China Galaxy Securities Co.Ltd(601881)
About Shandong Yabo Technology Co.Ltd(002323) adjusting capital reserve
Special opinions on the calculation formula of ex right reference price of converted share capital Shenzhen Stock Exchange:
On April 25, 2021, The intermediate people's Court of Zaozhuang City, Shandong Province made (2021) Lu 04 Po Shen No. 3 civil ruling, ruled to accept the creditor's reorganization application for Shandong Yabo Technology Co.Ltd(002323) (hereinafter referred to as "Yabo shares") according to law, and transferred the case to the people's Court of Shizhong District, Zaozhuang City, Shandong Province (hereinafter referred to as "Shizhong District Court") on April 29, 2021 ）Trial. On May 6, 2021, Shizhong District Court made (2021) Lu 0402 Po 3-1 decision and appointed Shandong Yabo Technology Co.Ltd(002323) liquidation group as the manager. On September 30, 2021, upon the application of the manager, Shizhong District Court made (2021) Lu 0402 Po 3-3 civil ruling and approved the Shandong Yabo Technology Co.Ltd(002323) reorganization plan (hereinafter referred to as "reorganization plan") ）And terminate the reorganization procedure of Yabo shares.
According to the investor's equity adjustment plan of the reorganization plan, this reorganization will convert the capital reserve into share capital based on the existing total share capital of Yabo shares of 745729656 shares and increase 18.44 shares for every 10 shares, with a total of 1375125486 shares. After the completion of this reorganization, the total share capital of the company will be increased from 745729656 shares to 2120855142 shares. Among the above converted shares, 323185413 shares will be distributed to all shareholders except the top ten shareholders registered in the company after the closing of the equity registration date, 789379580 shares will be transferred by the restructuring investor for a total cash consideration of 789379580 yuan, and the remaining 262560493 shares will be used to offset the debts of Yabo shares. (the exact number of shares to be added shall be subject to the number actually registered and confirmed by China Securities Depository and Clearing Co., Ltd. Shenzhen Branch)
China Galaxy Securities Co.Ltd(601881) (hereinafter referred to as "the financial consultant") as the financial consultant of Yabo shares, after careful research, it is considered that the calculation formula of ex right reference price needs to be adjusted in combination with the actual situation of the reorganization plan for the conversion of capital reserve into share capital in the reorganization of Yabo shares. The specific situation is explained as follows: I. the necessity of ex right
Ex rights is the elimination behavior formed by the increase of the company's share capital and the decrease of the actual value of the enterprise represented by each share, which needs to be eliminated from the stock market price after the occurrence of this fact. If the reorganization is completed according to the reorganization plan, For example, the increase in owner's equity caused by the addition of each share (newly added owner's equity / number of newly added shares) is lower than the current share price of Yabo shares in the secondary market, it is necessary to remove the rights of the company's secondary market share price according to the relevant formula. After comprehensive analysis and calculation, the capital reserve is converted into share capital according to the proportion of 18.44 shares per 10 shares, with a total of 1375125486 shares (the exact number of shares to be added shall be subject to the actual number registered and confirmed by China Securities Depository and Clearing Corporation Limited Shenzhen Branch). The increase in owner's equity caused by the new share is lower than the company's secondary market price. Therefore, it is necessary to remove the rights of Yabo shares after the conversion of capital reserve is completed.
2、 Proposed adjustment to the calculation formula of ex right reference price
According to article 4.4.2 of the trading rules of Shenzhen Stock Exchange (revised in March 2021): "the calculation formula of ex right (interest) reference price is:
Ex right (interest) reference price = [(previous closing price - cash dividend) + allotment price × Share change ratio] ÷ (1 + share change ratio)
When the securities issuer deems it necessary to adjust the above calculation formula, it may apply to the bourse for adjustment and explain the reasons. With the consent of the exchange, the securities issuer shall publish the calculation formula of the ex right (interest) reference price applicable to the ex right (interest) to the market. "
Since the capital reserve converted into share capital is a part of the adjustment of investors' rights and interests in the reorganization procedure, it is different from dividend and share distribution in the general sense, According to article 4.4.2 of the trading rules of Shenzhen Stock Exchange (revised in March 2021), the company adjusts the calculation formula of ex right reference price. Based on the actual situation of the company, the company plans to calculate the ex right reference price according to the following formula:
Ex right (interest) reference price = [(previous closing price - cash dividend) + the price of converted shares to offset debts × Proportion of change in tradable shares caused by conversion of shares to offset debts + price of converted shares subscribed by restructuring investors × Proportion of change in tradable shares due to subscription of converted shares by restructuring investors] ÷ (1 + proportion of change in tradable shares due to repayment of debts by converted shares + proportion of change in tradable shares due to subscription of converted shares by restructuring investors + proportion of change in tradable shares due to distribution to original shareholders)
Since no cash dividend is involved, the cash dividend in the formula is 0. Among them, the price of converted shares to offset the debt is 5.80 yuan / share, and the change proportion of circulating shares caused by converted shares to offset the debt is 262560493 / 745729656; The price of converted shares obtained by restructuring investors is 1.00 yuan / share, and the change proportion of circulating shares caused by converted shares obtained by restructuring investors is 789379580 / 745729656; The proportion of changes in tradable shares due to distribution to the original shareholders is 323185413 / 745729656.
