Zhongtian Financial's 7 billion deposit may be wasted, and the bankruptcy reorganization procedure has been opened before

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2024-05-10 15:30Posted in Beijing, creator in the field of finance and economics

China Life Insurance became a turning point in the fate of Zhongtian Financial.

01

Risk of loss of deposit

On May 9, Zhongtian Financial (000540. SZ) announced that it had previously paid a deposit of 7 billion yuan for the acquisition of Huaxia Life's equity, but now the transaction has not been completed, and the company will face a significant risk of losing the deposit.

Announcement on the termination of major asset restructuring

According to the announcement, on April 18 this year, the managers of Zhongtian Financial Company sent letters to Beijing Millennium Shihao and Beijing Zhongsheng Century respectively, requesting the return of the 7 billion yuan deposit and the corresponding capital occupation fee they had paid, but no response has been received from the two so far.

For Zhongtian Financial, China Life Insurance has become a turning point in its fate.

In November 2017, Zhongtian Financial purchased 21%-25% of the equity of China Life Insurance through Beijing Millennium Shihao and Beijing Zhongsheng Century, and the equity transaction price did not exceed 31 billion yuan, and Zhongtian Financial paid a deposit of 7 billion yuan at the beginning of the following year.

However, the subsequent transaction was delayed, and the 7 billion yuan deposit gradually became the financial pressure of Zhongtian Financial.

In July 2020, the China Banking and Insurance Regulatory Commission (CBIRC) announced the implementation of a receivership of China Life, which was postponed for another year after one year.

In November 2023, the overall acquisition of ChinaAMC Life's insurance business and the corresponding assets and liabilities was approved, and the purpose of Zhongtian Financial's acquisition of the equity of China Life Insurance could not be achieved. 

In recent years, dragged down by the above-mentioned acquisitions, Zhongtian Financial's performance has continued to decline or even lose money, while its financial liquidity is tight and its debt problems have become more and more obvious.

On June 30, 2023, due to the closing price of less than 1 yuan for 20 consecutive trading days, Zhongtian Financial officially terminated its listing and delisted.

In fact, as early as before the delisting of Zhongtian Financial, the issue of the 7 billion yuan deposit attracted the attention of regulators.

Previously, the Shenzhen Stock Exchange questioned Zhongtian Financial in the letter of concern: in 2017, it planned to purchase the equity of Huaxia Life Insurance to pay a deposit of 7 billion yuan, and the relevant deposit has not been recovered, why not make an impairment provision?

Zhongtian Financial replied that although the company and the counterparty have reached a preliminary transaction plan, they are still in the stage of reporting, communicating, consulting and refining the major matters involved in the plan with the relevant regulatory authorities, and have not yet formed a final plan.

In May 2023, Zhongtian Financial started the bankruptcy reorganization procedure and recently released the adjustment plan for the rights and interests of investors in the reorganization case.

02

Insolvent

According to the official website, Zhongtian Financial was founded in 1978 and listed on the Shenzhen Stock Exchange in February 1994, making it the first listed company in Guizhou Province.

Zhongtian Financial is one of the large-scale and comprehensive private enterprises in Guizhou Province, with first-class real estate development qualifications, and its business scope is mainly real estate development, insurance, securities and other businesses.

The official website of Zhongtian Finance

From the perspective of equity structure, the controlling shareholder of Zhongtian Financial is Jin Shiqi International Holding Co., Ltd., with a shareholding ratio of 38.82%, and the actual controller of the company is Luo Yuping.

Equity Penetration Chart

In recent years, affected by factors such as the decline in the prosperity of the real estate industry, Zhongtian Financial's financial expenses and non-recurring gains and losses based on asset impairment and credit impairment have seriously eroded profits, and the company has suffered large losses and weak profitability.

It is worth noting that the accounting firm has audited the financial data of Zhongtian Financial in recent years and issued an audit report with a qualified opinion.

In 2023, Zhongtian Financial will achieve a total operating income of 15.161 billion yuan, a year-on-year increase of 79.51%; The attributable net profit was -18.144 billion yuan, a year-on-year increase of -13.05%.

Net profit attributable to the parent company

As of the end of 2023, Zhongtian Financial has total assets of 123.935 billion yuan, total liabilities of 153.105 billion yuan, net assets of -291.71, and an asset-liability ratio of 123.54%.

Since 2022, Zhongtian Financial has become insolvent.

Financial leverage

The analysis of the debt structure of "Small Debt Market Watch" found that Zhongtian Financial is mainly based on non-current liabilities, accounting for 53% of the total liabilities.

As of the same reporting period, Zhongtian Financial had non-current liabilities of 81.632 billion yuan, of which long-term interest-bearing liabilities totaled 119 million yuan.

In addition, Zhongtian Financial also has current liabilities of 71.473 billion yuan, mainly non-current liabilities due within one year, and its short-term liabilities totaled 32.16 billion yuan.

