Zhongyuan Securities 's performance suffered a "Waterloo", with a net profit loss of 125 million yuan in the first half of the year.
's proprietary business fluctuated significantly, becoming one of the main reasons for dragging down Zhongyuan Securities' performance. In addition, the company's many main business segments, such as brokerage, investment banking, futures , credit business, etc., have all declined to varying degrees.
Henan local broker Zhongyuan Securities suffered a "Waterloo" performance. In the first half of this year, the company achieved operating income of 788 million yuan, a year-on-year decrease of 66.28%; net profit loss of 125 million yuan, a year-on-year decrease of 154.79%, becoming one of the few brokers listed in A shares .
At the 2022 semi-annual performance briefing held recently, Li Zhaoxin, president of Zhongyuan Securities, said, "In the first half of this year, in the face of multiple negative factors, the company lost more than 120 million yuan, which has not been seen in many years. We are very sad and have conducted profound reflections and repeated research."
"International Financial News" reporter found that the volatility of proprietary business has become one of the main reasons for dragging down Zhongyuan Securities' performance. Among them, the company's fair value change income of was -463 million yuan, a year-on-year decrease of 382.4%. In addition to proprietary business, the company's many main business segments, such as brokerage, investment banking, futures, credit business, etc., have all declined to varying degrees. Among them, only one IPO sponsorship project was completed, and investment bank revenue dropped by 55%; futures business decreased by 961 million yuan year-on-year.
was once considered a dark horse for securities companies due to its rapid development in performance. After 2018, it entered a period of rapid development, and its net profit continued to rise. At the same time, due to the repeated series of projects, performance began to show signs of deterioration. At the 2021 interim report performance meeting, Zhongyuan Securities Party Secretary and Chairman Suga Mingjun made a clear statement: After experiencing the difficult adjustment stages from 2018 to 2020, 2021 has entered a new stage of rapid development. We will strive to "rebuild a Zhongyuan Securities" within a certain period of time through three major mechanisms and four measures.
However, Zhongyuan Securities' loss in the first half of 2022 exceeded its full-year net profit in 2020. In the past two years, Zhongyuan Securities has also recovered through fundraising, and has raised more than 10 billion yuan in several fundraising, providing financial guarantees for business development. Currently, the 7 billion yuan private placement project is in progress.
So, can Zhongyuan Securities make large-scale fundraising and recovery reversal of the passive situation of business development? What are the plans for the future?
lost 125 million yuan in half a year
Henan Province's first A+H listed brokerage firm Zhongyuan Securities (601375.SH, 1375.HK), with poor performance in the first half of the year. According to the financial report, in the first half of this year, Zhongyuan Securities achieved operating income of 788 million yuan, a year-on-year decrease of 66.28%; net profit loss of 125 million yuan, a year-on-year decrease of 154.79%.
In the first half of 2022, A-share market performed sluggishly, and the report cards handed over by securities firms were not ideal. The 42 A-share listed securities companies (statistical statistics are the parent company, that is, listed securities companies), operating income in the first half of the year decreased by 18.7% year-on-year, and net profit attributable to shareholders decreased by 25.6% year-on-year. Further, most securities companies achieved positive net profits, but there were also two securities companies, Zhongyuan Securities and Pacific Securities and , which suffered losses, that is, losses of 125 million yuan and 76 million yuan respectively.
htmlOn September 5, Zhongyuan Securities held a semi-annual performance briefing for 2022. Li Zhaoxin, president of Zhongyuan Securities, said, "In the first half of this year, in the face of multiple negative factors, the company lost more than 120 million yuan, which has not been seen in many years. As a listed company in Shanghai and Hong Kong, performance is the "touchstone" for us in the face of the market and investors. We are very sad and have conducted profound reflection and repeated research."As the market rebounded, the performance of many small and medium-sized securities companies increased significantly in the second quarter. For example, Zhejiang Securities in the second quarter's net profit increased by 25.02% month-on-month, Founder Securities increased by 97.97% month-on-month. At the same time, Guoyuan Securities , Dongwu Securities , and Guohai Securities improved more significantly, and the net profit in the second quarter increased by 823.26%, 519.13% and 261.95% month-on-month respectively.
