CFIC Introduction
Since last year, the equity transfer of trust companies has generally been "cold", and the equity transfer of some trust companies has been postponed many times due to "no one cares".
Original title: The overall valuation of trust equity has shrunk! Small and medium-sized shareholders frequently "discount" and exit
The equity of the trust company was also transferred. Dongguan Holdings recently disclosed that it intends to transfer about 22.21% of the equity of Dongguan Trust Co., Ltd. (hereinafter referred to as "Dongguan Trust") to Dongguan Road and Bridge Investment and Construction Co., Ltd. (hereinafter referred to as "Dongguan Road and Bridge").
Since last year, the equity transfer of trust companies has generally been "cold", and the equity transfer of some trust companies has been postponed many times due to "no one cares". Industry experts said that the trust industry is currently in a critical period of business transformation, and the overall valuation of trust companies' equity has declined. This trend may be difficult to reverse in the short term, and the phenomenon of minority shareholders transferring equity is expected to continue.
Dongguan Trust shares changed
Dongguan Holdings recently announced that in order to focus on its main responsibilities and main business, optimize the asset structure and improve the quality of assets, it intends to transfer about 22.21% of the equity held by Dongguan Trust to Dongguan Road and Bridge for about 1.428 billion yuan. After the completion of this transfer, Dongguan Holdings will no longer hold the equity of Dongguan Trust. The counterparty of this transaction, Dongguan Road and Bridge, is a wholly-owned subsidiary of Dongguan Transportation Investment Group Co., Ltd., the controlling shareholder of the company. According to the "Stock Listing Rules" and other relevant provisions, the equity transfer constitutes a connected transaction. Dongguan Holdings disclosed that the transaction price is based on the appraisal value of Dongguan Trust's shareholders' equity of 6,428,881,300 yuan on October 31, 2023, the evaluation base date, with a transfer ratio of 22.2069% and a corresponding transfer price of 1,427,655,200 yuan. According to the announcement, since 2009, Dongguan Holdings has invested about 1.574 billion yuan in Dongguan Trust, and has received cash dividends of about 148 million yuan from Dongguan Trust, which is about 1.425 billion yuan after offsetting, and the transaction price will be 1.428 billion yuan for this sale, which is slightly higher than the amount after offsetting. It is worth mentioning that Dongguan Holdings' previous announcement showed that from January to October 2023, Dongguan Trust's operating income was -633 million yuan, the realized fee and commission income was 209 million yuan, and the net profit loss was 564 million yuan. In addition, an announcement recently issued by Dongguan Holdings on impairment provision shows that because the recoverable amount of Dongguan Trust's equity held by Dongguan Holdings is lower than the book value of 1.828 billion yuan held by the equity at the end of 2023, the company has made an impairment provision of 400 million yuan for Dongguan Trust's long-term equity investment, which is expected to reduce Dongguan Holdings' net profit attributable to shareholders of listed companies by 311 million yuan in 2023. Talking about the purpose of this transaction, Dongguan Holdings believes that the current trust industry operating risks and market risks have increased. From the perspective of business development, in recent years, the supervision of the trust industry has maintained a strict general tone, and the supervision has guided business transformation, making business development more difficult, especially on March 20, 2023, the former China Banking and Insurance Regulatory Commission issued the Notice on Standardizing the Classification of Trust Business of Trust Companies, and the trust industry will officially begin to standardize the classification of business, and trust companies are facing the pressure of transformation to reshape their business structure. Dongguan Holdings said that the increase in industry risks has put forward higher liquidity requirements for trust companies, and according to regulatory provisions, trust company shareholders should replenish capital when necessary. Judging from the financial statements of Dongguan Trust, the performance of Dongguan Trust has been declining year by year. In this context, the continued holding of Dongguan Trust equity will bring great uncertainty to the company's future performance, and this transfer will help the company focus on its main business, optimize the company's asset structure, and improve the company's capital and resource utilization efficiency.
