In the capital market, it is rare to vote against . Choosing to abstain may already indicate your attitude.
days ago, listed company Huachuang Yangan announced that it plans to acquire the minority shareholders of Huachuang Securities, and price 576 million yuan in 2.5617% of the equity held by the four partnerships. However, although the proposal was approved by the board of directors, three directors voted abstaining, two of whom believed that the acquisition price was significantly higher.
In terms of transaction content, the acquisition of Huachuang Yang'an's equity comes from a shareholding platform established by Huachuang Securities in 2015 to implement capital increase in management and core employees. After waiting patiently for the past five years, the consideration of this equity has been more than four times the investment in the past year. After the recent positive news of securities company employee equity incentives has been reported, the subsequent situation is exciting.
acquired the employee shareholding platform shares for 576 million yuan. As the controlling shareholder of Huachuang Securities, on September 6, Huachuang Yangan signed a "Cash Purchase Agreement" with four counterparties, preparing to include all shares of Huachuang Securities in its acquisition.
days ago, Huachuang Yangan announced that the company plans to acquire shares of minority shareholders of Huachuang Securities, involving a share of 2.5617%, and the acquisition price is 576 million yuan. After the transaction is completed, Huachuang Securities will become a wholly-owned subsidiary of Huachuang Yangan.
From the perspective of the counterparty, the counterparty of this transaction, Huarui Fuyu, Huarui Fushun, Huarui Fuxiang and Huarui Fuxi are a shareholding platform established by Huachuang Securities in 2015 to implement capital increase in management and core employees. Among them, Tao Yongze, chairman of Huachuang Yang'an, is a limited partner of Huarui Fuyu, and this transaction is an related transaction.
According to the appraisal report issued by Zhongtianhua Asset Appraisal Company, as of June 30, 2019, the appraisal value of all shareholders of Huachuang Securities was 22.469 billion yuan, and the appraisal value of 25617% equity of Huachuang Securities was 576 million yuan. Based on Huachuang Securities' registered capital of 9.226 billion yuan, the trading price per share of Huachuang Securities is about 2.43 yuan, while Huachuang Securities' appraisal net assets were 11.094 billion yuan.
For Huachuang Yangan, Huachuang Securities is the company's well-deserved profit pillar. In the first half of this year, Huachuang Securities performed well, achieving main business revenue of 1.2 billion yuan and net profit of 258 million yuan, both of which exceeded the full-year level last year. Huachuang Yangan achieved a net profit attributable to shareholders of 287 million yuan in the first half of the year, and Huachuang Securities contributed nearly 90%.
Huachuang Yangan said that it is expected that this transaction can effectively increase the net profit and net assets attributable to shareholders of listed companies, and the continuous profitability of listed companies will be improved, thereby fully protecting the interests of the company and small and medium-sized shareholders.
Three directors voted for abstaining votes
At present, Huachuang Yangan's acquisition of shares in the employee shareholding platform this time was the first to benefit from a number of senior executives of Huachuang Securities.
For example, Huachuang Yangan needs to pay a consideration of 219 million yuan for the acquisition of the equity held by Huarui Fuyu, of which Huachuang Securities Deputy General Manager Hua Zhongwei holds 10.47% of the shares, Chairman Tao Yongze holds 8.93% of the shares, and executive Peng Bo holds 7.61% of the shares. If the equity holding is not considered, the funds can be obtained after the transaction is completed, 1666 million to 22.93 million yuan.
However, some directors of Huachuang Yangan complained about the price of this acquisition and expressed their opinions by voting abstention.
board resolution shows that there are currently 9 members of Huachuang Yang'an board of directors. Judging from the board of directors' review procedures, there were 8 directors participating in the equity acquisition proposal, and Chairman Tao Yongze evaded voting due to his connection. Although the final proposal was successfully passed with a vote of 5 votes, 0 votes against and 3 abstentions, the abstentions given by the three directors are still confusing.
Specifically:
Li Jianxiong's main reason for abstention is that the company's new capital invested in Huachuang Securities in December 2016 was also calculated at a price-to-book ratio of 2.04 times, seriously inflated the valuation amount and lacked rationality; Huachuang Securities' return on equity in the first half of the year was lower than the average level of the benchmark company. Through recent trading cases and operating performance comparisons, the overall price-to-book ratio used in the evaluation report is relatively high, which is unfair.
Zhang Minggui's main reason for abstention is: the acquisition price of this transaction is obviously unfair. From the perspective of benchmarking companies, Huachuang Securities' return on equity is obviously low. From the perspective of benchmarking cases, the acquisition price is obviously high, and the price-to-book ratio should be controlled below 2 times.
Yu Siming's main reason for abstention is that he received the evaluation feedback data for a short time.
