TOP Financial and AMTD Digital stocks surged: time to buy?

TOP Financial Group (TOP) and AMTD Digital (HKD) stock prices went parabolic this week, helped by the robust demand for Chinese companies after the government announced a series of stimulus measures. 

AMTD Digital shares surged by 22% on Wednesday and by over 42% in extended hours, pushing its market cap to over $615 million. 

Similarly, TOP Financial shares soared by 61% in the regular session and continued with these gains in extended hours, rising by over 6%. 

Still, the two companies remain significantly below their all-time highs. TOP has crashed by more than 98%, giving it a market cap of more than $61 million. Similarly, AMTD Digital, together with AMTD Idea, have tumbled by over 90% from their all-time highs.

What is TOP Financial?

TOP Financial is not a company that many Americans know. It is a Hong Kong-based company that provides brokerage solutions to clients in the city and in mainland China. 

Its subsidiaries provide platforms that enable users to buy and sell local and international stocks. 

Therefore, like Futu Holdings, which I wrote about this week, TOP Financial stock surged because of the recent rebound of Chinese and global stocks after China implemented a series of stimulus measures. 

Most stock indices, like the Hang Seng and the Shanghai Composite, have done well in the past few weeks, rising to their highest points in months. Traders believe that its business will see more inflows in the coming months if the stock rebound continues.

This enthusiasm has pushed more investors to TOP Financial, which is widely seen as a meme stock.

Unlike other companies, TOP has not published its financial results lately, and its website does not provide any recent information. The only recent news came on February 12, when the company announced a decision to raise $5 million in a registered direct offering. 

Its recent 20F filing, or annual report for foreign issuers, showed that it made $8 million in the last financial year, a drop from the $9.7 million it made in the previous year. Its net income was $1.1 million, another drop from $3.4 million and $3.5 million in the last two financial years, combined.

Turning to the daily chart, we see that the TOP share price bottomed at $1.39 in September. It has then rebounded to over $3.50 this week as investors moved to meme and Chinese stocks. As it jumped, it crossed the key resistance levels at $2.20 and $2.65, its lowest point in April and the highest level in July. 

Therefore, while the stock may continue rising in the near term, there is a risk that it will resume the downtrend when the momentum on Chinese stocks fades. 

AMTD Digital analysis

AMTD Digital and AMTD Idea are other stocks that have surged this week, with the former’s market cap soaring to over $750 million. 

AMTD Digital owns several firms in the financial services industry. Its Airstar brand is a collaboration with Xiaomi and offers online banking solutions to customers. 

It also owns AMTD Risk Solutions, an insurance brokerage that offers services in the property, liability, financial loss, and personal risk industries.

AMTD Digital has also invested in the media industry, where it owns L’Officiel brand, a media enterprise based in Paris. It also owns ForkastLabs, DigFin, and The Art Newspaper. Forkast Labs owns one of the top publications in the crypto industry. 

It is also a big player in the investment industry through its S$50 million AMTD ASEAN Solidarity Fund 

The most recent financial results shows that AMTD Digital had over $8.6 million in sales in the six months to October 31st last year, a big decline from the same period. 

Nonetheless, its profit for the period jumped to over $30 million, helped by the change in fair value of some of its assets. 

Additionally, its cash and cash equivalents dropped to over $134 million from $152 million in the same period. 

AMTD stock analysis

AMTD chart by TradingView

The daily chart shows that the AMTD share price bottomed at $2.61 in September, and has bounced back since then. It recently surged above the key resistance point at $2.94, its lowest point in April this year. 

AMTD has jumped above the 50-day and 25-day Exponential Moving Averages (EMA), which have made a bullish crossover, pointing to more upside. 

The Relative Strength Index (RSI) and the MACD indicators have all drifted upwards, meaning that there is momentum. 

Therefore, the AMTD share price will likely continue rising as buyers target the key resistance point at $4.95, the highest point on May 14. A break above that level will point to more gains in the near term.

However, like with TOP Financial, there are rising odds that the stock will enter a distribution phase as the hype on Chinese stocks start to fade.

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