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TOP Financial Group has been increasing on different trading activities
In the past two trading days “investors have been in the market” according to Yahoo Finance Live worried about a half year of flat trading on the NASDAQ stock for TOP Financial Group (NASDAQ: TOP).
Shares of the Hong Kong-based online retailer surged 1,150% at one point on April 28.
The meme tree is a popular animal that has the ability to captivate people’s attention on the Internet, and the social feeling surrounding the tree that dominates such a forum is important to generate again. The power of online activities and discussions and the analysis of meme trees on social media and blogs create and nurture social spirits as these technologies have an amazing ability to evoke emotions and cybernauts.
Therefore, many investors, convinced by the information on these platforms, choose to trade these stocks. It’s a surprise stock price the more it grows, the more likely it is that the stock’s market value will be separated from the company’s objectives.
TOP Financial Group’s shares closed at $108.21 on April 28, up 441.05% from the previous close, and bringing the market capitalization to $3.8 billion. . About 6.7 million shares were traded on the market.
Source: Search Alpha
The transaction is impressive considering that there are 5 million shares of the company that can be traded on NASDAQ, the total number of issued shares and shares of TOP Financial Group is 30 million.
Of the total issued and outstanding shares, most of the shares are privately held by corporations, but a smaller 14.24% is publicly held for a market value of approximately $540.12 million.
Source: Search Alpha
About TOP Financial Group and their “No Comments” on Share Price Movements
The first $25 million fund was issued on Wednesday, June 1, 2022, under Zhong Yang Financial Group (TOP) which will change its name to TOP Financial Group Limited in July 2022.
Zhong Yang – the founder of TOP – offered 5 million common shares and asked for a price of $5 per share.
TOP specializes in trading local and foreign stocks in addition to futures and options, but most of its income comes from commissions on futures contracts. .
In response to the wild changes that occurred on Friday, the Hong Kong-based online shopping company released the following information during business hours, saying it would not comment further on the matter:
“While it is the Company’s duty not to comment on stock movements, we believe it is important to caution investors and all others to rely only on information and filings with the United States Securities and Exchange Commission. and Exchange Commission issued by the Company itself. or its authorized representatives.”
The trades of the previous day are not lost.
Yahoo Finance puts the volume of shares traded on Thursday, April 27 at 34,109,600 – look at the many thin bars under the TOP price curve for April 27 – as The share price went up, but it didn’t go up. on Friday.
Source: Search Alpha
The share price closed at $20 on April 27, up 179% from $7.17 at the close on April 26 to $24 during the day, but the high volatility forced TOP stocks to stall at times on Thursday.
Apparently, it’s not TOP Financial Group as there are a handful of other small-cap stocks from China’s financial services sector that have been coveted by meme investors.
TOP Price at 22x IPO Price Now Need to Grow Business
Thursday’s trading total was 6 times the free float of 5 million shares indicated by TOP, and the difference may have contributed to social sentiment to hold TOP shares in the fund though all costs.
One thing is certain: when low-floating stocks are highly traded, stock prices tend to rise in large swings.
Therefore, the price of TOP today is almost 22 times higher than June 1, 2022 [IPO]and that if the business does not progress according to the company’s expectations, this market value will not be related to the intrinsic value of the stock.
The intrinsic value depends on the performance of the ongoing operations and the expected growth of the company. Based on the intrinsic value of what the company can generate going forward from that operating portfolio, the stock may be overvalued at these prices now.
However, the view changes whether this real value can be realized on the future possibilities of the company, namely a stable trading platform for Asian traders, not only for Hong Kong traders who want a TOP.
How TOP Financial Group has been doing recently
The company reports financial results for the full fiscal year ending March 30, and the first six months of operations ending September 30.
The latest reporting period covers April 1, 2022 – September 30, 2022, TOP Financial reported on January 6, 2023.
