high rise buildings

The Sentage Holdings stock price has been on a rollercoaster since its IPO in July. They offered 4,000,000 ordinary shares at a public offering with a reference price of $5.00. The price rose to $52 when open to the public. About two weeks later, the price dropped from an intraday high of $41 to a closing price of $11.53. The price has continued to decline and is now at $2.20. So is it time for a reversal?

The Company

Sentage Holdings is a financial service provider that offers a comprehensive range of financial services across consumer loan repayment and collection management, loan recommendation, and prepaid payment network services in China.

Financials

At its height, Sentage Holdings had a market capitalisation of $600M. This now sits at $28M. The company made sales of $3.6M and operating income of $2.18M.

What is the potential?

Evergrande has been a topical conversation in recent weeks. The debt crisis in China is a serious concern. How can this play into the hands of Sentage Holdings? The immediate impact of Evergrande’s troubles will be on China’s once booming property market. The sector represents 7.3% of the countrys GDP compared to 4.1% in 2000. It is a market which been over-expanding for many years, with the debt level of other big development firms already very high. If Evergrande were to collapse, it would cause a domino effect across the sector, potentially leading to the demise of more businesses.

This would lead to more people relying on borrowed money to get by, playing into the hands of Sentage and the loan market. The companies loan repayment and collection management services would rise in demand, as well as their loan recommendation services.

Technicals

The RSI for SNTG is 28, making it oversold. The daily chart is reclaiming the 9EMA. There is also a gap fill from $8.40 to $10. With a float of 5 million, the price could rise fast once this gets going. We recently saw a meteoric rise in price for Camber Energy (CEI), making a nine-fold return in a month.

Is Sentage Holdings the next runner?

One thought on “Sentage Holdings stock is oversold”

Leave a Reply