Equity "discount" transfers are frequent
In addition to Dongguan Trust, the shares of a number of trust companies have been listed and transferred at a "discount" recently. On January 30, 125 million shares of China Shipping Trust (accounting for 5% of the total share capital) were listed and transferred for the second time on the Beijing Equity Exchange, and the transferor was China CITIC Co., Ltd., with a reserve price of 269.55 million yuan, which was a 9% discount from the first listing price. According to the announcement of the Beijing Equity Exchange, the transfer information will be disclosed until April 19, 2024. China Coal Energy Group Co., Ltd. has been listed and transferred 100 million shares of China Coal Insurance (accounting for 8.2% of the total share capital) and 3.3921% of the shares of China Chengxin Trust since January 11, and the transfer reserve price has been reduced to 91.55232 million yuan and 702.33552 million yuan respectively, which is nearly 9% off the reserve price listed for transfer in September last year. In addition, the transfer project of 3.09% equity (204 million shares) of CEFC Trust held by Dalian Port Group Co., Ltd. will be promoted on the Beijing Equity Exchange on July 10, 2023, and the price will be negotiable, and the information will be disclosed until July 9, 2024. According to the project information, the overall assets of CEFC Trust are of high quality, and although some of the business projects are exposed to risks, the overall flaws are not concealed, and the Dalian Municipal Government and the financial authorities are currently leading the management and resolution of risks. The reporter noticed that the equity transferors of a number of trust companies have state-owned backgrounds behind them. For example, the equity transferor of China Shipping Trust is China CITIC, and the equity transferors of China Chengxin Trust and Western Trust are China Coal Energy Group and Rainbow Group respectively. Shuai Guorang, a researcher at usufruct trust, said that there may be three reasons why small and medium-sized shareholders of many trust companies want to withdraw: first, small shareholders need to optimize their capital layout and focus on their main business due to their own strategic adjustments; second, the trust industry is in a period of deep transformation, and the operating performance of many trust companies has declined significantly, which may not meet the company's strategic investment requirements; third, in terms of the specific affairs of trust companies, some small shareholders have relatively weak voice and cannot participate in the operation more deeply. "Market clearance is the inevitable result of industry development and market competition, which is conducive to the long-term and healthy development of the trust industry. Shuai Guo said.
Valuations are shrinking and difficult to change in the short term
The reporter inquired about the data of the Beijing and Shanghai property rights exchanges and found that there are still a number of trust companies including China Chengxin Trust, Western Trust and China Overseas Trust looking for buyers. However, the equity targets of some trust companies are not very popular in the market, and even encounter the embarrassing situation of multiple transfers, postponements, and price reductions, among which the equity of Western Trust has been listed for transfer four times. Data from the Ali auction platform shows that the market is not active in the equity trading of trust companies. In recent years, a number of trust companies such as Zhongyuan Trust, CEFC Trust, Beijing Trust and Sichuan Trust have conducted equity auctions, but all of them ended in unsuccessful bids. At present, China Chengxin Trust, Western Trust and China Shipping Trust, which are still auctioning online, have also made it clear that after the expiration of the disclosure announcement, if the intended transferee is not collected, the information disclosure content will not be changed, and the cycle will be extended by five working days until the intended transferee is collected. "It is the norm for the trust equity transfer market to be cold, and in the current market environment, the stock prices of a large number of listed financial institutions have been broken. Yu Zhi, a researcher at the Yongyi Financial Trust Research Institute, said that the trust industry is currently in a critical period of business transformation, most trust companies are affected, performance pressure is greater, and the industry stock risk continues to be exposed, so the overall valuation of trust company equity has declined, which has a greater impact on the equity value of trust companies held by small and medium-sized shareholders. In the short term, this trend may be difficult to reverse, and the phenomenon of minority shareholders transferring equity may continue. "Compared with the 'hot' in previous years, the equity of trust companies has obviously 'fallen out of favor' in recent years. An industry expert believes that the value of the trust company's equity depends on the value of the license and the company's operating conditions. In particular, those trust companies with stable operation of trust assets, good self-operated assets, stable operation in the early stage, and transparent and controllable potential non-performing projects are still attractive in terms of equity.
Source of this article: Economic Information Daily
Author: Zhong Yuan
WeChat editor: Liu Sile
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