Weir shares once again boldly donated shares for charity, and there were continuous doubts about the disguised reduction of holdings and detour reductions
"China Science and Technology Investment", Zhang Ting, He Ziyan
A few days ago, Weir shares (603501. SH) issued an announcement on the plan of the controlling shareholder acting in concert to donate part of the company's shares free of charge, announcing that the controlling shareholder acting in concert Shaoxing Weihao Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as "Shaoxing Weihao") plans to donate 15 million shares of the company held by it to the Education Foundation of Ningbo Oriental University of Technology free of charge, accounting for 1.23% of the company's current total share capital. Based on the closing price of 100.81 yuan per share on the day of the announcement, Shaoxing Weihao donated shares to the Education Foundation of Ningbo Oriental University of Technology with a value of more than 1.512 billion yuan. On the day of the announcement, Weir shares were questioned by the capital market for disguised reduction.
According to public information, Weir was established in 2007 and was initially engaged in the design, sales and distribution of power components and power ICs. The company has expanded its business footprint through internal establishment and extended mergers and acquisitions, providing solutions such as image sensors, analog and touch screens and displays, and gradually transformed into a world-leading platform-based semiconductor design company. In 2017, Weir shares were listed on the Shanghai Stock Exchange.
Donated 1.5 billion yuan to run a school
Weir shares said in the announcement that the controlling shareholder and concerted action person Shaoxing Weihao plans to donate 15 million shares of the company it holds to the Ningbo Oriental University of Technology Education Foundation free of charge, in order to support the development of education, and to fund the Ningbo Oriental University of Technology Education Foundation to carry out charitable activities.
According to the company's investigation data, the actual controller of Shaoxing Weihao is also the actual controller and chairman of Weir shares, Yu Renrong. According to the official website of the grantee's fund, the Ningbo Oriental University of Technology Education Foundation is the main body of the endowment fund of Ningbo Oriental University of Technology (tentative name). The proceeds from the donation will be used to support the development of Ningbo Eastern University of Technology, including discipline construction, scientific research improvement, education and teaching, talent training and campus construction. In addition, Ningbo Oriental University of Technology is also a new type of research university initiated by Yu Renrong as the initiator, established by Ningbo Yu Renrong Education Foundation (hereinafter referred to as "Yu Renrong Education Foundation"), and supported by Zhejiang Province and Ningbo Municipal Government.
Under the close relationship chain, many investors believe that the above-mentioned practice of Weir shares is a fancy reduction method by shareholders of listed companies. There are a lot of remarks in the stock bar such as "left hand to right hand", "donate to yourself", "every time you donate, the stock price is high, ignoring the interests of small shareholders", "tax reduction and tax refund arbitrage" and so on.
In fact, this is not the first time that Shaoxing Weihao has donated to the foundation established by Ningbo Eastern University of Technology. In June 2020, Yu Renrong proposed to donate a high-level university in his hometown of Ningbo, in October 2023, Yu Renrong established the Yu Renrong Education Foundation, and in November 2021, the Yu Renrong Education Foundation invested 30 billion yuan in the infrastructure construction, university operating expenses and school funds of Ningbo Eastern University of Technology. On June 26, 2023, the Education Foundation of Ningbo Eastern University of Technology was officially established. In February and December 2023, Shaoxing Weihao donated 10 million shares to Yu Renrong Education Foundation and Ningbo Oriental University of Technology Education Foundation, with a market value of more than 800 million yuan and 1 billion yuan respectively, all of which were used to fund the construction and development of private universities.
On the evening of the day of the donation announcement, Weir once again issued a supplementary announcement explaining that the recipient has no relationship with the company and the company's controlling shareholders, directors, supervisors and senior managers. And the grantee promises that the donated shares of Weir shares will be combined with the controlling shareholder of Weir shares to calculate the reduction amount. Despite this, there are still investors who question that the move of the controlling shareholder of Weir shares is to use the charity bypass to reduce their holdings and reduce them in disguise.
