Market Impact Analysis of Wanjia Group (00401.HK) Rights Issue Plan

Wanjia Group (00401.HK) is a Hong Kong-listed stock in the healthcare services sector, with core businesses including pharmaceutical wholesale and distribution as well as hemodialysis treatment services [0]. The main catalyst for it becoming a hot stock recently is the 1-for-1 rights issue plan announced on December 30, 2025 [1][2][3]: the rights issue price is HK$0.08, a 31.62% discount to the closing price on December 29, 2025. The net proceeds will range from HK$40.82 million to HK$47.28 million, which will be used for business expansion, repayment of director loans and accounts payable, and supplementary working capital [3].

: On the first trading day after the rights issue announcement (December 31, 2025), the share price fell by 14.53% from HK$0.117 to HK$0.100 [2][4], with a cumulative drop of 31.97% in one month [2]. The trading volume on that day was only 40,000 shares, accounting for 6.99% of the 3-month average volume (570,720 shares) [0][4], reflecting strong wait-and-see sentiment among investors [5].

: The sharp drop in share price after the announcement indicates a negative initial reaction, with divided sentiment in the AASTOCKS comment section (1 positive / 1 negative) [2]. The technical indicator RSI (14) stands at 26.64, which is in the oversold zone [0], suggesting potential short-term rebound space for the price.

1. Significant Rights Issue Dilution Risk
   : The 1-for-1 ratio will lead to approximately 50% dilution of existing shareholders’ equity (if fully subscribed) [3], which is the core reason for investors’ negative reaction.
2. Liquidity and Valuation Contradiction
   : Low trading volume indicates low market participation. The share price is close to the median level of its 52-week range (HK$0.044-HK$0.182) [4], and the price-to-book ratio of 0.98 is close to the book value. However, the negative P/E (-7.65) shows that the company is in a loss-making state [0], so the valuation appeal is questionable.
3. Support Role of Rights Issue Price
   : The rights issue price of HK$0.08 may become a short-term support level. If the share price falls below this level, investors may give up the rights issue and buy directly in the market instead, increasing selling pressure [3].

1. Equity Dilution Risk
   : The 1-for-1 rights issue will significantly dilute existing shareholders’ equity [3].
2. Financial and Profit Risk
   : The company is currently in a loss-making state with a negative P/E (-7.65), and its financial condition needs improvement [0].
3. Rights Issue Subscription Risk
   : If the rights issue is not fully subscribed, the company will not be able to raise the expected funds, affecting its business development plans [3].
4. Compliance Risk
   : Its Wuhua Hemodialysis Center once needed rectification due to non-compliance issues [6].

1. Business Expansion Potential
   : The rights issue funds will be used for the expansion of existing businesses and potential investments in the healthcare sector. If implemented smoothly, it may drive long-term growth [3].
2. Oversold Rebound Opportunity
   : The RSI (14) is in the oversold zone, so there may be short-term rebound opportunities [0].

Wanjia Group (00401.HK) has become a hot stock due to its rights issue plan. After the announcement, the share price fell sharply with low trading volume. Although the rights issue plan provides financial support for business expansion, dilution risk, loss-making status, and compliance history are major concerns. Investors need to pay attention to the rights issue subscription situation, business development progress, and changes in financial conditions.