A-share listed banks are frequently carrying out “disk protection” actions. On February 24, according to incomplete statistics by the reporter of Beijing business daily, since the beginning of the year, Chongqing rural commercial bank, Bank Of Chongqing Co.Ltd(601963) , Industrial Bank Co.Ltd(601166) , China Zheshang Bank Co.Ltd(601916) and other banks have successively issued announcements, announcing that directors, shareholders and senior executives will pay out of their own pocket or voluntarily increase their shares.
The latest share increase plan comes from China Zheshang Bank Co.Ltd(601916) . On February 21, the bank issued an announcement on measures to stabilize the stock price, including 7 directors and senior managers, who will increase their A-share shares with their own funds that receive no less than 15% of the salary (after tax) from the bank in the previous year. At the same time, based on the confidence in the bank’s future development prospects and recognition of its growth value, China Zheshang Bank Co.Ltd(601916) six current senior managers will voluntarily increase their A-share shares of the bank with their own funds in addition to completing the above-mentioned compulsory increase. The total amount of the above compulsory and voluntary holdings shall not be less than 5.3428 million yuan, which shall be implemented within six months from February 22.
China Zheshang Bank Co.Ltd(601916) the reasons for this increase include stabilizing the stock price and optimistic about the development prospects of banks, which is also the main reason for the increase of general bank executives. China Everbright Bank Company Limited Co.Ltd(601818) financial market analyst Zhou Maohua said that there are many reasons for shareholders, directors and executives of listed banks to increase their holdings of shares, mainly including adjusting the ownership structure through increasing their holdings, supporting the market and stabilizing the stock price, or being optimistic about the development prospect of the bank and believing that the current stock price is obviously undervalued.
From the current announcement of banks, the main purpose of the increase is to stabilize the stock price. For example, Bank Of Chongqing Co.Ltd(601963) previously announced that from January 4 to February 7, the closing price of the bank’s A-share stock had been lower than the bank’s latest audited net assets per share (adjusted to 10.91 yuan) for 20 consecutive trading days, triggering measures to stabilize the stock price. Therefore, it was decided that seven directors, five senior managers and Chongqing Yufu, the largest shareholder, would be appointed, The total shareholding of the bank is no less than 26.6224 million yuan. Among them, the total shareholding increase of directors and senior managers shall not be less than 763400 yuan, which shall be implemented within 90 days from February 7, and the shareholding increase of Chongqing Yufu shall not be less than 25.859 million yuan, which shall be implemented within 6 months from February 7.
Can the phased increase of directors, shareholders and senior executives stabilize or improve the stock price? Zhou Maohua believes that the increase of senior executives’ holdings of their own company’s shares will play a positive role in stabilizing investor confidence and stock price. However, how to go about the phased stock price is also affected by macroeconomic policies, the company’s operating performance, the overall risk preference of the market, market hot spots and other factors. What needs to be paid attention to is that if the company’s fundamentals are stable and the valuation is reasonable, as the short-term factors fade out, It is bound to win the favor of investors.
When it comes to the share price of the bank, the reporter of Beijing business daily noted that the share price of Industrial Bank Co.Ltd(601166) showed a significant upward trend during the increase from January 13 to February 18. From the increase date to February 22, the share price of Industrial Bank Co.Ltd(601166) reached the peak of 23.22 yuan / share since the beginning of the year. However, since then, the share price of the bank showed a downward trend, and until the closing on February 24, the share price of the Bank fell to 22.32 yuan / share; Bank Of Chongqing Co.Ltd(601963) since the implementation of the share increase plan on February 7, the share price has increased slightly. Until February 11, the increase reached 9.15 yuan / share, it began to fluctuate and fall. As of today’s closing, the share price has fallen to 8.63 yuan / share; Subject to the sales restriction period of the annual report and quarterly report, Chongqing rural commercial bank will actually start to increase its holdings after the release of the first quarter report of 2022. However, since the announcement on February 7, the share price of Chongqing rural commercial bank has increased slightly. By February 11, the share price of Chongqing Rural Commercial Bank reached the peak of 4.09 yuan / share since the beginning of the year, and then began to fluctuate and decline. Until today’s closing, it has fallen to 3.93 yuan / share.
Tao Jin, deputy director of the macroeconomic research center of Suning Financial Research Institute, believes that increasing the holdings of major shareholders or directors, supervisors and senior managers is a relatively major measure to stabilize the stock price of banks. Whether the measures are effective depends fundamentally on the performance of banks and their growth and stability. On the basis of good performance and good risk control, the increase in holdings will help release positive signals and improve valuation.
On the whole, bank stocks are still undervalued. According to wind data, as of the closing on February 24, 35 of the 42 A-share listed banks had a price to book ratio of less than 1, and more than 80% of bank stocks “broke the net”. From the current trend, can the undervalued state of bank stocks be improved in the future? Zhou Maohua analyzed and pointed out that from the perspective of trend, China’s fundamentals have recovered steadily, policies have been accurately supported, enterprise operations have been gradually improved, and the prospects for bank profits and asset quality are optimistic; At present, the overall low-lying and overvalued value of bank valuation is still worth looking forward to the valuation repair market.
