Newly listed Shengu Group Co.,Ltd. (601091.SH) has seen its share price skyrocket over the past two trading sessions, with the latest closing price surging more than 12 times above its issue price.

On September 17, the stock opened 196.13% higher on its debut day, closed up 373.80%, and triggered temporary trading halts twice during the session. The following day, September 18, the stock opened nearly 28% lower in the morning auction, but staged a dramatic afternoon rally, reaching a cumulative peak gain of over 15 times before closing up 177.74%.

On September 18, the Shanghai Stock Exchange (SSE) stated in a notice that Shengu Group shares had experienced significant price fluctuations since listing, and that some investors had engaged in abnormal trading behavior that disrupted the normal order of stock trading. The exchange imposed self-regulatory measures, including suspending account trading, on the relevant investors in accordance with regulations.

Meanwhile, Shengu Group also issued a risk warning, noting that its price-to-earnings (P/E) ratio and price-to-book (P/B) ratio are significantly higher than the industry average. The company cautioned that its short-term stock price volatility has intensified with high turnover rates, and there is a risk of a sharp pullback following the rapid surge. Investors were urged to make rational decisions and invest prudently.

Irrational Speculators Face Trading Suspensions

On September 17, Shengu Group made its A-share debut with an issue price of RMB 4.39 per share and an issue P/E ratio of 29.81 times, making it the lowest-priced new stock on the Shanghai Stock Exchange main board in 2026. On its first trading day, the stock drew attention for triggering intraday trading halts twice. The stock closed at the day's high of RMB 20.80 per share, up 373.80%.

On September 18, despite the substantial gains from the previous day, Shengu Group remained in the spotlight, with the stock experiencing extreme volatility. The stock opened nearly 28% lower in the morning auction, dipped to a low of RMB 14.68 per share, then surged sharply in the afternoon to an intraday high of RMB 82.59 per share, triggering two more intraday trading halts. By the close on September 18, the stock finished at RMB 57.77 per share, up 177.74%, with a total market capitalization of RMB 179.665 billion.

Industry insiders believe there are clear signs of speculation in Shengu Group. On one hand, the stock saw massive turnover on two consecutive days—79.62% and 89.08%, respectively—indicating that a large number of IPO allocated investors had sold their shares, and even a significant portion of investors who bought at the auction on the first day chose to exit quickly on the second day. On the other hand, discussions about Shengu Group have noticeably increased on stock forums, with many posts containing inflammatory rhetoric encouraging more investors to make irrational purchases for short-term price gains.

This has drawn heightened regulatory attention. According to the latest announcement from the SSE, some investors trading Shengu Group shares engaged in abnormal trading behavior that disrupted the normal order of stock trading. The exchange imposed self-regulatory measures, including suspending account trading, on the relevant investors in accordance with regulations.

Additionally, the SSE reported taking self-regulatory action against 50 cases of abnormal securities trading behavior, such as market manipulation and false orders, closely monitoring stocks with significant volatility, conducting special investigations into 33 major matters involving listed companies, and reporting 2 suspected illegal or non-compliant case leads to the China Securities Regulatory Commission.

High Valuation Meets Earnings Pressure

As the stock price has climbed, Shengu Group's valuation has deviated significantly from the industry benchmark. Meanwhile, the company faces downward pressure on its earnings. As of September 18, the company's static P/E ratio and P/B ratio stood at 242.96 times and 26.06 times, respectively. In comparison, the latest static P/E ratio and P/B ratio released by the China Securities Index Co., Ltd. on September 17 were 41.74 times and 3.50 times, respectively, meaning Shengu Group's valuation metrics are significantly higher than the industry average.

Shengu Group, a state-owned enterprise under the Shenyang Tiexi District State-Owned Assets Supervision and Administration Bureau, focuses on the research, development, and manufacturing of major equipment such as large centrifugal compressors, reciprocating compressors, and nuclear pumps, as well as full lifecycle services. From 2023 to 2025, the company's revenue was RMB 8.206 billion, RMB 9.309 billion, and RMB 10.122 billion, respectively, while net profit attributable to shareholders was RMB 355 million, RMB 442 million, and RMB 739 million.

However, 2026 earnings are facing certain pressures. According to the listing prospectus, Shengu Group expects to achieve revenue of RMB 7.3 billion to RMB 7.7 billion for January to September 2026, representing a change of -3.98% to 1.28% compared to the same period in 2025. Net profit attributable to shareholders is projected at RMB 456 million to RMB 550 million, down 8.13% to 23.83% year-over-year. The company attributed this to higher gross margins on certain projects and export projects in the first three quarters of 2025, while major construction projects in 2026 are expected to have higher acceptance rates in the fourth quarter. Additionally, some major export projects have seen delivery delays due to geopolitical factors, and the depreciation of the exchange rate has led to exchange losses and reduced interest income, increasing financial expenses.

Shengu Group also provided its full-year 2026 forecast, projecting revenue in the range of RMB 11.1 billion to RMB 11.4 billion, up 9.66% to 12.62% year-over-year, and net profit attributable to shareholders in the range of RMB 626 million to RMB 660 million, down 10.75% to 15.34% year-over-year.

According to the industry insider, new stocks typically have relatively small free-float shares in the early stages of listing, and price discovery is not yet fully established, making them susceptible to speculative capital. However, any short-term speculation detached from fundamentals is unsustainable and will ultimately revert to the company's intrinsic value. "Investors should take a rational view of price fluctuations in the early stages of a new stock listing and avoid blindly following the crowd under emotional influence," the insider said.