On the afternoon of February 11, Hong Kong stocks Zhengrong real estate and Zhengrong services collapsed, with a decline of more than 80%. After 14:00, the share prices of the two companies began to rise slowly. As of the closing, Zhengrong Service reported HK $1.73, down 57.7%, and the market value evaporated by HK $2.45 billion; Zhengrong real estate reported HK $1.23, down 66.4%, and the market value evaporated HK $10.61 billion.
At the same time, Haitong international has also been placed on the cusp of the storm due to the accurate “stepping on thunder” of the research report. On February 8, before the sharp drop in share price, Haitong international published an industry research report to sing Zhengrong service. Moreover, Haitong international, which published several Zhengrong service research reports within a year, is almost its largest bull watcher. Except Haitong international, only Southwest Securities Co.Ltd(600369) and Huaxi Securities Co.Ltd(002926) have given Zhengrong service “overweight” and “buy” ratings in 2021.
Haitong International’s latest research report is optimistic about Zhengrong service
caught in the dollar debt crisis and the actual controller was forced to close his position?
The evaporation of the market value of HK $10 billion is not without trace. Zhengrong group’s US dollar bonds began to fall in the afternoon of February 10. On the same day, it was rumored that Zhengrong real estate was short of funds and could not redeem the above perpetual bonds as planned.
Affected by this news, on the afternoon of February 11, the corporate bond “20 Zhengrong 03” issued by China fell by more than 20%, and the trading was temporarily suspended.
For the above rumors, Zhengrong real estate responded in the afternoon that the company would redeem $200 million of perpetual bonds as originally planned. The relevant rumors were untrue. For the sharp decline in share price, Zhengrong real estate said that today, some institutions may maliciously short and buy again, and the company is further understanding the reasons for the decline in share price.
After hours, some media said that some shares held by ou Zongrong, the actual controller of Zhengrong real estate, were forcibly closed. According to the Hong Kong stock exchange, ou Zongrong currently owns 54.71% of Zhengrong real estate and 63.26% of Zhengrong service.
Haitong international is optimistic about Zhengrong’s service, and the precise spot fell sharply
It is worth noting that on February 8, before the sharp drop in share price, Haitong international published an industry research report to sing Zhengrong service.
The research report pointed out that the 23 property management enterprises concerned by Haitong international realized the rapid growth of contract area and construction area under management in 2021, which exceeded the growth rate of the same period last year. They are optimistic about the M & A ability and management ability of these head enterprises. In the research report, Haitong international specially recommended three real estate service stocks, including Zhengrong service, saying that Zhengrong service is cautious about related party transactions and has sufficient cash flow without allotment. To maintain Zhengrong’s service superior to the market rating, the target price is HK $8.09/share, corresponding to 12 times of P / E in 2021 and 8 times of P / E in 2022. On February 7, the closing price of Zhengrong service was HK $3.67, only about half of the target price given by Haitong.
According to the reporter’s reply, Haitong international insisted on singing more Zhengrong services last year. It published Chinese and English research reports in August, may, March and January 2021, and was optimistic about Zhengrong services. The authors of the research report are Bonnie Zhou
According to the research report published in August, the net income of Zhengrong service in fiscal year 2021 is expected to increase by 64% year-on-year. At the same time, the total floor area of Shanghai Sitong service (2021-2024) is about 4.8 billion square meters. At the same time, it is also participating in the conference of Shanghai Sitong service (2021-2024) in the future fiscal year. Meanwhile, the compound annual growth rate of net income in this period will reach 40%. Haitong International believes that Zhengrong service is one of the few property management companies that have formulated medium and long-term goals.
On May 20, Zhengrong Service announced that it would purchase 99% of Zhengrong commercial (unlisted) shares from Zhengrong real estate for a consideration of 891 million yuan. Haitong international commented that as of the end of fiscal year 2020, the cash on hand of Zhengrong service was RMB 1.45 billion, including RMB 1.1 billion raised by IPO. Among the IPO funds raised by the company, RMB 314 million is planned to be used for M & A, and all the funds will be used for the acquisition of Zhengrong business. After the completion of this acquisition, we expect the company’s cash on hand to reach 600 million to 700 million yuan by the end of fiscal year 2021. Therefore, we believe that Zhengrong service may choose financing for future mergers and acquisitions. Maintain the “better than the market” rating of the stock.
According to the research report in April, Zhengrong service’s performance in fiscal year 2020 was released. The total operating revenue increased by 54% year-on-year, the net profit increased by 63% year-on-year, and the final dividend was HK $0.07, accounting for 42% of the dividend payout rate. Haitong international lowered its revenue and operating revenue forecast for fiscal year 21-22 by 12% and 6%, raised its net profit forecast for fiscal year 21 by 8%, and lowered its net profit forecast for fiscal year 22 by 9%. The target price was changed from HK $8.34 to HK $8.09.
At the same time, it is also mentioned that the main risks faced by Zhengrong service are the delivery schedule of Zhengrong real estate group project and the expansion speed of third-party projects. Said that these factors may affect the area under management of Zhengrong service, thus affecting its revenue / operating revenue and operating profit.
Haitong international, which published several Zhengrong service research reports within a year, is almost its largest bull. Except Haitong international, only Southwest Securities Co.Ltd(600369) and Huaxi Securities Co.Ltd(002926) have given Zhengrong service “overweight” and “buy” ratings in 2021.
Moreover, Zhengrong real estate Haitong international was not stingy. It published a research report in August and March 2021 and gave a rating of “better than the big market”.
after Ruixing coffee, step on thunder again
The sharp decline of Zhengrong service and Zhengrong real estate is not the first time that Haitong international has stepped on thunder accurately.
On January 10, 2020, Credit Suisse, Morgan Stanley, China International Capital Corporation Limited(601995) and Haitong international, as joint bookrunners, assisted Ruixing coffee in completing the synchronous issuance of convertible bonds and stocks of US stocks.
Shortly afterwards, Ruixing received a muddy water short report. Haitong international, as the underwriter of Ruixing coffee, released a research report in support of Ruixing, saying that the short selling report of muddy water has defects, the representativeness of grass-roots research data is insufficient, and the samples such as single store observation days and small tickets are small. It also said that a key advantage of Ruixing coffee’s business model is that all transactions are processed through the online payment platform, This makes it difficult for Ruixing coffee to forge transactions.
On April 2, 2020, Ruixing coffee announced that the chief operating officer and some subordinates of Ruixing coffee had forged transactions and other misconduct, involving an amount of about 2.2 billion yuan. Ruixing’s announcement made Haitong international, which once supported it, suffer a severe blow in the face.
Credit Suisse’s share price plummeted due to the fraud scandal, and Chairman Lu Zhengyao failed to fulfill the relevant terms of the $518 million margin loan. Goldman Sachs, one of the lenders, announced that the lender had taken enforcement procedures for 76.4 million Ruixing coffee shares. According to the closing price on Monday, the value of these shares is about $335 million and the loss is about $168 million.
Haitong international also ranked among the top five lenders and suffered heavy losses.
