Baiao Chemical (603360.SS) Shareholder Reduction Event Analysis Report

Based on collected data and announcement information, I provide you with a

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Shareholding Reduction Shareholder	Identity	Planned Shares to Reduce	Reduction Ratio	Reduction Method
Dalian Tongyun Investment Co., Ltd.	Controlling Shareholder	≤21,186,709 Shares	≤3%	Centralized Auction (≤7,062,236 shares) + Block Trading (≤14,124,473 shares)
Dalian Guangyao Zhixin Shuhong Enterprise Management Consulting Partnership	Shareholder holding more than 5% of shares	≤21,186,709 Shares	≤3%	Centralized Auction (≤7,062,236 shares) + Block Trading (≤14,124,473 shares)
Total	—	≤42,373,418 Shares	≤6%	—

: All for ‘own capital needs’ [1][2]

It is worth noting that on November 26, 2025, Tongyun Investment, Guangyao Zhixin and Mr. Liu Hongjun signed the “Share Transfer Agreement” [3]. This reduction plan is only about one and a half months after the signing of the share transfer agreement, and there may be related arrangements.

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Indicator	Value
Current Closing Price	¥29.67
5-Day Price Change	-8.20%
1-Month Price Change	-12.58%
20-Day Moving Average	¥31.09
50-Day Moving Average	¥32.15
Technical Support Level	¥29.05
Technical Resistance Level	¥31.09

• Significant negative impact
  . A combined reduction scale of 6% is a major negative event, which usually creates obvious selling pressure on the stock price within 3-5 trading days after the release of the reduction announcement [1]
• The two major shareholders are reducing their holdings simultaneously, and this
  joint reduction
  by shareholders with a combined shareholding of over 5% is likely to trigger market concerns about the company’s fundamentals
• Only about one and a half months have passed since the signing of the share transfer agreement on November 26, 2025, and the market may question whether there is undisclosed information asymmetry

• Approximately 42 million potential sell orders in the short term (corresponding to a market value of about ¥1.25 billion, calculated based on the current stock price) [1][2]
• The average daily trading volume is approximately 15.12 million shares, and the shares to be reduced account for about 2.8 times the average daily trading volume, which may put pressure on short-term liquidity
• Reduction via block trading (accounting for 2/3 of the total) can reduce the price impact on the secondary market, but the centralized auction portion will still create immediate selling pressure

• The stock price has shown a weak trend of
  8.20% decline in 5 consecutive days
  and
  12.58% decline in one month
  [0]
• The current stock price has
  broken below the 50-day moving average by 4.52%
  and is in a short-term downward channel
• Technical indicators show that the KDJ is in the oversold zone (J value: -12.7), with potential for a rebound but weak momentum [0]

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Analysis Dimension	Rating	Key Indicators
Financial Attitude	Neutral	Prudent accounting treatment, no extremely aggressive or conservative behaviors
Cash Flow	Healthy	Free cash flow of ¥88.07 million, sound cash flow position
Debt Risk	Low Risk	Current ratio of 2.96, quick ratio of 1.55, strong short-term solvency
Profitability	Strong	ROE 12.86%, net profit margin 14.68%, gross profit margin 19.56%

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Valuation Indicator	Value	Industry Comparison	Assessment
Price-to-Earnings Ratio (P/E)	96.26x	Chemical industry average is approximately 15-25x	Significantly Overvalued
Price-to-Book Ratio (P/B)	13.81x	Chemical industry average is approximately 2-4x	Significantly Overvalued
Price-to-Sales Ratio (P/S)	14.24x	Chemical industry average is approximately 1-2x	Significantly Overvalued
EV/OCF	109.39x	—	Obvious Valuation Bubble

: Baiao Chemical’s current valuation significantly deviates from the normal level of the chemical industry, posing a substantial valuation regression risk. The 96x P/E ratio indicates that the market has extremely high expectations for the company’s future growth, and any signal of underperformance may lead to a sharp valuation correction.