Zhongyuan Securities' second-quarter performance continued to decline. Data shows that in the first and second quarters, Zhongyuan Securities achieved operating income of 388 million yuan and 399 million yuan, a year-on-year decrease of 63.9% and 68.31%; net profit was 18.4329 million yuan and -144 million yuan, a year-on-year decrease of 84.76% and 233.22%.
Relevant person in charge of Zhongyuan Securities said in an interview with the International Financial News that the company's losses in the first half of the year were mainly due to factors such as the international situation and domestic epidemic. The company's investment business revenue in the first and second-tier markets decreased year-on-year; due to the periodic impact of investment banking projects, the revenue of underwriting business decreased year-on-year; the company's stock pledge and other businesses set aside credit impairment losses.
The market fell first and then rose in the first half of the year, and the securities companies' proprietary business fluctuated significantly, becoming one of the main reasons for dragging down performance. In the first half of this year, Zhongyuan Securities' proprietary trading business achieved operating income of 149 million yuan, a year-on-year decrease of 84 million yuan, a decrease of 61.81%, accounting for 20.4% of the current revenue.
During the reporting period, Zhongyuan Securities' fair value change income was -463 million yuan, a year-on-year decrease of 382.4%. In response, Zhongyuan Securities stated that the loss of fair value changes in return is mainly the decrease in the fair value changes in return of trading financial assets in this period.
Revenues of multiple businesses declined
In addition to proprietary businesses, many of Zhongyuan Securities' main business segments have all declined to varying degrees. In terms of brokerage business, in the first half of the year, due to the decrease in revenue from agency trading securities business and agency sales of financial products business, Zhongyuan Securities' securities brokerage business revenue was 294 million yuan, a year-on-year decrease of 53 million yuan.
Investment banking business suffered a heavy blow, and the number of sponsored projects declined. Data shows that in the first half of this year, Zhongyuan Securities completed a total of 1 IPO lead underwriting project, with the cumulative lead underwriting amount of equity in Shanghai and Shenzhen stock markets of 1.296 billion yuan; 7 corporate bond projects were completed, with the cumulative lead underwriting amount of 2.073 billion yuan; 1 IPO project sponsored by the company passed the review, and 2 refinancing projects passed the review.
As of the end of the reporting period, Zhongyuan Securities ranked 24th in the lead underwriting amount of IPO and 22nd in the lead underwriting income of IPO projects. In the first half of 2021, the company completed a total of 6 IPO lead underwriting projects, and 2 sponsored IPO projects passed the review. The IPO lead underwriting amount and revenue ranked 17th and 18th respectively.
Due to the decrease in the revenue of underwriting business of securities, Zhongyuan Securities achieved investment banking revenue of 120 million yuan in the first half of this year, a year-on-year decrease of 141 million yuan, a decrease of 55.05%.
futures business also performed poorly, originally the largest revenue, but the decline in the first half of the year was the highest. In the first half of this year, Zhongyuan Securities' futures business achieved revenue of 113 million yuan, accounting for 14.34% of the total revenue, a year-on-year decrease of 961 million yuan. Zhongyuan Securities said that it is mainly related to the decrease in sales revenue of commodity of subsidiary Yuxin Investment Management (Shanghai) Co., Ltd. In terms of credit business, Zhongyuan Securities achieved revenue of 203 million yuan, a year-on-year decrease of 23 million yuan. The company's losses in the first half of the year are also related to the credit impairment losses arrears for stock pledge and other businesses. Data shows that the company set aside 163 million yuan in credit impairment provisions in the second quarter, and the balance of stock pledge repurchase to be repurchased was 2.276 billion yuan, an increase of 10.48% from the beginning of the year.
htmlOn July 14, Zhongyuan Securities issued an announcement on to set aside asset impairment provisions , saying that 163 million yuan of credit impairment provisions were set aside in the second quarter of 2022, of which 128 million yuan of impairment provisions were set aside for to buy and sell financial assets . Mainly, credit impairment provisions are made for stock pledge businesses of Kedi Dairy (002770.SZ, delisted) and Xinguang Yuancheng (002147.SZ, delisted).semi-annual report disclosed that Zhongyuan Securities and Kodi Food Group Co., Ltd. (Kodi Dairy Holding Party), with a lawsuit amount of 431 million yuan. In addition to Kodi Group, there is also Shihezi Ruichen Equity Investment Partnership (Limited Partnership) with a lawsuit amount of 188 million yuan and Henan Zhongyi Real Estate Co., Ltd. with a lawsuit amount of 106 million yuan.
