Qilian International Holding Group Limited Announces 1 for 5 Reverse Share Split
Qilian International Holding Group (NASDAQ: QLI) has announced a 1 for 5 reverse share split, effective June 21, 2024. Approved on May 29, 2023, this split will reduce the number of issued and outstanding Class A and Class B ordinary shares. The new Class A shares are expected to trade at five times their previous price, though this is not guaranteed. Shareholders will receive one new share for every five shares held. Post-split, Qilian's authorized share capital will consist of 70 million Class A shares, 20 million Class B shares, and 10 million preferred shares. Fractional shares will be rounded up to the nearest whole share.
- The reverse split may lead to an increased share price, potentially making the stock more attractive to investors.
- The reduction in outstanding shares could improve earnings per share (EPS) metrics.
- The rounding up of fractional shares could be beneficial to shareholders.
- The company cannot assure that the new share price will be maintained or reflect the 1 for 5 split ratio.
- The reverse split could be seen as a move to meet listing requirements, which may indicate underlying financial distress.
- There are no guarantees that the share price will remain above the pre-split trading price.
Insights
Reverse share splits are often employed by companies to increase the trading price of their shares. This can make the stock more attractive to institutional investors, who may have minimum price thresholds for investments. For Qilian International, this 1-for-5 split will reduce the number of shares outstanding from
While this can give a cosmetic boost to the share price, it does not fundamentally change the company's valuation or financial health. Investors should be aware that the actual value of their holdings remains constant immediately after the split, despite the higher share price. The company's market cap will remain the same, meaning the overall value of all outstanding shares combined will not change.
A potential short-term benefit is improved perception among investors, potentially attracting those who were previously deterred by the lower price. However, if the underlying business fundamentals don't improve, the stock price might not sustain the higher levels and could revert back or even drop below pre-split levels.
In terms of long-term impacts, investors should keep an eye on the company's ability to leverage this event to drive genuine business growth. For instance, any strategies or actions taken post-split to enhance revenue streams, cut costs, or expand market presence will be more telling of the stock's future trajectory.
The reverse split for Qilian International also signals a strategic move to maintain its NASDAQ listing. Stock exchanges often have minimum price requirements for continued listing and reverse splits can be a way for companies to meet these criteria. By consolidating shares, the company aims to stay compliant and avoid delisting risks.
From a market perception standpoint, reverse splits can sometimes be viewed as a red flag, suggesting that a company is struggling to maintain its share price. However, this isn't universally the case; it depends heavily on the company's subsequent performance and market conditions. Investors should monitor how the market reacts post-split and whether any significant changes in trading volume or institutional interest occur.
It's also important to consider the impact on liquidity. With fewer shares outstanding, individual trades can have a greater impact on the share price, potentially increasing volatility. This can be a double-edged sword; while some traders might welcome the higher price movements, long-term investors might be wary of increased risk.
Overall, while the reverse split is a notable event, it's the company's future operational performance and strategic initiatives that will ultimately determine its attractiveness as an investment. Retail investors should watch for upcoming earnings reports and any new business developments that could provide more substantial reasons to invest.
The reverse share split is expected to lead the Company's Class A ordinary shares to trade at approximately five times the price per share at which it trades prior to the effectiveness of the reverse share split. The Company, however, cannot assure that the price of its Class A ordinary shares after the reverse split will reflect the 1 for 5 reverse split ratio, that the price per share following the effective time of the reverse split will be maintained for any period of time, or that the price will remain above the pre-split trading price.
The Company has filed the Amended and Restated Articles and Memorandum of Association in connection with the reverse share split. Immediately prior to the reverse split, there are 23,750,000 of the Company's Class A Ordinary Shares and 12,000,000 Class B ordinary shares outstanding. Effecting the 1 for 5 reverse split will reduce the number of issued and outstanding shares to approximately 4,750,000 Class A ordinary shares and 2,400,000 Class B ordinary shares. As a result of the reverse split, the Company's authorized share capital will be changed to 70,000,000 Class A Ordinary Shares, par value
Fractional Shares
Any fractional shares that would have resulted because of the Reverse Split will be rounded up to the nearest whole share.
New Ordinary Share Certificates
Certificates reflecting the new share number will be issued in due course as old share certificates are tendered for exchange or transfer to the Company's transfer agent, VStock. Registered shareholders holding pre-split shares of the Company's ordinary shares electronically in book-entry form are not required to take any action to receive post-split shares. Shareholders who hold their shares through a securities broker or nominee (i.e., in "street name") will be contacted by their brokers or nominees with any instructions. For more information, shareholders and securities brokers should contact VStock at (212)828-8436.
About Qilian International Holding Group Ltd
Qilian International Holding Group Ltd, headquartered in
Safe Harbor Statement
Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, are: the ability to manage growth; ability to identify and integrate other future acquisitions; ability to obtain additional financing in the future to fund capital expenditures; fluctuations in general economic and business conditions; costs or other factors adversely affecting our profitability; litigation involving patents, intellectual property, and other matters; potential changes in the legislative and regulatory environment; a pandemic or epidemic. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in the Company's filings with the Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Such information speaks only as of the date of this release.
For more information, please contact:
Name: Yubin Jiang
Email: info@qiliancorp.com jiangyubin@qiliancorp.com
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SOURCE Qilian International Holding Group Limited
FAQ
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