Analysis of Abnormal Fluctuations in Lokai Co., Ltd. (603829): Hot Money Speculation, Valuation Risks, and Impact of Convertible Bond Delisting

Lokai Co., Ltd. (603829), as a national high-tech enterprise and a “Little Giant” enterprise specializing in medium and low voltage distribution equipment [0], recently triggered the Shanghai Stock Exchange’s abnormal fluctuation announcement [1] because the cumulative deviation value of its stock price increase over three consecutive trading days (November 14, 17, and 18) exceeded 20%. On November 18, the stock price closed at 24.17 yuan, achieving two consecutive daily limits with a turnover of 195 million yuan [2]. Dragon and Tiger List data shows that the well-known hot money “Yishun Liuguang” was on the list [5], indicating that short-term stock price fluctuations are mainly driven by hot money speculation.

From a valuation perspective, the company’s latest rolling price-earnings ratio is 34.52 times, significantly higher than the industry average of 24.62 times [0], showing an obvious valuation premium. In terms of fundamentals, the company’s main business is the R&D, production, and sales of medium and low voltage distribution equipment such as circuit breakers and ring main units, and their accessories [0]. No major operational changes have been disclosed recently, and production and operation conditions are normal [1].

1. Hot Money Dominates Short-Term Market
   : The signs of hot money participation in the Dragon and Tiger List [5] are consistent with the consecutive daily limit trend, reflecting overheated short-term market sentiment and possible deviation of stock price fluctuations from fundamentals.
2. Valuation Deviates from Fundamentals
   : The high price-earnings ratio [0] contrasts with the company’s fundamentals without major positive news, suggesting a risk of valuation correction.
3. Potential Impact of Convertible Bond Delisting
   : Lokai Convertible Bond will be delisted on November 21 [6]. Convertible bond holders may choose to convert to stocks or redeem, which may intensify short-term fluctuations in stock liquidity.

• Valuation Correction Risk
  : The current price-earnings ratio is higher than the industry average [0]. If hot money withdraws, the stock price may face correction pressure.
• Increased Short-Term Volatility
  : Hot money speculation leads to increased stock price volatility [5], and investors need to be alert to the risk of chasing high prices.
• Impact of Convertible Bond Delisting
  : The delisting of the convertible bond on November 21 [6] may trigger short-term changes in capital flows.

• The short-term strong market may provide arbitrage opportunities for transactional investors, but it is necessary to strictly control positions and pay attention to hot money trends [5].

The recent strong stock price of Lokai Co., Ltd. is mainly driven by hot money speculation, lacking support from major fundamental positive news; its valuation is at a relatively high level in the industry, with a risk of correction; the convertible bond delisting event may intensify short-term fluctuations. Investors should consider their own risk tolerance, view the short-term market rationally, and avoid blind chasing of high prices.