Fulongma Group Co Ltd. – Riding the Sea‑Bridge Wave or Riding a Bubble?

Fulongma Group (SH 603686), a Longyan‑based machinery manufacturer, has pushed its shares to a 52‑week high of 30.94 CNY on 2025‑10‑30, matching the market‑wide surge of the Sea‑Bridge (海峡西岸) concept. The company’s market cap hovers at 12.85 billion CNY while its price‑to‑earnings ratio of 74.78 reflects a valuation that is hard to justify on fundamentals alone.

1. The “Sea‑Bridge” Mania – A New Rally or a New Bubble?

The Sea‑Bridge theme, anchored by Pan’an Development (000592), has dominated the A‑share market this week. After an explosive run on Monday‑Tuesday, the sector cooled on Wednesday‑Thursday, only to regain momentum on Friday when Pan’an Development, buoyed by a massive volume surge, flipped from weakness to strength. This reversal rekindled interest in the entire concept, propelling a wave of limit‑up stocks, including Fulongma.

Why is this important for Fulongma?
Fulongma’s product line—road‑cleaning and refuse‑collection vehicles, new‑energy sanitation equipment, and related engineering services—aligns closely with the coastal‑logistics narrative that the Sea‑Bridge theme promotes. Investors, therefore, are treating Fulongma as a proxy for the broader coastal‑development push.

Yet the rally is built on sentiment rather than substance. The company’s earnings have been volatile, and its high PE suggests that the market is pricing in future growth that has not yet materialised. A correction in the Sea‑Bridge sector would hit Fulongma hard, given its thin margin of safety.

2. Foreign‑Investment Progress – A New Chapter or Just Paperwork?

On 2025‑10‑31, Fulongma filed “2025 Annual Foreign‑Investment Progress Announcement (Nine)”. While the filing itself is routine, the timing is significant: the company is signalling an intent to broaden its capital base amid a tightening domestic credit environment. Investors should ask whether this will translate into actual expansion of overseas production or simply inject liquidity to support the current share price.

3. Market‑Wide Conditions – A Mixed Bag

  • Capital Flows: Financing investors poured ¥413 billion into the market, setting a record for net inflow. The bulk of the inflows went to electricity‑equipment, automotive, and machinery sectors—exactly where Fulongma sits.
  • Sector Rotation: While AI and high‑tech themes lost steam, energy‑related stocks (including lithium‑battery makers) gained traction. The Sea‑Bridge stocks benefited from a policy‑driven pivot toward coastal and marine development.
  • Volume & Volatility: The Shanghai Composite surged past 4,000 points on its own, only to wobble back down. This volatility has kept limit‑up stocks like Fulongma in the spotlight.

4. The Limit‑Up Phenomenon – A Double‑Edged Sword

Fulongma’s shares hit a limit‑up on 2025‑10‑31, a rare feat that can create a self‑fulfilling rally. Analysts note that the stock moved from two‑consecutive limit‑ups to a third, reinforcing investor belief in its upside. However, limit‑ups often precede a sharp retracement once the buying momentum exhausts. For Fulongma, the risk is that the current price of 30.94 CNY will be unsustainably inflated, especially given the company’s modest earnings and a PE ratio that dwarfs the industry average.

5. What Should Investors Do?

  1. Scrutinise Fundamentals – Examine Fulongma’s cash flow, debt levels, and R&D spend. A 74.78 PE ratio demands a 20‑plus percent growth rate to stay justified, which is unrealistic for a mature machinery producer.
  2. Watch Policy Signals – The Sea‑Bridge theme is policy‑driven. Any shift in regional development priorities could quickly erode the premium.
  3. Consider a Tactical Exit – If the share price reaches a new 52‑week high, an early profit lock‑in could be prudent. The market has already priced in the most obvious upside; the next move may be a pullback.
  4. Diversify Exposure – Instead of a concentrated bet on Fulongma, spread risk across a broader coastal‑logistics basket, or pivot to higher‑growth sectors like clean energy or AI that are showing stronger fundamentals.

6. Bottom Line

Fulongma Group’s recent surge is symptomatic of a broader Sea‑Bridge enthusiasm that is currently driving market sentiment. While the company’s product portfolio aligns with the coastal‑development narrative, its valuation remains a concern. The upcoming foreign‑investment announcement offers a potential catalyst, but until tangible operational expansion materialises, investors should remain skeptical. The market may reward Fulongma in the short term, but a correction is likely if fundamentals fail to catch up with the inflated price.