This long-overlooked railway stock in the Hong Kong market may soon face exclusion from the Stock Connect program. According to data, CANGGANGRAILWAY's average market capitalization from January 1, 2025, to December 31, 2025, stood at HKD 4.96 billion, below the Stock Connect removal threshold of HKD 6.007 billion. Additionally, despite fluctuating trading activity, the stock has remained weak and sluggish after a significant 36% decline between 2024 and 2025, leading to persistent liquidity issues in 2025.

The combination of these two non-compliant factors suggests CANGGANGRAILWAY is at risk of being removed from the Stock Connect in the next periodic review. Such an exclusion would be a major negative signal, as the company would lose access to southbound capital—a key liquidity source for Hong Kong stocks—potentially exacerbating trading thinness and further dampening market confidence.

CANGGANGRAILWAY debuted on the Hong Kong stock market in October 2020 as the "first regional railway stock." After peaking at HKD 3.262 on October 25, 2023, its shares have trended downward, closing at just HKD 0.75 on November 27, 2025, with a total market cap of HKD 3 billion.

**Earnings Volatility: Heavy Reliance on Coal Freight Demand** Founded in 1979 and operational since 1982, CANGGANGRAILWAY primarily operates the Canggang Line, a 216.6 km railway connecting Cangzhou to Bohai New Area (including Huanghua Port), with links to the Shuohuang and Hanhuang branch lines. The Shuohuang Line is a critical artery for China's "West-to-East Coal Transport" strategy, while Huanghua Port handles about 30% of China Energy Group's coal shipments.

Rail freight, dominated by coal (over 85% of revenue), forms the core business, supplemented by auxiliary services like loading/unloading and road freight (15% of revenue). However, this "coal-driven" model has exposed the company to volatility. In H1 2025, revenue dipped 0.3% YoY to RMB 131.7 million, with a slight 0.5% decline in rail freight offset by a 1.2% rise in auxiliary services. Net profit, however, grew 17.2% to RMB 30.88 million, aided by cost-cutting efforts.

Longer-term, 2024 full-year revenue fell 25.82% to RMB 259 million due to weaker coal demand, highlighting structural risks from over-reliance on the coal sector. Broader energy transition trends, such as decarbonization policies, could further pressure coal demand.

**Insider Selling vs. State Backing: A Mixed Signal** Recent heavy selling by executives has raised concerns. Chairman Liu Yongliang reduced his stake from 48.22% to 40.34% through multiple transactions in September 2025, signaling potential internal pessimism.

In contrast, state-owned Hebei Cangzhou Transportation Control Group increased its stake to 28.78% during the same period, suggesting local government support to stabilize confidence and reinforce long-term infrastructure commitments.

**Future Plans: Diversification and Expansion** CANGGANGRAILWAY aims to mitigate risks by: 1. **New Branch Line Construction**: A provincially approved line, set for late 2024, will expand coverage and capacity. 2. **Infrastructure Upgrades**: RMB 24.3 million allocated to enhance safety and load capacity on the Canggang Line. 3. **Market Diversification**: Pursuing a "Railway+" strategy to develop new freight categories (e.g., sand, ore powder) and offset declining traditional建材 shipments.

While these efforts may help reduce coal dependency, the pace and effectiveness of转型 will determine whether CANGGANGRAILWAY can achieve sustainable growth. For investors, the key lies in whether the company can successfully "decouple" from coal and identify a viable second growth engine.