Source: Sina Finance
Introduction: following the successful share-holding reforms of China Cinda and China Huarong, China Orient Asset Management Corporation (hereinafter referred to as COAMC) has entered the final stage of its share-holding reform. Mr. Zhang Zi’ai, the President of COAMC, told Sina Finance that COAMC had formally submitted its plan of share-holding reform to the relevant authorities and it had been planning for an overseas IPO as a whole.
On February 26th, Sina Finance reported that Dongxing Securities (13.22, 4.04, 44.01%), as a “new comer” to the securities brokerage section of the stock market, reached the daily limit of stock price increase within seconds after IPO as was expected. Its stock price soared by 44.01% and closed at RMB 13.22. Zhang Zi’ai, the President of COAMC (the controlling shareholder of Dongxing), revealed that COAMC had formally submitted its plan for share-holding reform to the relevant authorities and had been planning for an overseas IPO as a whole.
Dongxing Securities issued 500 million shares and set its IPO price at RMB 9.18/share with a PE ratio of 22.97 times. After the IPO, Dongxing Securities has 2.504 billion shares in total. It raised RMB 4.59 billion (RMB 4.474 billion if the issue expanses were deducted) through IPO.
Considering that the average PE ratio of securities brokerage stocks had reached 76.88 times, analysts said that Dongxing Securities was significantly underrated as the first securities broker affiliated to an AMC going public. With a frozen capital of RMB 495.553 billion for subscription (both online and offline subscription combined), Dongxing Securities surpassed Guosen Securities (21.21, 0.74, 3.62%) which went public in the end of last year with a frozen capital for subscription of RMB 372.088 billion.
With a registered capital of RMB 2.004 billion, Dongxing Securities is a national comprehensive securities company sponsored mainly by COAMC. Affiliated to an AMC and supported by its own 58 outlets across China,Dongxing Securities is relatively lager than many of its competitors. It mainly focuses on securities brokerage, investment banking, asset management, proprietary securities trading, alternative investment, margin trading, futures, direct investment etc. It has Dongxing Futures Co., Ltd., Dongxing Securities Investment Co., Ltd. and Dongxing Capital Investment Management Co., Ltd. as its subsidiaries.
Dongxing Securities is a mid-sized broker, ranking 22nd in terms of operating revenue and 20th in terms of net profit according to the ranking provided by Securities Association of China (SAC) in 2013.
Dongxing Securities registered a net asset of RMB 6.147 billion. Its operating revenue reached RMB 1.431 billion in 2012, RMB 2.034 billion in 2013, and RMB 2.598 billion in 2014 with year-on-year increases of 29.94%, 42.01% and 27.73% for each of the three years mentioned. The net profit increased from RMB 513 million in 2012 to RMB 1.041 billion in 2014, which is faster than the increase of operating revenue.
Wei Qinghua, the President and legal person of Dongxing Securities, said that his company would continue to focus on the securities brokerage business and work hard to build a “comprehensive wealth management institution with its own characteristics” after the IPO. He explained that the company would develop a business model for investment and financing which included both equity and debt financing by giving priority to “big asset management”, modern investment banking and Internet business in the future.
Facing up to the competition with major securities brokers, “Dongxing Securities could count on the support of the COAMC as a financial holding group which was made up of the parent company and its subsidiaries such as China United Insurance, Daye Trust, China National Foreign Trade Financial & Leasing as well as China Orient International etc. Dongxing shall find its unique position in the market to make a difference by satisfying the need for financing of SMEs for example,” Wei Qinghua was quoted as saying.
As for the support given by the parent company to Dongxing Securities, COAMC President Zhang Zi’ai said “Dongxing Securities has its own market-oriented mechanisms for incentives and employment with little intervention of the parent company. We did not put many people in there but we would support each other to form a synergy at the strategic level.”
Dongxing Securities is the first COAMC subsidiary that went public. As the controlling shareholder, COAMC is a state-owned financial holding group corporation with subsidiaries in businesses such as securities, futures, trust, insurance, financial leasing and credit rating etc.
Following the successful restructuring of Cinda and Huarong, COAMC has entered the final stage of share-holding reform. President Zhang Zi’ai told Sina Finance that they had already formally submitted the plan for share-holding reform to the relevant authorities and now they are planning for an overseas IPO as a whole.
“It is hard to give you a timetable for the group’s IPO. But it is unlikely that we will go public within this year. Cinda was listed in Hong Kong and Huarong is also planning for an IPO in Hong Kong. It might be an option for COAMC, too” President Zhang Zi’ai was quoted as saying. It is worth noticing that before the spring festival, COAMC purchased 50.03% of the outstanding shares of Shanghai Zendai with a price of HKD 0.2 per share and a markup of 9% compared with the price prior to the suspension of stock trading. It cost COAMC HKD 1.489 billion in total to complete the purchase.
(Reported by Xu Yu with Sina Finance from Shanghai).
