The former motorcycle giant and “Longxin series” in the capital market struggled for several years in debt difficulties and finally went bankrupt and reorganized. And this has also brought clearance opportunities for the important “gold Lord” Chongqing Rural Commercial Bank Co.Ltd(601077) of Longxin series.
Chongqing Rural Commercial Bank Co.Ltd(601077) march 25 disclosed that in the bankruptcy and reorganization of 13 enterprises including Longxin Group Co., Ltd. (hereinafter referred to as “Longxin group”), the creditor’s rights of RMB 7.262 billion declared by the bank will be paid off according to the repayment scheme determined in the reorganization agreement. At present, the board of directors of the bank has agreed to the settlement plan, and an interim shareholders’ meeting will be held on April 12 to vote on the matter.
Longxin series, which started from motorcycle accessories, was founded by Chongqing tycoon Tu Jianhua. Its members include Longxin group, Longxin Holding Co., Ltd. (hereinafter referred to as “Longxin holding”) and a number of listed companies. In 2018, Longxin began to fall into debt difficulties, and bond defaults occurred successively in June 2020. At the end of January this year, 13 Longxin enterprises, including Longxin group, were adjudicated bankruptcy and reorganization by the court.
Longxin is also an important shareholder of Chongqing Rural Commercial Bank Co.Ltd(601077) and currently holds 570 million shares of the bank through Longxin holdings, ranking fifth among the top ten shareholders. As an important capital provider, Chongqing Rural Commercial Bank Co.Ltd(601077) the asset quality is also under great pressure due to Longxin system. In 2020 and the first half of 2021, the bank has written off more than 5.4 billion yuan of Longxin loans.
Since returning to a shares, the asset quality pressure caused by Chongqing Rural Commercial Bank Co.Ltd(601077) related party transactions has been concerned by the market. With the advancement of Longxin bankruptcy reorganization, will Chongqing Rural Commercial Bank Co.Ltd(601077) ‘s asset quality pressure be relieved together?
the fifth largest shareholder owes 7.2 billion debt
Among many Longxin enterprises, Chongqing Rural Commercial Bank Co.Ltd(601077) are important creditors. Among the total claims of 7.26 billion yuan, there are three Longxin enterprises directly involved.
According to the disclosure of Chongqing Rural Commercial Bank Co.Ltd(601077) march 25, among the direct creditor’s rights of the bank in Longxin series, Longxin Holdings has the largest amount. As of September 30 last year, the amount of creditor’s rights declared was 6.017 billion yuan, and the creditor’s rights in Yushang Investment Group Co., Ltd. (hereinafter referred to as “Yushang group”) and Chongqing Yushang renewable resources development Co., Ltd. (hereinafter referred to as “Yushang renewable resources”) were 610 million yuan and 94 million yuan respectively.
The rest is secured claims. The announcement shows that the loans of five related parties including Chongqing Jinling Automobile (Group) Co., Ltd. in Chongqing Rural Commercial Bank Co.Ltd(601077) are guaranteed by Longxin group, involving an amount of 541 million yuan. According to the semi annual report of last year, by the end of June 2021, the loan balance of Chongqing Jinling Automobile in the bank was about 200 million yuan.
According to the disclosure of new century credit evaluation on February 9, the number of enterprises involved in the bankruptcy and reorganization of Longxin group reached 13. In addition to the company itself, it also includes 11 subsidiaries controlled by Longxin. At the end of December last year, Shandong Jiuyang Group Co., Ltd. has been determined as the lead party to form a consortium as the pre restructuring strategic investor of Longxin group. On January 30 this year, the bankruptcy reorganization application of Longxin group has been accepted by Chongqing fifth intermediate people’s court. On January 12, Chongqing Rural Commercial Bank Co.Ltd(601077) had received the restructuring agreement, which was subsequently approved by its board of directors.
According to public information, Longxin holdings was established on January 22, 2003. Its legal representative is Tu Jianmin, with a registered capital of 1 billion yuan, 98% of which is held by Longxin group. Longxin group was established in 1996 with a registered capital of 160 million yuan, and the actual controller is Tu Jianhua.
Tu Jianhua, the actual controller of Longxin, started from motorcycle accessories in his early years and founded Longxin motorcycle. Together with Lifan motorcycle and Zongshen Motorcycle, Longxin motorcycle formed a tripartite pattern in Chongqing and became a giant in China’s motorcycle industry. Since then, Longxin has gradually expanded its territory to many fields such as real estate, finance and automobile. At present, Longxin holding is also the controlling shareholder of three listed companies Loncin Motor Co.Ltd(603766) , Shanghai Fenghwa Group Co.Ltd(600615) , and H-share Qihe environmental protection.
According to the third quarterly report of last year, by the end of September 2021, after excluding subsidiaries, Longxin holdings had only 1.04 million yuan in cash, while long-term and short-term loans and current liabilities due within one year reached 4.6 billion yuan, 640 million yuan and 10.4 billion yuan respectively, and the funds have been exhausted.