In this regard, a relevant person in charge of Zhongyuan Securities told reporters, "The company will continue to take multiple measures to actively explore disposal measures through legal litigation, judicial auction, asset revitalization, capital use and other methods, strive for capital preservation, find effective paths and breakthroughs, and protect the company's rights and interests to the greatest extent."
raising more than 10 billion yuan of funds and busy recovering blood
In recent years, Zhongyuan Securities has raised funds and raised more than 10 billion yuan in several times, providing financial guarantees for business development.
In 2022, Zhongyuan Securities successfully issued the first A+H listed provincial securities firm US dollar bond through its subsidiary Zhongzhou International Financial Holdings Co., Ltd., raising US$100 million.
In April this year, Zhongyuan Securities disclosed its plan for a private placement, and the company plans to raise no more than 7 billion yuan in funds for private placement of shares. Among them, 3.3 billion yuan will develop capital intermediary business, 2.1 billion yuan will develop investment and trading business, and 800 million yuan will increase capital for wholly-owned subsidiaries at home and abroad. This is also the second time that Zhongyuan Securities has launched a private placement financing after raising more than 3.6 billion yuan through private placement in 2020.
On the evening of August 8, Zhongyuan Securities' issuance of A-shares was accepted by the China Securities Regulatory Commission; on August 19, the China Securities Regulatory Commission put forward feedback, requiring Zhongyuan Securities to explain the rationality and necessity of financing, as well as the specific investment content and basis for calculating the amount of funds raised by 7 billion yuan, and whether it can maximize the use effect. In addition, the China Securities Regulatory Commission also raised questions about whether sensitive real estate business involves, major pending litigation and arbitration provisions are sufficient.
At present, Zhongyuan Securities is promoting refinancing matters. In response, Zhongyuan Securities stated that the company will reply within 30 days after receiving feedback from the China Securities Regulatory Commission, and the specific content shall be subject to the announcement.
Regarding the necessity of issuing private placement, the relevant person in charge of Zhongyuan Securities introduced in an interview with our reporter that it is mainly based on several reasons: seizing the new opportunities for the development of Henan Province in the "14th Five-Year Plan" and enhancing the ability to serve the real economy. Continuously consolidate the capital foundation and consolidate and enhance market competitiveness. Comprehensively improve risk resistance and achieve stable and healthy development.
At the same time, in order to ensure the effective use of the raised funds, after the completion of this private placement of shares, the person in charge further introduced that the company will vigorously promote the development of its main business, improve the overall operational efficiency, and strengthen the management of raised funds to improve the efficiency of the raised funds. The specific measures to be taken are as follows:
First, focus on major national strategies and accelerate transformation and development. The company will focus on increasing the proportion of direct financing and serving the real economy, take digital transformation as the starting point, and take institutional and mechanism innovation as the driving force to comprehensively strengthen strategic cooperation with top institutions, continue to deepen various reforms, focus on preventing and resolving risks, strive to achieve high-quality development of the company, and make new contributions to the high-quality development of the real economy and the capital market.
Second, on the basis of deepening the cultivation of Henan, we continue to expand the company's development space. The company will continue to deepen its roots in the Henan market, deeply integrate into the overall economic and social development of the province, and support and serve the construction of a modern Henan. At the same time, we will accelerate the development of sectors such as Shanghai Center, Beijing Branch, and Guangzhou-Shenzhen Headquarters, accelerate the internationalization of Hong Kong subsidiaries, increase profit contribution, comprehensively promote the upgrade of brokerage business and major business lines such as investment banking, investment, and asset management, and continuously expand the company's development space.
The third is to strengthen the management of raised funds and improve the efficiency of raised funds. After the funds raised in this issuance are in place, the company will strengthen the management of funds raised in accordance with the requirements of relevant laws, regulations and other normative documents, the "Company Articles of Association" and the fundraising management system, and strive to improve the efficiency of the fundraising, thereby enhancing the company's operating strength and risk resistance, promoting the development of various businesses, and improving the company's operating performance.
Fourth, strictly implement the company's dividend policy to protect the interests and returns of the company's shareholders. The company attaches great importance to protecting shareholders' rights and interests, will continue to maintain the continuity and stability of profit distribution policies, and insist on creating long-term value for shareholders.
showed signs of fatigue after spanning growth
was once considered a dark horse for securities companies due to its rapid development in performance.
