The net issuance caused controversy, and the bank of Lanzhou rose again on the second day of listing

China Times (www.chinatimes.net.cn) reporter Fu Bixiao trainee reporter Lu Mengxue reported in Beijing

As the first bank stock in A-share to break the net issue, Lanzhou Bank rose and fell on the first day of listing.

As of the close of trading on January 17, Bank of Lanzhou quoted 5.14 yuan, up 43.98%, with a turnover of 537 million yuan and a total market value of 29.276 billion yuan.

The financial data disclosed in the prospectus of Bank of Lanzhou and the 2021 performance forecast show that the performance of Bank of Lanzhou has grown steadily in recent years, and the performance of 2021 has grown rapidly, and it is expected to achieve a net profit attributable to the mother of 1.527-1.637 billion yuan, an increase of 2.29%-9.66% year-on-year; it is expected to achieve a net profit attributable to the mother of 15.87-1.698 billion yuan after deducting non-recurring gains and losses, an increase of 79.38%-91.85% year-on-year.

After the net issuance, it will meet the listing limit

According to the prospectus, Lanzhou Bank is the first local joint-stock commercial bank with independent legal person status in Gansu Province, and is a joint-stock commercial bank initiated by local finance, enterprise legal persons and natural persons on the basis of the joint-stock system transformation and asset restructuring carried out on the basis of the 56 urban credit cooperatives in the former Lanzhou City.

In 2016, Bank of Lanzhou submitted an IPO prospectus to the CSRC, which was successfully approved in September 2021 and listed on the main board of the Shenzhen Stock Exchange on January 17, 2022, making it the first bank stock to be listed in 2022.

According to the prospectus, the number of shares issued by Lanzhou Bank in the initial public offering is about 570 million shares, the issue price is 3.57 yuan per share, and the expected amount of fundraising is 2.033 billion yuan.

It is worth noting that Lanzhou Bank's net issuance this time is also the first "net breaking" bank stock issued by A shares. In December 2021, the prospectus released by Lanzhou Bank showed that the net assets per share of Lanzhou Bank after the issuance were 4.33 yuan, corresponding to the price-to-book ratio of 0.82 times, which was higher than the issue price of 0.76 yuan, which meant that the bank's unlisted shares had been "broken".

Although it is a net-breaking offering, the data shows that the diluted price-to-earnings ratio of Lanzhou Bank in 2020 corresponding to the issue price is 22.97 times, which is 8.02 times higher than the average price-earnings ratio of comparable companies.

In this regard, The Bank of Lanzhou responded to the media that if calculated by the performance of 2021, the price-earnings ratio of the bank's issuance is only about 12 times, which is basically on the same level as other banks listed in recent years.

However, investors do not seem to be moved by the "leak- and leak-picking" opportunities that may be brought about by the net issuance. According to the results of the initial public offering of shares, the number of abandoned shares of Lanzhou Bank exceeded 3.6 million shares, with an amount of more than 12.8587 million yuan, which is at a high level among similar institutions.

Relevant industry insiders said that the abandonment of new stocks is generally related to the overall low price of the stock market, the lack of confidence of shareholders in the stock and the reasons for the capital chain of the winners.

However, on the morning of January 17, The Bank of Lanzhou rose to a limit.

Bank of Lanzhou said that all the funds raised from its offering will be used to enrich the capital after deducting the issuance fee.

The 2021 performance is expected to increase significantly

In the 2021 British "Banker" magazine "Global Top 1000 Banks" list, Lanzhou Bank ranked

Ranked 324th, up 35 places from the previous year.

Bank of Lanzhou made an estimate of 2021 results in the prospectus, saying that Bank of Lanzhou expects operating income of 7.815-7.932 billion yuan in 2021, an increase of 7.00%-8.60% year-on-year; expected to achieve net profit of about 1577-1.687 billion yuan, an increase of 2.90%-10.05% year-on-year; expected to achieve net profit attributable to owners of the parent company of 15.27-1.637 billion yuan, an increase of 2.29%-9.66% year-on-year. It is expected to achieve net profit attributable to owners of the parent company after deducting non-recurring gains and losses of 1.587-1.698 billion yuan, an increase of 79.38% to 91.85% year-on-year.

In fact, the performance growth of Bank of Lanzhou in recent years has been relatively stable.

The data shows that in 2018, 2019 and 2020, the operating income of Lanzhou Bank was 6.800 billion yuan, 7.618 billion yuan and 7.304 billion yuan respectively; the net profit attributable to the mother was 2.248 billion yuan, 1.464 billion yuan and 1.493 billion yuan, respectively.

In the first three quarters of 2021, Bank of Lanzhou has achieved operating income of 5.982 billion yuan, an increase of 30.75% over the same period of the previous year; net profit attributable to the mother was 1.254 billion yuan, an increase of 108.86% over the same period of the previous year, and the operating performance was significantly improved over the same period last year.

At the same time as the performance growth, the credit assets of Lanzhou Bank have grown steadily, and the asset structure has been optimized significantly. In the first three quarters of 2021, loans and advances were issued for 208.609 billion yuan, an increase of 10.37% over the end of 2020, accounting for 52.06% of total assets; and deposits were absorbed of 310.346 billion yuan, an increase of 8.37% over the end of 2020.

In terms of deposit stability, Bank of Lanzhou has also maintained a good momentum. Public information shows that Lanzhou Bank's funds mainly come from deposits, and the proportion of the bank's total deposits in total financing has remained above 85% in recent years. From the perspective of deposit structure, as of the end of 2020, the bank's personal deposits accounted for 64.87% of total deposits, and fixed deposits accounted for 59.01%, and the deposit stability was better.

In terms of asset quality, the non-performing loan ratio of Lanzhou Bank has also declined steadily in the past three years, and the asset quality has steadily improved. According to the data, as of June 30, 2021, the bank's non-performing loan ratio was 1.51%, down 0.1 percentage points from the end of 2020 and 0.56 percentage points from the end of 2019.

As a local corporate bank, Lanzhou Bank has strong business competitiveness in Gansu Province and occupies an important position in the local financial system. According to the "Monthly Report on Monetary and Credit Statistics of Financial Institutions in Gansu Province" of the Lanzhou Central Branch of Chinese Min bank, as of June 30, 2021, Lanzhou Bank ranked first in the loan balance and deposit balance among small and medium-sized commercial banks in Gansu Province, accounting for 9.96% and 13.44% of the market share respectively.

In addition, Lanzhou Bank has a relatively high proportion of state-owned legal person shares in its equity structure, which provides more support for it in terms of capital replenishment, business expansion and credit risk resolution. According to the prospectus, as of July 31, 2021, there were 27 state-owned shareholders of the issuer of Lanzhou Bank, holding 32.4394% of the total share capital of the issuer.

Industry analysts believe that after the issuance and listing of A-shares, Lanzhou Bank will be further enhanced in terms of market position and brand value, and its comprehensive competitiveness will be further enhanced.

Editor-in-Charge: Meng Junlian Editor-in-Chief: Ran Xuedong