GCL System Integration Technology Co, a photovoltaic company once on the brink of bankruptcy, resumed trading on Wednesday after a reorganization and saw its shares surge by 986 percent to 13.25 yuan ($2.06).
The company, which was known as Shanghai Chaori Solar Energy Science & Technology Co before the reorganization, is a medium-scale photovoltaic (PV) enterprise that got listed in November 2010 on the Shenzhen Stock Exchange (SSE).
But trading in its shares was suspended on May 28, 2014 after it reported three consecutive years of audited net losses.
Chaori made a 55 million yuan loss in 2011, 1.75 billion yuan loss in 2012 and 1.33 billion loss in 2013, according to the company's earnings reports.
The reborn company announced its trading resumption late on Tuesday, saying that the move had been approved by the SSE.
The exchange usually imposes a 10 percent daily limit on stock price moves, but that rule doesn't apply on the first day that shares under special treatment resume trading.
However, trading was halted temporarily twice during the day as the SSE warned investors of possible risks.
Publicity alone can't prop up a stock price for long, Duan Zhiyu, an energy analyst at Bloomberg New Energy Finance, told the Global Times on Wednesday, although he declined to comment on specific companies.
Chaori was involved in the first corporate bond default in China's onshore market, a development that analysts viewed as a milestone.
The company announced on March 4, 2014 that it would be unable to honor a second interest payment of 89.8 million yuan due three days later for its 1 billion yuan, five-year bond that was issued in March 2012.
The status of the bonds was eventually resolved after a restructuring plan was approved at a creditors' meeting on October 23, 2014.
The plan allowed a domestic subsidiary of Hongkong-based PV giant Golden Concord Holdings to become its controlling shareholder and eight other investors to become the company's strategic investors.
Together, these investors provided the funds to repay Choari's debts and resume production.
"But I don't think it will take long to change the market's long-held view of debt repayments," Duan said.
"The market needs a mechanism for the survival of the fittest that allows companies that default to go bankrupt," he said. "The government has gradually indicated that it is relaxing its restrictions on this."
Premier Li Keqiang said in March this year that the government will allow liquidation under market principles.
Duan also noted that a more flexible attitude on debt can help investors improve their risk awareness.