• After reducing its holdings by 3%, Dalian Tongyun Investment Co., Ltd., as the controlling shareholder, still maintains its controlling position
• The share reduction will not affect the company’s normal operations and strategic direction
• The impact on the company’s governance structure is limited

• Proceeds from the reduction belong to the individual/institutional shareholder and will not be injected into the listed company
• It will not help improve the company’s financial situation or increase R&D investment
• It may trigger market concerns about the company’s shareholding structure

• The company’s first-half 2025 revenue was $300 million, with a year-on-year growth of approximately 6% [0]
• The revenues in the recent four quarters are as follows: $448 million (Q1), $416 million (Q4), $310 million (Q3), $300 million (Q2) [0]
• The trend of slowing performance growth is obvious, which contradicts the high valuation

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Risk Type	Specific Description	Risk Level
Valuation Correction Risk	P/E ratio reaches 96x, far exceeding the industry average; any performance shortfall will lead to a sharp valuation correction	🔴 High
Selling Pressure Risk from Share Reduction	The 6% share reduction will continue to create selling pressure in the short term	🔴 High
Performance Growth Rate Risk	Revenue growth is slowing down, and high growth is unsustainable	🟠 Medium-High
Market Sentiment Risk	Shareholder reduction may trigger follow-up selling	🟠 Medium-High
Liquidity Risk	Average daily trading volume is ¥1.512 billion; large-scale reduction may impact liquidity	🟡 Medium

Opportunity Type	Specific Description	Conditions
Oversold Rebound Opportunity	KDJ is in the oversold zone, and there is technical demand for a rebound	Short-term Rebound
Fundamental Support	Sound financial status and abundant cash flow	Of interest to long-term value investors
Low Beta Characteristic	Beta is only 0.41, with low correlation to the broader market	Diversify portfolio risk

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1. Avoid Buying
   : It is recommended to postpone buying during the implementation period of the reduction plan (usually 15 trading days to 6 months after the announcement)
2. Monitor Support Level
   : ¥29.05 is the key technical support level; a break below may trigger the next round of selling
3. Monitor Trading Volume
   : If a sharp decline with increased volume occurs, it is recommended to stop losses; if the volume shrinks and the price stabilizes, you may consider light-position trading for a rebound

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1. Valuation Regression Opportunity
   : Gradually build positions after the valuation returns to a reasonable range (P/E 30-40x, corresponding to a stock price of around ¥9.8-13)
2. Wait for the Reduction to Be Completed
   : Choose the right time to position after the reduction plan is completed and market sentiment stabilizes
3. Performance Verification
   : Pay attention to the performance of subsequent financial reports to verify the rationality of the high valuation

⚠️

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• The current 96x P/E valuation has a significant bubble; even after the reduction is completed, the risk of valuation regression remains high
• Signs of slowing performance growth have emerged, and the logic of high growth is facing challenges
• It is recommended that investors pay close attention to the 2025 annual report and 2026 first-quarter report performance
• Control position size; it is recommended that the position does not exceed 30% of the total capital during the reduction period

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This joint share reduction of 6% in total constitutes a

for Baiao Chemical, mainly due to the following reasons:

1. Large Scale
   : The 6% share reduction accounts for 2.8 times the average daily trading volume, creating obvious short-term selling pressure
2. Sensitive Timing
   : Only one and a half months have passed since the signing of the share transfer agreement, and the market may have concerns about information asymmetry
3. High Valuation
   : The 96x P/E ratio means the market has extremely high expectations, and any negative news will be amplified
4. Weak Trend
   : The stock price is in a downward channel, having broken below the 50-day moving average, with a weak technical outlook

, the company’s fundamentals remain sound (prudent financials, abundant cash flow). If the stock price corrects sharply to a reasonable valuation range due to the share reduction, investors may accumulate positions on dips. The key is to patiently wait for the completion of the share reduction and the return of valuation to a reasonable level.

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[1] Sina Finance - Baiao Chemical: Shareholders Tongyun Investment and Guangyao Zhixin plan to reduce their holdings by no more than 3% each (https://finance.sina.com.cn/jjxw/2026-01-14/doc-inhhhtem8202795.shtml)

[2] Jiemian News - Baiao Chemical: Shareholders Tongyun Investment and Guangyao Zhixin plan to reduce their holdings by no more than 3% each (https://www.jiemian.com/article/13886164.html)

[3] National Business Daily - Baiao Chemical: Tongyun Investment plans to reduce its holdings by no more than approximately 21.19 million shares (https://www.nbd.com.cn/articles/2026-01-14/4220541.html)

[0] Gilin AI Financial Database - Company fundamentals, technical analysis and market data