21 Century Economic Report reporter Li Lanqing and intern Di Ruoyu Shanghai report After the price of Zhongtian Urban Investment was "cut in half", Zhongtian Financial (SZ: 000540), with hundreds of billions of debts, sold Zhongtian Urban Investment and the road to recovery has changed again.
Recently, Zhongtian Financial announced that it has not yet received the 100% equity transferee from Zhongtian Urban Investment Group Co., Ltd. (hereinafter referred to as "Zhongtian Urban Investment") Jiayuan Chuangsheng Holding Group Co., Ltd. (hereinafter referred to as "Jiayuan Chuang") as agreed in the agreement Sheng") and Shanghai Jiezhong Enterprise Management Center (Limited Partnership) (hereinafter referred to as "Shanghai Jiezhong") will provide a 15-day grace period for the second equity transfer of 2.959 billion yuan.
On December 20, 2021, Zhongtian Financial passed the resolution to sell 100% of the equity of Zhongtian Urban Investment at the second extraordinary general meeting of shareholders. The relevant agreement stipulated that the equity transferee should pay the second equity transfer payment within 10 working days after the agreement was reviewed and approved by the shareholders' meeting. However, until January 4, 2022, the transferee failed to pay the relevant payment as scheduled. , Zhongtian Financial provided it with a 15-day grace period.
is calculated based on 15 calendar days. The grace period for the second equity transfer payment has expired on January 20, 2022, but Zhongtian Financial has not announced receipt of the relevant payment, which means that the transferee Fang Jiayuan Chuangsheng and Shanghai Jiezhong have already Breach of contract.
The Difficult Transformation Road to “De-Real Estate”
Since 2014, with the implementation of Guizhou Province’s “Introducing Capital into Guizhou” strategy, Zhongtian Financial has begun to promote the layout of the financial industry and has also embarked on the road to “De-Real Estate” . In 2015, Zhongtian Financial acquired a controlling stake in Overseas Securities (now Zhongtian Guofu Securities) through a public auction, and within the next year, it successively acquired 51% of the equity of Zhongrong Life Insurance and became the largest shareholder.
In 2017, the company officially changed its name from "Zhongtian Urban Investment Group Co., Ltd." to "Zhongtian Financial Group Co., Ltd.". In 2018, Zhongtian Financial proposed to divest its real estate business but ultimately failed. At that time, Zhongtian Financial believed that the current development of the real estate business was relatively slow and the profitability of profit growth was weakened. Moreover, under the national macro-control of the real estate industry, the relevant financial regulatory agencies had comprehensively tightened various policies in the real estate industry, which had a negative impact on the development of the real estate business. A certain amount of pressure. In the view of Zhongtian Financial, it is difficult to help the company achieve leapfrog development simply by relying solely on the organic growth of existing assets and businesses.
Regarding the reasons for divesting the real estate business, Zhongtian Financial stated many times in the announcement that this move will help optimize the financial structure and asset structure, enhance asset liquidity, and help the company concentrate its capital advantages and focus on the development of financial business.
Zhongtian Urban Investment has always been the core wholly-owned subsidiary of Zhongtian Financial .
Judging from the revenue structure of Zhongtian Financial, since 2018, the revenue from the real estate business operated by Zhongtian Urban Investment has always accounted for more than 75%. From 2018 to 2020 and the first half of 2021, Zhongtian Financial recorded real estate business income of 12.96 billion yuan, 10.955 billion yuan, 5.434 billion yuan, and 4.07 billion yuan respectively, accounting for 91.7% and 87.1% of total revenue respectively. , 76.18%, 81.71%, and the gross profit margins during each reporting period were 36%, 39.82%, 44.88%, and 33.87% respectively.
From the perspective of asset size proportion, as of the end of August 2021, Zhongtian Urban Investment's total assets and net assets were 46.31 billion yuan and 7.242 billion yuan respectively, accounting for approximately 28.94% and 28.94% of Zhongtian Financial's total assets and net assets respectively. 33.83%.
After Zhongtian Financial announced the divestment of Zhongtian Urban Investment, Oriental Jincheng International Credit Rating Co., Ltd. (hereinafter referred to as "Oriental Jincheng") announced its concern. Oriental Jincheng believes that Zhongtian Urban Investment is the core subsidiary of Zhongtian Financial. It accounts for a relatively high proportion of its assets, revenue and profits. After the equity transfer is completed, Zhongtian Urban Investment and its subsidiaries will no longer be included in the consolidated statements of Zhongtian Financial. After the small amount of real estate assets remaining in the body are sold, Zhongtian Financial will no longer engage in real estate development business. Its future business will mainly include financial services such as insurance, securities, and funds, as well as modern services such as conferences, exhibitions, hotels, education, and sports. Industry. This matter is expected to have a greater impact on Zhongtian Financial's future revenue and profits, and will also have an impact on Zhongtian Financial's credit level.
