Nearly a year later, Orient Securities Company Limited(600958) 16.8 billion rights issue ushered in progress, and 308 million rights issue of H shares was first approved.
After hours on February 23, Orient Securities Company Limited(600958) announced that the CSRC recently approved the company to issue no more than 308 million overseas listed foreign shares with a par value of 1 yuan per share, all of which are ordinary shares. The issuance and listing of Orient Securities Company Limited(600958) H shares is subject to the approval of the Hong Kong stock exchange.
Orient Securities Company Limited(600958) This allotment is a simultaneous issuance of a + H shares, and the total amount of funds raised by the allotment is expected to be no more than 16.8 billion yuan. At the same time that the H-share allotment was approved, the A-share allotment application document also entered the feedback stage – on January 15, Orient Securities Company Limited(600958) replied to the CSRC about the financing necessity and relevant penalties.
In addition to the approval of H-share allotment, Orient Securities Company Limited(600958) share price showed eye-catching performance today. As of the closing, it was reported at 12.39 yuan, up 4.12%, leading the securities sector; The company’s H-share price was also red, rising slightly by 0.69% to HK $5.87.
Among various refinancing methods, the allotment of shares is favored by securities companies for its advantages of low fund-raising difficulty and faster issuance speed. Since 2020, there have been 9 securities companies that have implemented the allotment of shares. In addition to Orient Securities Company Limited(600958) , there are Caitong Securities Co.Ltd(601108) and China Industrial Securities Co.Ltd(601377) , of which Orient Securities Company Limited(600958) is the first to raise 16.8 billion yuan.
raised 16.8 billion yuan and invested more than 70% in investment banking, wealth management and other businesses
On March 30, 2021, Orient Securities Company Limited(600958) disclosed the plan for public offering of shares. The company plans to allot no more than 3 A shares and H shares for every 10 shares. The number of shares allotted is no more than 2.098 billion, and the total amount of funds raised by the allotment is expected to be no more than 16.8 billion yuan (the specific scale depends on the market conditions at the time of issuance).
The launch of the share allotment scheme once triggered a plunge in Orient Securities Company Limited(600958) share price the next day, even hitting a new low in one year. At the closing on March 31, 2021, Orient Securities Company Limited(600958) A shares closed at 8.86 yuan, down 8%; H shares closed at HK $5.05, down 2.88%.
For the purpose of allotment, Orient Securities Company Limited(600958) said that after deducting the issuance expenses, it is intended to be used to increase the company’s capital, supplement working capital, optimize the asset liability structure, serve the real economy, and comprehensively improve the company’s market competitiveness and anti risk ability.
Orient Securities Company Limited(600958) This fund-raising mainly has four major investments, of which more than 70% are invested in investment banking, wealth management and securities finance. Specifically, the investment in investment banking, wealth management and securities finance business shall not exceed 6 billion yuan, the investment in sales and trading business shall not exceed 3.8 billion yuan, and the supplementary working capital shall not exceed 1 billion yuan.
Orient Securities Company Limited(600958) said that increasing capital investment in investment banking will include but not limited to underwriting and recommendation business, financial consulting business, project follow-up investment, equity investment fund and other enterprise financing full cycle services, and develop the layout of investment banks in the whole business chain. Wealth management and securities finance business, including but not limited to wealth management, margin trading, financial technology, etc., further promote the transformation of the company’s wealth management business.
the net profit doubled in 2021, and the performance may be dragged down by the stock quality
In addition to the phased progress in the allotment, Orient Securities Company Limited(600958) recently announced the performance forecast for 2021.
On February 9, Orient Securities Company Limited(600958) disclosed the performance express of 2021. The announcement shows that in 2021, the company achieved an operating revenue of 24.373 billion yuan, a year-on-year increase of 5.36%; The net profit was 5.372 billion yuan, an increase of 97.27% over the same period last year, nearly doubling.
For the reasons for the outstanding performance, Orient Securities Company Limited(600958) said that it was mainly due to the year-on-year increase in the net income of service charges from the company’s asset management, brokerage, investment banking and other businesses and the investment income of associated enterprises. At the same time, the provision for credit impairment decreased year-on-year.
At the same time of the high increase in net profit, Orient Securities Company Limited(600958) also attracted attention in an announcement on the provision for asset impairment disclosed on the same day, in which the amount of impairment is not small. According to the announcement, the provision for impairment of various assets in Orient Securities Company Limited(600958) in 2021 totaled 1.317 billion yuan, reducing the net profit of 987 million yuan in 2021.
Among them, the provision for resale financial assets accounted for the majority, and the amount of impairment reserves reached 1.318 billion yuan, accounting for more than 100% of the total provision, which is also equivalent to 24.53% of the current net profit of Orient Securities Company Limited(600958) . Orient Securities Company Limited(600958) said that affected by the changes in the credit status of the financier and the market value of the pledge, the purchase of resale financial assets mainly comes from the provision for impairment of stock pledge items that fail to fulfill the obligation of repurchase or supplementary pledge in accordance with the agreement.
The reporter also noted that a large amount of impairment loss also occurred in Orient Securities Company Limited(600958) in 2020, up to 2.592 billion yuan, reducing the company’s net profit of 1.944 billion yuan in 2020. In contrast, the impairment of assets in 2021 has decreased significantly compared with the previous year, which may be one of the reasons for the high profit increase of Orient Securities Company Limited(600958) last year.
38.8 billion share allotment of 3 securities companies is still on the way
In order to grasp the development opportunities of the industry and improve the comprehensive competitiveness, the refinancing enthusiasm of listed securities companies remains high. Among various refinancing methods such as fixed increase, share allotment and convertible bonds, share allotment is particularly popular because of its advantages such as low fund-raising difficulty, faster issuance speed, larger fund-raising scale and no dilution of the proportion of old shareholders’ equity.
Just a month ago, Citic Securities Company Limited(600030) was known as the largest allotment in the history of the securities industry, and the smooth landing was particularly eye-catching. On January 26, Citic Securities Company Limited(600030) released the announcement of the issuance results of the allotment. The effective subscription amount of the A-share allotment was 22.396 billion yuan. Then, its 8 billion yuan allotment fund-raising for cash management also triggered a heated discussion.
How popular is the allotment of shares in the refinancing of securities companies? According to the previous statistics of the financial Associated Press, since 2020, including Citic Securities Company Limited(600030) , nine securities companies have implemented share allotment, including Soochow Securities Co.Ltd(601555) , Hongta Securities Co.Ltd(601236) , Huaan Securities Co.Ltd(600909) , Guoyuan Securities Company Limited(000728) , China Merchants Securities Co.Ltd(600999) , Shanxi Securities Co.Ltd(002500) , Tianfeng Securities Co.Ltd(601162) , Sealand Securities Co.Ltd(000750) , raising a total of 80.326 billion yuan, of which Soochow Securities Co.Ltd(601555) has implemented share allotment twice during the period.
In addition, there are three other securities companies in the process of share allotment. In addition to Orient Securities Company Limited(600958) , there are Caitong Securities Co.Ltd(601108) and China Industrial Securities Co.Ltd(601377) . According to the current proposed fund-raising amount, the total allotment scale of the three securities companies has reached 38.8 billion yuan; The fund-raising amount of Orient Securities Company Limited(600958) was 16.8 billion yuan, followed by China Industrial Securities Co.Ltd(601377) 14 billion yuan and Caitong Securities Co.Ltd(601108) 8 billion yuan. Among them, Caitong Securities Co.Ltd(601108) was approved by the CSRC on January 26 and plans to place 1.077 billion new shares to the original shareholders.
