On the evening of May 14, Guolian Securities (601456. SH) announced the disclosure of the major asset restructuring plan and issued a resumption announcement, and the A-share shares will resume trading from the opening of the market on the 15th. After the resumption of trading on the 15th, Guolian Securities opened with a daily limit, and the daily limit price was closed to more than 8.2 million hands (nearly 9.5 billion yuan).
Titanium Media APP learned that before the acquisition of Guolian Securities, its controlling shareholder Guolian Group had spent a huge amount of money to auction the equity of Minsheng Securities at a high premium last year. Financial data show that the performance of Minsheng Securities in recent years is relatively outstanding as a whole, and it can be regarded as a high-quality asset. In contrast, Guolian Securities will fall into the dilemma of increasing revenue but not increasing profits in 2023, and it will lose money in the first quarter of 2024. The industry generally believes that after the acquisition of Minsheng Securities by Guolian Securities, the two brokerages can achieve better integration in complementing each other's advantages.
From 9.1 billion acquisitions to 100% holdings
When the former largest shareholder of Minsheng Securities, "Oceanwide", fell into a debt crisis, as one of its highest-quality assets, the 3.471 billion shares of Minsheng Securities once attracted market and regulatory attention.
On March 15, 2023, the equity auction of Minsheng Securities came to an end, and Guolian Group, the major shareholder of Guolian Securities, finally won, taking over nearly 3.5 billion shares of Minsheng Securities for 9.105 billion yuan, a premium of 55% over the starting price of 5.865 billion yuan. On December 13 of that year, the China Securities Regulatory Commission issued the "Reply on Approving the Change of Major Shareholders of Minsheng Securities Co., Ltd.", approving Guolian Group as a major shareholder of Minsheng Securities, and having no objection to Guolian Group's transfer of 3.471 billion shares of Minsheng Securities in accordance with the law.
With the settlement of the equity change and the official inclusion of Minsheng Securities under the Guolian Group, how the former "investment banking dark horse" will be integrated with Guolian Securities, a subsidiary of Guolian Group, has aroused speculation from all walks of life.
Last night's announcement gave the answer.
According to the information disclosed in the announcement, Guolian Securities intends to issue A shares to purchase 100% of the shares of Minsheng Securities held by 46 entities including Guolian Group and Shanghai Fengquanyu Enterprise Management Co., Ltd. At present, the audit and evaluation of the target company has not yet been completed, and the transaction price involved in the purchase of assets through the issuance of shares will be based on the evaluation results of the appraisal report issued by the asset appraisal agency in accordance with the provisions of the Securities Law and filed by the competent state-owned assets regulatory authority, and shall be determined by the parties to the transaction through negotiation. After friendly negotiation between the parties to the transaction, the issue price of the shares in this reorganization is the average trading price of A-shares in the 120 trading days before the pricing benchmark date, that is, 11.31 yuan per share.
At the same time, Guolian Securities intends to issue A-shares to no more than 35 specific investors to raise matching funds. The total amount of matching funds raised this time shall not exceed RMB 2 billion (including the principal number), and the number of A shares issued shall not exceed 250 million shares (including the principal number), and the final amount of funds raised and the number of shares issued shall be capped by the amount of funds raised and the number of shares issued by the Shanghai Stock Exchange and the registration decision made by the China Securities Regulatory Commission. After deducting intermediary fees and transaction taxes and fees, the matching funds raised in this transaction are intended to be used to develop Minsheng securities business.
On the evening of May 14, Times Publishing (600551. SH), Sophia (002572. SZ), Beijing Lier (002392. SZ) and other companies have successively announced that they intend to sell their shares in Minsheng Securities to Guolian Securities, and subscribe for the newly issued A shares of Guolian Securities with the underlying assets.
Or use Minsheng Securities to get rid of the development dilemma
According to the data, Minsheng Securities, established in 1986, originated in Zhengzhou, developed in Beijing, and later moved to Shanghai, and is one of the oldest veteran securities firms in China. 10 years ago, it was labeled as an "investment banking dark horse", and then it was hit hard by the investment banking business due to project violations.
At the end of 2016, Feng Henian, former Secretary of the Party Committee of the Shandong Supervision Bureau of the China Securities Regulatory Commission, joined Minsheng Securities, and its investment banking business once again sprung up. At that time, Feng Henian announced that from August 2021, it would take three years to land in the capital market and complete the goal of independent IPO listing.