Among them, Li Jianxiong is the vice chairman of Huachuang Yang'an, vice president and CEO of New Hope Group; Zhang Minggui is also the vice president of New Hope Group, and also serves as president of New Hope Group Sichuan headquarters and president of New Hope Real Estate. Yu Siming just served as a director of Huachuang Yang'an in August this year. He is a certified public accountant and senior accountant. His professional experience is related to finance. He is currently the deputy director of the Audit Department of China Kweichow Moutai Winery (Group) Co., Ltd.
Judging from the reasons raised by Li Jianxiong and Zhang Minggui, it mainly focuses on the unfair issue of the high price and the high price-to-book ratio of the acquisition. Is the price-to-book ratio of
2.04 times high? Judging from the recent acquisitions of the securities industry, the previous acquisition of CITIC Securities by , gave a price-to-book ratio of about 1.2 times, while the recent acquisition of Hengtai Securities by Tianfeng Securities is about 1.5 times, which is quite different from the valuation of Huachuang Securities. However, as a Class A brokerage, in terms of operating conditions and industry competitiveness, Huachuang Securities' valuation is higher than Hengtai Securities and Guangzhou Securities.
, compared with listed securities companies, based on June 30, 2019 as the trading date, there are 11 listed securities companies with a price-to-book ratio of more than 2 times, 12 with a price-to-book ratio of 1.5 times to 2 times, and 12 with a price-to-earnings ratio of 1.0 times to 1.5 times.
Higher equity incentives for securities firms
As an effective incentive, employee stock ownership plans have always been an important measure for companies to retain talents.
Dongxing Securities Research Report points out that the securities industry is an intelligence-intensive industry, and human capital is an important factor in core competitiveness. Implement employee shareholding, so that management and company employees become company shareholders directly or indirectly, thereby establishing a long-term and stable profit sharing and risk sharing mechanism between major shareholders and professional management teams. In addition, the scale of the employee stock ownership plan and the decisive subscription of directors, supervisors and senior management can also reflect the firm determination of the company's executives and employees for the company's future development.
However, for the securities industry, due to the existence of a large number of state-owned enterprises and the restrictions on holding shares of securities practitioners, not many have successfully achieved employee equity incentives. Huachuang Securities' approval and implementation have been the first in recent years. Public information of
shows that as early as the end of 2014, Huachuang Securities held a shareholders' meeting and agreed to implement the capital increase plan for the company's core employees and management. On April 1, 2015, with the approval of the Guizhou Securities Regulatory Bureau, the registered capital of Huachuang Securities was changed from 1.5 billion yuan to 1.578 billion yuan. The total new investment funds paid by Huarui Fuyu, Huarui Fushun, Huarui Fuxiang and Huarui Fuxi in currency amounted to 138 million yuan, of which the new registered capital was 0.7900 million yuan, and the difference was 59 million yuan in capital reserves. After the capital increase of
is completed, Huarui Fuyu, Huarui Fushun, Huarui Fuxiang and Huarui Fuxi hold 1.90%, 1.16%, 0.99% and 0.93% of Huachuang Securities respectively. All four companies are limited partnerships established in February 2015. The general partners (GPs) are Zhongshi Yinshan, and the limited partners (LPs) are Huachuang Securities' core employees and management, with a total of 143 people. Huachuang Securities' 2015 annual report shows that after the capital increase is completed, Huachuang Securities' internal directors and senior management personnel held 11.22 million yuan in equity as limited partners through the employee stock ownership platform.
After Baoshuo Co., Ltd. took over Huachuang Securities and increased its capital in 2016, the proportion of shares held by the above four holding platforms was diluted, but the total holdings still exceeded 2.5%. After waiting patiently for the past five years, the consideration of this equity has been more than four times the investment in the past year.
Recently, the incentive policies for employees in the securities industry have gradually heated up. For example, the successful implementation of Huachuang Yangan's acquisition will provide a good reference case for the employee stock ownership plans of other securities companies.
In August this year, some local securities regulatory bureaus issued the "Notice on Supporting Securities Companies to Implement Employee Stock Ownership and Equity Incentive Plans in accordance with the Law" to securities companies in their jurisdiction, encouraging securities companies to implement equity incentives or employee stock ownership plans. For listed companies, they can be carried out in the form of asset management plans, trust plans, limited partnerships, etc. If non-listed securities companies implement employee stock ownership plans, they can be carried out in the form of limited partnerships, etc.
On November 9 last year, the China Securities Regulatory Commission, together with the Ministry of Finance and the State-owned Assets Supervision and Administration Commission, jointly issued the "Opinions on Supporting Listed Companies to Repurchase Shares", which clearly stated that listed financial enterprises can repurchase shares in accordance with the law for the implementation of equity incentives or employee stock ownership plans. In March this year, the draft employee stock ownership plan of CITIC Securities was released, and the number of securities companies that will carry out employee stock ownership is expected to continue to increase.
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