For this reporting period, TOP reported revenue of $5.2 million, up 62.5% year-on-year, mainly due to an increase in futures contract volume of 0.5 million year- annually on the TOP platform to 1.9 million during the period. H1 2022.
The revenue breakdown indicates that commissions from futures traders are the primary source of income as they account for 51.2% of total sales in H1 2022, which is the fees earned from providing marketing solutions to 9 customers are approximately 46%. The remaining 3-4% comes from trading and interest income and other minor items.
The total expenses were $3.32 million, and the majority – say, about 38% – related to the fees paid by the company to marketing partners because TOP had to use these partners to placing orders for its customers. Total expenses were 44.3% higher year-over-year.
Revenue was $1.8 million, up 100% from last year. So, TOP has an operating margin of 35.6% for H1 2022 and an operating margin of 28.3% for H1 2021.
The Financial Process of TOP
As of September 30, 2022, TOP’s balance sheet showed $25.7 million in cash, cash equivalents and restricted cash.
About 57% of this amount was exposed to the market volatility of the US Dollar against the Hong Kong Dollar.
That amount originally came from $25 million in net proceeds from the IPO.
Accounts payable to customers of $3.7 million came out of total accounts receivable of $4.11 million as of September 30, 2022.
The most important thing is that payments to customers are the deposits received by TOP from its customers that are needed to cover the position taken by customers for trading activities, as required by traders third. The asset also includes liabilities from pending transactions and overnight clearing houses as well as bank balances held by TOP on behalf of customers.
Total debt is the total operating lease liability of $201,774 ($201k).
The decorative structure now allows for exciting views
After the increase in the share price on the NASDAQ, TOP Financial Group’s capital structure is now as follows, with a market capitalization of $3.79 billion more than the net income by 149.8 times.
Source: Search Alpha
In the first half of 2022, TOP reported negative cash flows from operations of $4.72 million, but the company intends to move forward.
TOP therefore assumes that operating cash flow and available cash will allow the business to continue for another 12 months.
TOP Financial Group points out that its clients are mostly high-net-worth individuals acquired through social and professional relationships of shareholders.
However, TOP Financial Group seems to be looking to grow its business and the company’s strategy is to expand its customer base to include small retail customers and pay commission rates. higher.
The large amount of money spent on marketing activities indicates that the company is pursuing a level of growth, but the trend of the patent shows that TOP has not yet distributed much across advertising and media. channel to increase sales.
TOP needs to increase the number of customers who use its marketing services regularly, and to do this it needs to run an effective advertising campaign to drive demand on its marketing program, and to grow capital. .
The company expects to spend money on promotional activities, but if the purpose of this is business expansion, the proceeds from the IPO will not be available, which means that TOP will decide to improve its cash position. lending extra money or increasing credit.
Both types of financing have disadvantages, because issuing equity means diluting shareholders, while equity financing means paying bank fees.
The financial cost will not be too high because China’s central bank is holding interest rates to boost the economy’s recovery from the policy of not taking into account the Covid-19 virus. In addition, the Chinese central bank has no problem fighting high inflation like in Western economies.
In terms of issuing new shares, this approach could make it easier to raise more capital for investments, assuming the share price stays at this level after Friday’s increase.
The dilution problem for shareholders will be significantly reduced as less money will be spent on buying shares from the market in the future and will be invested in growth projects.
Assuming that the situation can be described above, this tree is worth keeping. There is a risk that the price of stocks will decrease from these high levels if the company wants to expand its business.
Conclusion
TOP Financial Group reported mixed trading activity over the past two days as investors traded stocks, due to a high in the stock market on Thursday and a rise in the share price in on Friday.
The share price is 22 times its post-IPO level in early June 2022.
The cost of financing will be more expensive and the business will need to grow, and to achieve this level of growth, TOP will have to invest heavily in marketing campaigns. Funding is required, which can be obtained from the issuance of new shares and/or cash financing.
Now the conditions are favorable for large capital growth.