In response to investors' doubts, the Investor Service Department of Weir Co., Ltd. once told the media that "there is no disguised reduction of holdings." The University Foundation is a non-profit organization, and the use of the foundation's funds is promoted in accordance with the progress of the university's construction, and is supervised by the Ministry of Education and the Ministry of Civil Affairs. ”
Fu Jian, director of Henan Zejin Law Firm, told the reporter of "China Science and Technology Investment" that according to the available information, it cannot be judged that Weir shares are reducing their holdings in disguise. On the one hand, it is more common for listed companies to donate equity to charitable foundations, and Yu Renrong has also made many donations; on the other hand, it can be seen in the announcement of Weir shares that the recipient has no relationship with the company and its controlling shareholders and other key personnel, and the shares donated by the donee will also be combined with the controlling shareholder of Weir shares to calculate the reduction amount. Since Ningbo Oriental University of Technology was founded by Yu Renrong, the controlling shareholder and actual controller, and Ningbo Yu Renrong Education Foundation and Ningbo Oriental University of Technology Education Foundation were the main bodies of preparation and fundraising for the establishment of Ningbo Oriental University of Technology, this move was suspected of reducing its shares in disguised form through charitable donations, but it could not be determined that it used the donation to reduce its holdings in disguise.
In recent years, there has been an increasing number of cases of shareholders of listed companies donating equity to charitable foundations, and Fu Jian believes that donating equity for charity is not uncommon in the capital market, as long as the donation is out of love for charity, does not have the idea of reducing shareholdings and fulfills the obligation of disclosure, share donation is allowed within a reasonable scope and extent. As an investor, we should look at it rationally, the reduction is not necessarily a negative event, the key is to look at the company's business development, under the premise of legal compliance, shareholders can legally reduce and increase their holdings, investors should still improve their information screening ability, do not be blinded by the so-called good reduction of holdings and cash. At the same time, major shareholders should strengthen information disclosure to ensure market transparency and fairness.
"In addition, the behavior of shareholders of listed companies to reduce their holdings in a fancy way has clear limits and legal provisions, and companies should not think of reducing their shareholdings in disguise through unreasonable and illegal means to reduce their own responsibilities and obligations, which is not a long-term plan for the development of the company, and will also subject the company to legal sanctions," Fu Jian further added.
For the market more and more of a variety of illegal shareholding reductions, Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, told the "China Science and Technology Investment" reporter that the behavior of shareholders of listed companies should be concerned and regulated. In the current capital market environment, investors need more transparency and public information to understand the behavior of shareholders to reduce their holdings. If there are obvious violations such as disguised shareholding reduction or detour reduction, the regulator should strengthen supervision, regulate the shareholding reduction behavior of shareholders, and protect the legitimate rights and interests of investors. At the same time, investors also need to look at shareholders' shareholding reduction rationally, and do not over-interpret and panic, so as to maintain the stability and healthy development of the market.
A few days ago, the China Securities Regulatory Commission (CSRC) also issued the "Opinions on Strengthening the Supervision of Listed Companies (Trial)" (hereinafter referred to as the "Opinions") to further regulate reasonable shareholding reduction and strictly crack down on illegal shareholding reduction. The "Opinions" put forward four specific requirements, namely, comprehensively improving the system of rules for reducing shareholdings, strictly regulating the behavior of major shareholders in reducing shareholdings, effectively preventing detour reductions, and severely cracking down on all kinds of illegal shareholding reductions, and "linking" the shareholding reductions with the net breaking, breaking, and dividend distribution of listed companies; strictly supervising the behavior of detouring shareholding reduction through divorce, pledge liquidation, refinancing and lending, securities lending and selling, etc.; and ordering the violating entities to repurchase the shares reduced in violation of regulations and pay the price difference.
Under the pressure of performance and stock price, the rationality of share donation was questioned
Behind the suspicion that Weir shares are reducing their holdings in disguise, it may be related to its performance and poor performance in the secondary market.
