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Nov. 7 (NBD) – Stock of leading Chinese chip maker Unigroup Guoxin Microelectronics Co Ltd (Guoxin Micro: 002049, SZ) edged up 0.94 percent on Thurday following a limit-down on the previous day.

Data shows that shares of the chip company fell by a 10-percent daily limit on Wednesday, with the top three institutional investors selling combined 212 million yuan (30.3 million U.S. dollars) worth of shares on the day.

With regard to the plunge, Guoxin Micro, in a reply to investors' questions, stressed that currently the business is maintaining stable growth and there isn't any unexpected bearishness. Meanwhile, the large-scale asset restructuring of the company is proceeding as planned. 

Liu Youhua, a researcher from a private equity platform, told National Business Daily (NBD) that the plummet might be due to the price diving of dollar bonds issued by Guoxin Micro's parent company Tsinghua Unigroup. 

NBD observed that the yield of Tsinghua Unigroup's dollar bonds due 2023 rose sharply by 216 BP (basis point) on October 31, with the cumulative growth for last month at 335 BP. The growth of yield signifies the downturn of the bond price.

"Guoxin Micro's stock price is unlikely to recover in the short run, but investors could wait patiently for its later performance as the company reported strong third-quarter results," Liu noted. 

Noticeably, another subsidiary of Tsinghua Unigroup, Unisplendour Corporation Limited, also suffered a drop of 3.95 percent on Wednesday.

Zhong Haibo, general manager at an asset management company, said, "The stock decline was mainly affected by the issuance of overseas bonds and the market is doubting Tsinghua Unigroup's ability to redeem the bonds. The overall liquidity of the market is still tight." 

The liquidity problems of Tsinghua Unigroup would remain a challenge for its subsidiaries, some held. 

The 2019 interim report of Tsinghua Unigroup indicated that debts of the parent company as of the end of the first half of 2019 totaled 202.1 billion yuan, with the debt-asset ratio registered at a whopping 73.68 percent.

At the same time, the business performance was not that satisfactory. For the first six months of this year, Tsinghua Unigroup reaped 33.1 billion yuan of revenue, up 12 percent from a year ago, but recorded net loss of 3.7 billion yuan, in striking contrast to 208 million yuan of net profit for the same period of last year.

Email: lansuying@nbd.com.cn