However, as the overall financing of the real estate industry tightens and sales collections slow down in 2021, Zhongtian Financial's real estate sales performance declines.
The third quarterly report data of 2021 shows that Zhongtian Financial recorded losses in the first three quarters of 2021. From January to September 2021, it achieved a net profit of -427 million yuan, turning from profit to loss year-on-year. However, from January to August, Zhongtian Urban Investment achieved a net profit of -427 million yuan. Profit was 348 million yuan. Zhongtian Financial stated in its performance forecast that the reason for the change in performance was, on the one hand, the increase in borrowing costs included in profits and losses compared with the same period last year, and on the other hand, the structure of real estate sales revenue carried forward during the reporting period compared with the same period last year. Differences, etc. resulted in a decrease in gross profit from real estate sales in the current period.
The third quarter report of Leikangmei Pharmaceutical turned from profit to loss
While real estate sales performance declined, Zhongtian Financial’s focus on transforming its financial business did not bring about a substantial increase in performance.
Zhongtian Financial's 2021 semi-annual report data shows that in the first half of 2021, the company achieved non-insurance contract service revenue of 125 million yuan, accounting for only 2.51% of total revenue, an increase of 57.85% over the same period last year.
At present, Zhongtian Financial's financial sector business includes insurance, securities, funds, etc., which are respectively managed by its subsidiaries Zhongrong Life Insurance Co., Ltd. (hereinafter referred to as "Zhongrong Life") and Zhongtian Guofu Securities Co., Ltd. (hereinafter referred to as "Zhongrong Life") Tianguofu"), Youshan Fund Management Co., Ltd. (hereinafter referred to as "Youshan Fund") and other operations.
Beginning in September 2015, Zhongtian Financial invested a total of approximately 6.8 billion yuan in more than a year, and eventually held approximately 51% of the equity of Zhongrong Life through its wholly-owned subsidiary Guiyang Financial Holdings Co., Ltd., becoming the real life insurance company of Zhongrong Life. According to the prosecution, after Zhongrong Life Insurance has gone through multiple rounds of capital increases, Zhongtian Financial currently indirectly holds about 36% of the shares and is still its largest shareholder.
With the increase in consolidated financial business, the book value of Zhongtian Financial’s goodwill has increased from 2.774 billion yuan in 2016 to 5.258 billion yuan today.
It is worth mentioning that in the first three quarters of 2021, overdue credit impairment losses on financial assets of listed companies increased significantly, from 35.0375 million yuan in the same period of 2020 to 238 million yuan, a year-on-year increase of 578.02%.
This is mainly due to Zhongtian Financial stepping on the issue of bonds by Leikangmei Pharmaceutical. Zhongtian Financial's 2021 semi-annual report shows that the company holds the "18 Kangmei 01" debt project with a face value of approximately 499 million yuan. "18 Kangmei 01" was supposed to mature on July 20, 2021, but it expired early on June 4, 2021 and was not paid, resulting in a substantial default, and the bond balance was 1.5 billion yuan.
The capital chain is tight and short-term debt repayment is under pressure.
Zhongtian Financial’s financial business not only failed to contribute considerable revenue, but also occupied a large amount of funds.
In November 2017, Zhongtian Financial signed an equity acquisition agreement framework with the original shareholders of China Life Insurance Co., Ltd. (hereinafter referred to as "China Life"), and planned to pay no more than 31 billion yuan in cash to acquire 21%-25% of the equity of China Life Insurance. As of the beginning of 2018, the company has paid a deposit of 7 billion yuan. However, in July 2020, the China Banking and Insurance Regulatory Commission dispatched a takeover team to take over China Life. On July 16, 2021, the supervision period of China Life was once again extended to July 16, 2022. Until now, there has been no substantial progress in the above-mentioned major asset purchases.
According to the agreement, if this major asset purchase cannot be achieved due to company reasons, the 7 billion yuan deposit paid by Zhongtian Financial will not be refunded. Therefore, this major asset restructuring not only involves the risk of deposit loss, but also considering that the comprehensive capital cost is about 8%, the total capital cost generated by the deposit of 7 billion yuan so far is about 2.24 billion yuan.
On the one hand, the settlement scale of real estate business continues to decline. On the other hand, the cost of financial business is rising and large amounts of funds are occupied. Zhongtian Financial's capital situation is not optimistic during the transformation process. Its assets have poor liquidity and it also faces greater debt repayment pressure in the short term.
