Author: Bao Xiren As early as the first trading day of 2018, Hongye Futures, which is listed in Hong Kong, released the pre-disclosure document for the A-share IPO. The prospectus of Hongye Futures has not been reviewed for a long time, and it was not until March this year that i

Author: Bao Xiren

As early as the first trading day of 2018, Hongye Futures listed in Hong Kong released the pre-disclosure document for A-share IPO. However, due to the regulatory sensitivity towards futures companies listed on the mainland, The prospectus of Hongye Futures has not been reviewed for a long time, and it was not until March this year that it received feedback from the China Securities Regulatory Commission.

As of now, there is no listed company in the A-share market that is fully engaged in the futures business. Therefore, once Hongye Futures returns to the A-share market, it will be the only futures company in China listed in both Hong Kong and the mainland.

There has been a wave of returning to A-shares in the past two years. The reason why Hongye Futures wants to return to A-shares and re-list is that in the final analysis, it still feels that it is not popular in the Hong Kong stock market and its valuation is low, and it is not good to list in A-shares. The valuation can also increase several times instantly.

The vicious competition in the industry may lead to a decline in performance.

The prospectus shows that the main source of income of Hongye Futures is fee income, including agency settlement fee income and futures exchange fee return and reduction income. The income level mainly depends on customers. Factors such as transaction size and handling rates.

In 2018, 2017 and 2016, the domestic agency customer transaction scale of Hongye Futures was 3003.605 billion yuan, 2993.502 billion yuan and 3548.750 billion yuan respectively, and the domestic commission rates were 0.05279%, 0.06309% and 0.0547% respectively.

The competition in the futures industry is relatively fierce, and the intuitive manifestation of the fierce competition is the sharp drop in the commission ratio - the current commission level in the entire industry is generally below 5 parts per 10,000. From 2016 to 2018, the company's agency settlement fee income was 133 million yuan, 98 million yuan and 78 million yuan respectively, a significant decline. This item will seriously affect the profits of Hongye Futures in the future.

Hongye Futures stated in the prospectus: At present, in order to promote the development of the industry, domestic futures exchanges return and reduce the handling fees collected to futures companies through regular or irregular methods. In 2018, 2017 and 2016, the amount of exchange fee refund and reduction received by the company was 98.3657 million yuan, 97.3875 million yuan and 68.3169 million yuan respectively, accounting for 15.96%, 18.619% and 20.87% of the company's operating income respectively. .

Since the exchange has not promulgated clear rules on the standards for fee refund and reduction, if this policy changes significantly in the future and the amount of fee refund and reduction is reduced or even suspended, the company's revenue will be further affected.

Jiangsu State-owned Assets’ “Cash Cow”

Previously, Hongye Futures stated in the A-share IPO prospectus that the number of A-shares issued this time would not exceed 120 million shares, accounting for approximately 13.23% of the company’s total pre-issuance share capital.

According to the prospectus information, Hongye Futures plans to use the raised funds to supplement the capital of the company and its domestic and overseas subsidiaries, add domestic and overseas subsidiaries and branches, optimize the construction of a multi-level network system; promote the development and layout of innovative businesses , promote the transformation and upgrading of enterprises; strengthen investment in information system construction and build a strong middle and back-end support system; and enhance the company's market competitiveness through mergers and acquisitions.

Hongye Futures The current top three shareholders are all Jiangsu Provincial state-owned enterprises Suho Group and its subsidiaries, with a total shareholding ratio of 62.51%. The fourth largest shareholder Huihong Group is also a provincial state-owned listed company, holding The share ratio is 7.05%.

Based on this calculation, the Jiangsu Provincial State-owned Assets Supervision and Administration Commission controls at least 70% of the equity of Hongye Futures . Therefore, once it returns to A-shares, the two major groups in Jiangsu Province will naturally be the biggest beneficiaries.

Although the current valuation of Hongye Futures is only about 16 times, if it is listed on the A-share market, its valuation will inevitably increase. By then, the shares held by Hongye Shares will naturally rise. If the performance is not good, it can be dealt with by selling some stocks. This has been tried repeatedly in several other state-owned listed companies.

Policies have begun to support the listing of futures companies

Compared with developed countries in Europe and the United States, my country's futures market started late, and the policies and regulations of the futures market have always lagged behind.

In 2014, the China Securities Regulatory Commission revised the " Futures Company Supervision and Management Measures ", changing the clause that shareholders must be "legal persons" to "natural persons, legal persons or futures organizations" to solve the institutional problem that natural persons cannot hold equity in futures companies. There are no prerequisites for the listing of futures companies. As long as they meet the basic requirements for listing, they can be listed. At the same time, the new regulations also improve the business scope of futures companies and reserve space for innovative business and license management.

The spokesperson of the China Securities Regulatory Commission at the time also stated that it would support futures companies to list on the National Equities Exchange and Quotations or issue and list overseas.

Since then, futures companies have begun to seek listings overseas and gradually entered the capital market. Hongye Futures was also successfully listed on the Hong Kong Stock Exchange at the end of 2015, becoming the second domestic Hong Kong stock listed futures company. However, the stock price performance has not been ideal.

At that time, the total amount of funds raised by Hongye Futures exceeded HK$600 million. According to the planned use of funds raised in its prospectus, 32% of it will be used to seek acquisitions, and try to apply for additional licenses to operate other securities and futures-related businesses in Hong Kong and provide a wider range of futures-related products and services to further develop Hong Kong. and global futures business; approximately 25% will be used to expand the diversity of asset management plans and product types, and develop its own investment advisory team; approximately 20% will be used to provide additional capital to Hongye Capital to further develop commodity trading and risk Manage business.

It should be noted that previously, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said:

"Compared with the demand for high-quality economic development, the futures market still has many problems in terms of institutional supply, market construction, investor structure, service capabilities, etc." We must increase policy support, vigorously promote the listing of qualified futures companies in A-shares, enhance the overall strength of the institution, and cultivate the backbone of the industry.”

This is the first time that the China Securities Regulatory Commission has publicly supported futures companies in A-shares. Listed.

Hongye Futures , which has been listed on Hong Kong stocks and has been standardized in the capital market for quite some time, has a good chance of becoming the first A+H stock in domestic futures.