In recent years, the share price of Vail shares has continued to decline. In 2021, the share price of Weir shares once rushed to a high of 345 yuan / share, and closed at a high of 341.56 yuan / share, with a total market value of nearly 300 billion yuan. At present, the share price of Weir shares has fallen below 100 yuan per share, with a market value of 117.7 billion yuan. From the perspective of stock price, Weir shares in December last year and the time node of this donation are the relative highs of its stock price, which also arouses investors' suspicion of reducing its shares, believing that its donation at a high point is detrimental to the interests of small and medium-sized investors. After the announcement of the donation, the share price of Weir shares has been falling. As of April 3, the closing price of Weir shares was 96.97 yuan per share, down nearly 72% from its closing high.
In addition, in the second half of 2021, the share price of Weir shares fluctuated and adjusted, and entered a downward channel in 2022. From September to December 2021, Yu Renrong reduced his holdings of 7.9 million shares in total, cashing out about 1.815 billion yuan at one time, and from June to July 2021, Yu Renrong and his concerted actor Yu Xiaorong reduced their holdings of 4.88 million "Weier convertible bonds" and cashed out 488 million yuan.
In the past two years, the operating performance of Weir shares has declined sharply one after another. The performance report shows that in the first three quarters of 2021-2022 and 2023, the operating income of Weir shares will be 24.104 billion yuan, 20.078 billion yuan and 15.081 billion yuan respectively, a year-on-year increase of 21.59%, -16.7% and -1.96% respectively, and the net profit attributable to shareholders of listed companies will be 4.476 billion yuan, 990 million yuan and 368 million yuan respectively, a year-on-year increase of 65.41%, -77.88% and -82.86%.
In addition, the operating pressure of Weir shares is also reflected in the inventory backlog. In 2022, the inventory impairment of Weir shares increased from 180 million yuan in 2021 to 1.359 billion yuan, and the inventory turnover days also surged from 86.98 days in 2018 to 273.66 days in 2022. In the first three quarters of 2021-2022 and 2023, the inventory of Weir shares reached 8.781 billion yuan, 12.356 billion yuan and 7.552 billion yuan respectively, a year-on-year increase of 66.51%, 40.71% and -46.49% respectively, accounting for 43.27%, 63% and 41.2% of current assets respectively. Although inventory pressure eased in the third quarter of last year, the proportion of inventory was still at a high level.
The company's performance has also made many investors think that Shaoxing Weihao's repeated donations are unreasonable. Some investors believe that in addition to the relatively high performance of Weir shares in 2020-2021, its cumulative net profit income from 2017 to 2019 is only 748 million yuan, and a share donation will cost 800 million yuan. In 2022 and the first three quarters of 2023, the net profit of Weir shares will only be 990 million yuan and 370 million yuan. Since 2023, the amounts donated by Shaoxing Weihao three times are 800 million yuan, 1 billion yuan, and 1.5 billion yuan respectively. In addition, in the first three quarters of 2023, the monetary funds of Weir shares will be 6.065 billion yuan, and the corresponding long-term and short-term borrowings will be 5.964 billion yuan. In addition, Weir shares are also financed by pledging shares. As of March 18, the controlling shareholders of Weir shares and their concerted actors have pledged a total of 232 million shares, accounting for 51.76% of their shareholdings. Under the pressure of the semiconductor market, the decline in the profitability of Weir shares, and the financial constraints, there are constant doubts about whether the donation behavior of the controlling shareholder is reasonable and whether it will have an impact on the long-term operation and development of the listed company.
Despite the increasing pressure of operation and public opinion, Weir has not wavered in its plan to donate shares to build the school. On March 26, Weir shares issued a reminder announcement on the transfer of some shares donated by the controlling shareholder acting in concert free of charge, and the change in the shareholding ratio of the controlling shareholder and its concerted action person exceeded 1%, Shaoxing Weihao has completed the transfer of shares of the company donated to the Oriental Institute of Technology Foundation, and Shaoxing Weihao reduced its shareholding ratio from 8.1546% to 6.0976% due to the donation of part of the company's shares and the increase in the company's share capital, with a change ratio of 2.057%.
The reporter sent a letter to Weir shares on issues such as share donation and business performance, but as of press time, no reply has been received.