What is the expected consolidation ratio and how will it impact the stock's liquidity and trading volume?

Expected consolidation ratio

The press release does not disclose the exact split‑ratio – it only confirms that a “share consolidation” will be put to shareholders for approval. In practice, Hong‑Kong‑listed civil‑engineering firms of Skyline Builders’ size typically opt for a reverse‑split in the range of 10‑for‑1 to 20‑for‑1 (i.e., ten or twenty existing shares exchanged for one new share). Until the extraordinary general meeting confirms the ratio, market participants should treat the exact figure as “to be announced”.

Liquidity and trading‑volume impact

A reverse split raises the nominal price per share while proportionally reducing the total share count. The immediate effect is a compression of the order book: fewer shares are available for trading, so the average daily volume (in shares) will fall. However, the higher per‑share price can improve the stock’s perceived quality and make it eligible for inclusion in certain institutional‑mandated indices that require a minimum price floor, potentially attracting more long‑‑term, “smart‑money” participants. In the short term, you can expect a dip in turnover and a modest widening of bid‑ask spreads as market makers adjust to the new liquidity profile. Once the new share structure is settled, volume usually stabilises at a lower absolute level but at a higher dollar‑value turnover, because each trade now represents a larger capital commitment.

Trading implication

- Pre‑announcement: Anticipate a modest price rally on the “reverse‑split announced” bias, especially if the ratio is on the tighter (e.g., 10‑for‑1) side.

- Post‑approval: Expect a brief liquidity‑dry‑out in the first few sessions; stay tight on stops until the market absorbs the new share count.

- Medium‑term: If the consolidation clears the “penny‑stock” stigma and lifts the share price above HK $1, the stock may see improved institutional demand and a more sustainable trading volume, supporting a higher valuation multiple.

In short, while the exact consolidation ratio is still pending, the mechanics of a reverse split will initially thin the share‑base and curb volume, but the higher price level can ultimately enhance liquidity quality and broaden the investor base. Position accordingly: short‑term caution on volatility, medium‑term bias bullish if the post‑split price clears the low‑price barrier.