In June 2014, the company listed on the Hong Kong Stock Exchange under the name of "Zhongzhou Securities"; in January 2017, it became the eighth brokerage firm in the country to achieve A+H listing.
From 2013 to 2017, Zhongyuan Securities took the opportunity to list and planned to develop key businesses such as investment banking and investment. After 2018, it entered a stage of rapid development and net profit continued to rise. From 2019 to 2021, Zhongyuan Securities' net profit was RMB 58 million, RMB 104 million and RMB 513 million respectively.
There is also haze under the sun.After 2018, Zhongyuan Securities' performance began to deteriorate due to multiple consecutive missed projects. The projects it participated in include Fuguiniao , Huishan Dairy , LeTV , etc.
At the 2021 interim report performance meeting, Suga Mingjun, Secretary of the Party Committee and Chairman of Zhongyuan Securities, made a clear statement, giving the market a "peace of mind": Zhongyuan Securities has entered the difficult adjustment stage in the three years from 2018 to 2020, and has entered a new stage of rapid development in 2021. It will strive to "create another Zhongyuan Securities" within a certain period of time through three major mechanisms and four measures.
At the same time, the company's senior management also experienced fluctuations. In June 2021, Chang Junsheng applied to resign from Zhongyuan Securities' director, vice chairman, president and other positions in the company for personal reasons. On April 4, 2022, Zhongyuan Securities issued an announcement on the market-oriented and public appointment of the president. The recruitment announcement also shows that the company's business goals include striving to create another Zhongyuan Securities in about 3 years. An announcement on April 30 stated that it plans to appoint Li Zhaoxin as the company's president and deputy director of the executive committee.
After leapfrog growth in net profit, Zhongyuan Securities suffered a loss of 125 million yuan in the first half of 2022, exceeding the net profit for the whole year in 2020.
However, regarding the company's performance losses in the first half of the year, Li Zhaoxin emphasized that the short-term impact did not affect the overall development of the company. The fundamentals of the company's development have not changed significantly, and the development trends of various businesses are good. Although operating performance suffered losses in the first half of the year, many work has achieved new breakthroughs and is gradually forming new highlights.
Looking forward to the second half of the year, Li Zhaoxin said that Zhongyuan Securities will give full play to the company's unique four major advantages. First, Zhongyuan Securities is a listed company on the main board of Shanghai and Hong Kong; second, Zhongyuan Securities is one of the "white list" securities companies; third, Zhongyuan Securities' core business, namely investment banking business, has developed rapidly, and has become the "locomotive" of the company's development, and has a strong ability to promote the listing of enterprises in Henan Province; fourth, the "three-in-one" financial service model has already had a powerful "value discovery" function.
Li Zhaoxin emphasized that in accordance with the various arrangements and decisions of the mid-term meeting, the "three-pronged approach" of business development, cost reduction and efficiency improvement and key risk projects will be taken to reverse the passive situation of the company's business development as soon as possible. At the same time, vigorously promote the second round of A-share private placement, vigorously strengthen the construction of compliance risk control, firmly adhere to the bottom line of compliance risk control, and create richer returns for shareholders.
Speaking of the layout and development in the next five years, a relevant person in charge of Zhongyuan Securities told reporters that in the future, the company's guiding ideology is: firmly anchor the "two guarantees" and help the "ten strategies", conscientiously implement the major decisions and deployments of the provincial party committee and the provincial government, further strengthen party building and party style and clean government construction, lead the company's development with high quality with high quality, continue to deepen reforms, promote the upgrade of various businesses, and make new contributions to the construction of a modern Henan and the development of the capital market.
specifically includes: adhering to the segmented service mechanism of leadership team and senior executives, and recommending more companies to go public and refinancing. Strengthen close cooperation with well-known domestic and foreign investment institutions and commercial banks, and gather advantageous resources to support "specialized, specialized and innovative" enterprises in the province. Vigorously promote multi-dimensional optimization reforms such as business strategy, organizational structure, internal control management, , performance allocation, and talent introduction. Actively carry out capital operations such as targeted additional issuance and bond issuance, and continuously improve the company's capital strength and capital operation capabilities. Further play the role of the Zhongyuan Equity Trading Center capital market in the company's controlling , and accelerate the establishment of "specialized, specialized and new" boards, etc.
This article is derived from the Zhengji Fengyun