In mid-2022, Feng Henian was taken away for investigation. At the beginning of 2023, Feng Henian was expelled from the party, his income confiscated and transferred to the procuratorate for review and prosecution in accordance with the law. With Feng Henian being investigated, nearly 3.5 billion shares of Minsheng Securities were auctioned, and its listing road has become more and more difficult.
It is worth noting that despite the changes at the top, this has not affected the rapid development of Minsheng Securities' investment banking business in recent years, precisely because its investment banking business has been at the forefront of the industry, and has also formed a market pattern of "three Chinas, one China and one people". In the past five years, Minsheng Investment Bank has ranked among the top in the industry in terms of the number of IPO passes, underwriting and sponsorship income and the number of projects under review. According to Wind statistics, 18 Minsheng Securities IPO projects will pass in 2023, ranking third in the industry in terms of the number of meetings; 20 companies were issued and listed, ranking fourth in the industry; Underwriting and sponsorship fee income ranked fourth in the industry. By the end of 2023, the number of IPOs under review ranked fifth in the industry.
In addition, the performance of Minsheng Securities has also been accelerating. According to the annual report data, from 2019 to 2021, the annual revenue of Minsheng Securities was 2.688 billion yuan, 3.62 billion yuan, and 4.726 billion yuan respectively; The corresponding net profit was 532 million yuan, 919 million yuan and 1.223 billion yuan. In 2023, the operating income of Minsheng Securities will be 3.798 billion yuan, a year-on-year increase of 50.05%, 2.531 billion yuan in 2022, the net profit will be 683 million yuan, a year-on-year increase of 209.04%, and the net profit in 2022 will be 221 million yuan.
In contrast, the performance of Guolian Securities in the past two years is unsatisfactory. In 2023, the company will fall into the dilemma of increasing revenue but not increasing profits, and its operating income will be about 2.955 billion yuan, an increase of 12.68% year-on-year; However, the net profit of 671.3 million yuan decreased by 12.51% year-on-year; In the first quarter of 2024, Guolian Securities was dragged down by the loss of its own business, and its revenue and net profit both declined, and there was a loss. In the first quarter of this year, the company achieved revenue of 173 million yuan, a year-on-year decrease of 74.44%, and a loss of 219 million yuan, a year-on-year profit turned into a loss.
It is foreseeable that after the acquisition of Minsheng Securities, Guolian Securities' own performance and scale can be improved to a certain extent.
The pace of brokerage mergers has accelerated
Titanium Media APP noticed that since the beginning of this year, there have been frequent equity changes in the industry. In addition to Guolian Securities and Minsheng Securities, on May 8, Zheshang Securities (601878. SH) announced that the company will participate in the auction of 449 million shares of Guodu Securities held by Guohua Energy Investment Co., Ltd.
The purchase of Guodu Securities shares this time is not the first time that Zheshang Securities has made a move. On March 29 this year, Zheshang Securities announced that it intends to transfer 4.7170%, 4.7170%, 3.7736%, 3.3089% and 2.6289% of the shares of Guodu Securities held by Chongqing Trust, Tianjin Chongxin, Chongqing Jiahong, Shenzhen Yuanwei and Shenzhen Zhongjun respectively, with a total of 19.1454%. After the successful transfer, Zheshang Securities will become the largest shareholder of Guodu Securities.
In addition to the above-mentioned brokerages, in recent years, including Ping An Securities and Founder Securities (601901. SH), Huachuang Securities and Pacific Securities are also rumored to have the possibility of mergers and acquisitions.
Industry insiders said that the mergers and acquisitions of securities companies are in line with the requirements of the Central Financial Work Conference to "support large state-owned financial institutions to become better and stronger". In recent years, China's financial regulators have repeatedly expressed their stance to encourage the creation of aircraft carrier-level head securities companies, that is, China's "super investment banks", through mergers and acquisitions of leading securities firms, in order to improve the status quo of "many but not big, big but not strong" in the domestic securities industry, and enhance China's comprehensive competitiveness in the international financial market. The mergers and acquisitions of securities companies are not only important to the securities industry, but also of great significance to the development of China's financial market and the implementation of strategic goals. (This article was first published on the Titanium Media APP, author|Yu Ying)
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