Compared with the scale of short-term debt, Zhongtian Financial liquidity is very tight, and its monetary funds on the account are only 5.946 billion yuan, which is only one-fifth of short-term debt, and the company faces a huge risk of short-term debt repayment.

In terms of standby funds, as of the end of March 2022, Zhongtian Financial Bank had a total credit line of 24.791 billion yuan and an unused credit line of 3.385 billion yuan, which can be seen that its financial flexibility is not good.

Bank credit

On the whole, Zhongtian Financial has 32.279 billion yuan of rigid debt, mainly long-term interest-bearing debt, with an interest-bearing debt ratio of 21%.

From the perspective of financing channels, as a listed company, Zhongtian has diversified financial channels, in addition to bond issuance and borrowing, it also finances through equity, trust, leasing, accounts receivable and equity pledge.

Among them, in terms of equity pledge, as of December 2022, Jin Shiqi Holdings, the controlling shareholder of Zhongtian Financial, has pledged 1.875 billion shares, accounting for 68.94% of its shares, with a high equity pledge rate.

From the perspective of financing structure, Zhongtian Finance's non-bank loans and trust financing account for more than 60% of the financing balance, and the proportion of non-standard financing is relatively high, which not only has high financing costs, but also has poor stability of financing channels, and there is a possibility of certain investment losses in the future.

In fact, since the famous "snake swallowing elephant" acquisition case in 2017, Zhongtian Financial has fallen into a vortex of insufficient liquidity and high short-term debt repayment risk.

In that year, in order to raise funds for the acquisition, Zhongtian Financial wanted to sell the real estate business it had started.

In March 2018, Zhongtian Financial announced that it planned to sell 100% of the equity of its subsidiary Zhongtian Urban Investment to Jinshiqi Industrial Investment, with a transaction price of 24.6 billion yuan; In May of the same year, Zhongtian Urban Investment completed 100% of the industrial and commercial change registration procedures and successfully transferred the ownership to the name of Jinshiqi Industrial Investment.

At the same time, in order to completely divest the real estate business, Zhongtian Financial further transferred 100% of the equity of Zhongtian Enterprise Management to Guizhou Tianchen Real Estate for a transaction consideration of 4.62 billion yuan.

It is worth mentioning that Zhongtian Financial also sold 70 luxury cars such as Porsche, Bentley, Ferrari and Lamborghini under the name of the company and Guiyang Financial Holdings, which were originally worth 70 million yuan and sold for less than 20 million yuan.

At the beginning of 2018, Zhongtian Financial paid a deposit of 7 billion yuan for the acquisition, but at the end of the year, it suddenly terminated the equity transfer agreement and asset transfer agreement signed with Jinshiqi Industrial Investment and Guizhou Tianchen to recover the relevant equity and assets.

In the year of Zhongtian Finance's "tossing", its profitability declined, cash flow continued to flow out, and liquidity tightened and other problems became more and more apparent.

03

"The richest man in Guizhou"

In the early years, Luo Yuping devoted himself to the construction of construction projects, and later began to contract engineering projects, and after having the original capital, he founded Jin Shiqi Holdings in 2005.

In 2007, Luo Yuping settled in Guizhou's first listed company, "Century Zhongtian", which was later renamed Zhongtian Urban Investment.

After the success of the backdoor, the development of Zhongtian Urban Investment has entered the fast lane, because Luo Yuping has created many star real estate projects, crowning all Guizhou real estate enterprises, so he is also nicknamed "Luo Bancheng".

Luo Yuping, Chairman of the Board of Directors of Jin Shiqi Holdings

Zhongtian Urban Investment, which originally started with real estate business, ushered in a turning point in the company's development in 2015.

In fact, as early as 2013, Zhongtian Urban Investment had a layout in the banking industry, and it invested 94.43 million yuan in Bank of Guizhou and then invested in Bank of Guiyang.

In 2015, Zhongtian Urban Investment officially launched its financial strategy, and since then, it has successively laid out financial industries such as banking, securities, insurance, private equity funds, and inclusive finance, and has successively won a number of financial licenses, and changed its name to Zhongtian Financial in 2017.

After the renaming, Zhongtian Financial is positioned as the first listed company of a private financial group, forming a whole industry chain financial system with insurance as the leader, industry as the support, and securities, funds, private banks and other diversified financial sectors as the auxiliary wings.

While expanding his business territory, Luo Yuping became the "richest man in Guizhou".

In the 2019 Hurun Report, Luo Yuping ranked first in Guizhou and 263rd in the country with a value of 13 billion yuan.

However, due to the acquisition of China Life Insurance, Zhongtian Financial was dragged into a quagmire.

The complexity behind the acquisition is far beyond imagination, not only because it involves the approval of financial license assets by multiple levels of regulators, but more importantly, because of the special background and history of China Life.

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