As of the end of September 2021, Zhongtian Financial’s total assets were 160 billion yuan, total liabilities were 138.6 billion yuan, and the asset-liability ratio reached 86.62%. After excluding advances, the asset-liability ratio still reached 83%, the net debt ratio was 184%, and the cash shortage The debt-to-debt ratio is 0.1, which means the debt repayment pressure is very high. In fact, at the end of each reporting period from 2017 to 2020, Zhongtian Financial’s asset-liability ratio was always above 80%, which were 82.42%, 80.67%, 82.68%, and 84.35% respectively.
In terms of asset quality, Zhongtian Financial's liquidity is poor. As of the end of September 2021, the company's current assets totaled 80.418 billion yuan, of which inventory scale was 40.945 billion yuan, trading financial assets were 26.43 billion yuan, and monetary funds on the account were only 2.821 billion yuan. Yuan, of which 176 million Yuan of monetary funds were frozen by the judiciary. As of the end of the reporting period, Zhongtian Financial had total restricted assets of 11.264 billion yuan, accounting for approximately 7.04% of total assets.
Especially in terms of short-term debt, as of the end of September 2021, Zhongtian Financial's short-term borrowings were 2.623 billion yuan, a year-on-year increase of 85.39%, notes payable and accounts payable totaled 6.259 billion yuan, and non-current liabilities due within one year were 24.529 billion yuan, totaling The scale of short-term debt reached 33.411 billion yuan, accounting for 24.1% of total liabilities.
As of March 31, 2021, Zhongtian Financial had received a total of 31.229 billion yuan in bank credit lines, of which 8.882 billion yuan was unused, and its short-term debt coverage was weak.
It is worth noting that in the next two years (2022 and 2023), Zhongtian Financial will usher in the centralized redemption of 8.15 billion yuan of existing bonds.
Although some of the existing bonds of Zhongtian Financial have guarantors as credit enhancement measures, the guarantor is Jinshiqi International Holdings Co., Ltd. (hereinafter referred to as "Jinshiqi"). Jin Shiqi is the largest shareholder of Zhongtian Financial, with a shareholding ratio of 46.17%, and the actual controller is also Luo Yuping. Jinshiqi itself is already facing the dilemma of poor profitability, high proportion of restricted assets, and great debt repayment pressure.
Jinshiqi's 2021 semi-annual report data shows that as of the end of June, the book value of restricted assets within the scope of the company's consolidated statements was 11.771 billion yuan, accounting for 97.16% of the net assets at the end of the reporting period. As of the end of June 2021, the company's total liabilities were approximately 52.6 billion yuan, the asset-liability ratio after excluding advance receipts reached 92%, the net debt ratio was 402%, and the cash-to-short-term debt ratio was 0.13. Looking only at the parent company's financial statements, as of the end of June 2021, the parent company's assets totaled 13.782 billion yuan, and total liabilities were 16.525 billion yuan. The parent company was insolvent.
When the capital chain is tight, Jin Shiqi frequently pledges its equity in listed companies. As of January 19, 2022, Jinshiqi has pledged a total of 3.234 billion shares of listed companies, accounting for 74.19% of its shares in Zhongtian Financial.
From this point of view, Zhongtian Financial's eagerness to sell Zhongtian Urban Investment to "recover blood" is a helpless move.
After Jiayuan Chuangsheng and Shanghai Jiezhong defaulted on the second equity transfer payment, on January 18, Zhongtian Financial pledged 89% of the equity of Zhongtian Urban Investment to Ping An Bank Huizhou Branch for its subsidiary Guiyang Financial Holdings Co., Ltd. 1.7 billion yuan of financing and 5 billion yuan of financing from the headquarters provide credit enhancement.
According to previous disclosures by Zhongtian Financial, Jiayuan Chuangsheng has paid a deposit of 1.58 billion yuan, which is approximately 17.15% of the transaction price of Zhongtian Urban Investment. At the same time, the company pledged 11% of the equity of Zhongtian Urban Investment to Jiayuan Chuangsheng. After 89% of the equity was pledged on January 18, 100% of the equity of Zhongtian Urban Investment has been pledged for financing.
What impact will the divestiture of Zhongtian Urban Investment have on the profitability of Zhongtian Financial? How will Zhongtian Financial respond to the default of equity payments between Jiayuan Chuangsheng and Shanghai Jiezhong? How will we ensure the centralized redemption of public bonds at maturity in the next two years? A reporter from the 21st Century Business Herald sent an interview letter to Zhongtian Financial, which stated that "everything is subject to the announcement."
As of the closing of the stock market on January 24, the share price of Zhongtian Financial (000540.SZ) was 2.6 yuan, down 1.52% that day. It fell 24.2% from the 52-week high of 3.43 yuan on September 10, 2021.
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