Meanwhile, if the calculation result of the above formula is greater than the closing price of the stock before the ex right and ex dividend date of the company's capital reserve converted into share capital, The adjusted ex right (interest) reference price of the company shall be consistent with the closing price of the stock before the ex right and ex interest date of the capital reserve converted into share capital; if the calculation result of the above formula is less than the closing price of the stock before the ex right and ex interest date of the company's capital reserve converted into share capital, the ex right (interest) reference price of the company shall be adjusted according to the above formula.
3、 It is reasonable to adjust the calculation formula of ex right reference price this time
(i) The basic principle and market practice of ex right in stock price
Ex rights means that when the total share capital of a listed company increases but the actual value of the enterprise represented by each share decreases, it is necessary to eliminate these factors from the stock price and adjust the stock price. When the total share capital of a listed company increases, the ex right of the stock price is mainly the behavior of the original shareholders of the listed company:
1. If the share capital is increased but the owner's equity has not changed, the capital reserve shall be converted into share capital or shares shall be distributed
When the share capital of a listed company increases and there is no corresponding change in the owner's equity, the actual value of the enterprise represented by each share (calculated according to the net assets per share) decreases. In order to promote the open market to reflect the company's stock price on a fair basis, the stock price needs to be adjusted downward through ex rights.
2. Allotment of shares of listed companies whose price is significantly lower than the market price
When a listed company allots shares, the general situation is to allot shares to all the original shareholders of the listed company in proportion, and the allotment price is significantly lower than the market transaction price. Therefore, the allotment of shares gives all the original shareholders of the listed company the right to subscribe for new shares at a large discount, which is a rearrangement of the shareholders' rights and interests of all the shareholders of the listed company. From the perspective of the open market, in order to reflect the fair trading price benchmark, the company's stock price needs to be adjusted downward through ex right after the allotment.
In addition, for additional issuance other than share allotment, such as non-public offering and public offering of shares by a listed company, the net assets per share will increase accordingly under normal circumstances. In principle, the stock price of the company will not be adjusted through ex right.
（2） Specific conditions of capital reserve converted into share capital of Yabo shares
The conversion of capital reserve to share capital is an important part of Yabo's share restructuring plan, which is significantly different from the conversion of capital reserve to share capital of listed companies under normal circumstances.
1. The conversion of capital reserve into share capital shall be implemented after the court's ruling and approval. Most of the converted shares are used to introduce restructuring investors and pay off debts. Before this increase, The owner's equity of Yabo shares attributable to the parent company is 40 million yuan (financial data of the semi annual report in 2021). The company is close to insolvent, and the net asset per share is only 0.05 yuan (40 million yuan / 746 million shares = 0.05 yuan). According to the restructuring plan, after the conversion, Yabo shares, while expanding its total share capital, introduced restructuring investors and paid off its liabilities. The company's assets increased significantly, the debt scale decreased significantly, the asset liability structure was fundamentally improved, and the owner's equity increased significantly. In terms of the net profit level, Yabo shares were at a low level before the restructuring In the state of continuous loss, the net profit is negative for three consecutive years; After the reorganization, the company will restore its ability of continuous operation. Therefore, there is a qualitative difference between the increase of capital reserve and the general situation that the company's share capital increases before and after the increase, but the owner's equity and profitability remain unchanged, resulting in the decline of the actual value of the enterprise represented by each share, so the stock price needs to be adjusted by ex right.
2. According to the restructuring plan, most of the shares generated from the conversion of capital reserve into share capital are used to introduce restructuring investors, who pay cash for consideration. In the reorganization procedure, the manager recruited the reorganization investors in an open manner, and stressed in the recruitment conditions that the reorganization investors need to assist in solving the problems of performance compensation of shareholders of Yabo shares, performance compensation of former shareholders of Sun company and shareholders' claims caused by Securities Misrepresentation. During the recruitment period, only one intended investor signed up and was willing to coordinate and solve the above problems. In order to avoid the reorganization failure and liquidation of Yabo shares due to lack of resource investment, the manager and the only intended investor have determined the final investment plan after several rounds of negotiation and negotiation. From the perspective of implementation effect, this re increase is not a pure placement to all the original shareholders of the listed company under normal circumstances, but is closer to a market-oriented and negotiated transaction.
3. After the completion of this reorganization, the asset liability structure of Yabo shares has been optimized and the strength of net assets has been enhanced. According to the provisions of the reorganization plan, after the completion of the reorganization of the company, not only the total liabilities of the company will be greatly reduced and the financial situation will be effectively improved, but also powerful reorganization investors have been introduced into the reorganization procedure to help the operation and development of the company, and the equity value owned by the shareholders of the company will be significantly improved. Therefore, if the ex right price of the company's stock is calculated according to the original formula in the trading rules, the ex right price of the company's stock after ex right will be significantly lower than that before ex right, and the ex right price will not fairly reflect the real value of the company's stock after Yabo shares have improved the fundamentals and essence of the company through reorganization, It is also inconsistent with the basic principle of finding the fair value of the company's shares through ex right.
4、 Conclusion
In conclusion, the financial advisor believes that in order to promote the smooth implementation of the reorganization plan of Yabo shares, and considering the need for the company's share price to reflect the fair value of Yabo shares after the fundamental aspects of reorganization have been substantially improved, At the same time, there is a significant difference between the conversion of capital reserve into share capital in the reorganization procedure of Yabo shares and the conversion of capital reserve into share capital or allotment of shares of Listed Companies in general. The calculation formula of the original ex right reference price does not conform to the actual situation of the conversion of capital reserve into share capital in the reorganization of Yabo shares, Therefore, it is necessary to adjust the calculation formula of ex right reference price in line with the actual situation of the company.
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China Galaxy Securities Co.Ltd(601881) December 24, 2021