According to Chongqing Rural Commercial Bank Co.Ltd(601077) disclosure, among the secured and ordinary creditor’s rights, the former will be paid in priority within the assessed value of the guaranteed property, and the excess will be paid off as ordinary creditor’s rights; There are two types of ordinary creditor’s rights, which are fully paid off in cash below 500000 yuan, and the excess part is compensated by obtaining the shares of listed company shares + trust beneficial rights.
The sources of debt paying assets will consist of Loncin Motor Co.Ltd(603766) 205 million shares, 241 million shares of Qihe environmental protection, Shanghai Fenghwa Group Co.Ltd(600615) 651 million shares, 432 million shares of Hanhua financial holding and shares of trust beneficial rights. Among them, the assets of the trust plan include some non cash assets other than the assets reserved for operation and the above debt paying stocks.
In terms of specific repayment methods, the shares of shares of listed companies and beneficial rights of trust will be obtained according to the proportion of the amount of creditor’s rights of more than 500000 yuan to the total amount of creditor’s rights of more than 500000 yuan of all ordinary creditors.
As of the closing on March 25, the shares of Loncin Motor Co.Ltd(603766) , Shanghai Fenghwa Group Co.Ltd(600615) , Qihe environmental protection and Hanhua financial holding were 4.38 yuan, 8.31 yuan, 0.8 Hong Kong dollars and 0.39 Hong Kong dollars respectively, corresponding to the total market value of the above debt paying shares of about 1.25 billion yuan. The source and composition of debt repayment assets other than the equity of listed companies have not been disclosed by relevant parties.
how much can the loss be recovered
Over the years, the large amount of debt of Longxin series has brought great pressure on Chongqing Rural Commercial Bank Co.Ltd(601077) ‘s asset quality and profit. This behavior has accrued and written off Longxin series loans for many times. With the help of this reorganization, the bank also got the opportunity to clear.
The debt crisis of Longxin has been gradually exposed as early as 2018. In March of that year, Shanghai Fenghwa Group Co.Ltd(600615) purchased 480 million yuan of trust products in breach of contract. Afterwards, it was found that the funds were finally occupied by Longxin holdings and its related parties. On November 2, 2019, on the fifth day of A-share listing, Chongqing Rural Commercial Bank Co.Ltd(601077) disclosed that all 570 million shares of the bank held by Longxin holdings were waiting to be frozen.
Subsequently, the loan of Longxin holdings in the bank was extended. According to the 2020 annual report, in April and June of that year, Chongqing Rural Commercial Bank Co.Ltd(601077) extended the 997 million yuan loan of Longxin holdings in the bank to 2021. In August and October of that year, Longxin holdings obtained another one-year credit of RMB 6.479 billion from the bank.
Chongqing Rural Commercial Bank Co.Ltd(601077) ‘s help still failed to prevent Longxin series from sliding into difficulties.
In June 2020, Longxin holdings announced that it was unable to disclose the 2019 annual report and the first quarterly report of 2020, and the debt risk of Longxin was officially exposed. By January 20 last year, the overdue debt of Longxin holdings alone had reached 6.037 billion yuan.
With the spread of the debt crisis, Chongqing Rural Commercial Bank Co.Ltd(601077) began to write off the loans of Longxin series. According to the annual report data, in 2020, the loan amount of Longxin holdings written off by the bank reached 3.806 billion yuan. For the remaining 1.535 billion yuan, the provision for impairment also reached 1.301 billion yuan. In the first half of last year, after the principal of 1.392 billion yuan was written off again, the loan balance of Longxin holdings in the bank has dropped to 0.5% This means that all loans of Longxin holdings in the bank have been written off, with a total amount of more than 5.4 billion yuan.
In addition to Longxin holdings, a number of Longxin companies have also obtained Chongqing Rural Commercial Bank Co.Ltd(601077) large amounts of funds. By the end of 2020, the loan balance of Yushang group and Yushang renewable resources in the bank was 606 million yuan and 94.13 million yuan. By the end of June last year, the balance was 617 million yuan and 94.12 million yuan respectively.
The loan of Longxin Holdings has had a great impact on the asset quality and profit of Chongqing Rural Commercial Bank Co.Ltd(601077) . In 2020 and the first half of 2021, the bank cancelled 10.2 billion yuan and 2.53 billion yuan of non-performing loans, of which Longxin holding accounted for about 38% and 51%, and more than 40% and 20% of the net profit in the same period.
With the progress of Longxin series restructuring, Chongqing Rural Commercial Bank Co.Ltd(601077) written off and uncollected loans may be partially recovered Chongqing Rural Commercial Bank Co.Ltd(601077) said that the bankruptcy reorganization of Longxin group was conducive to the repayment of the creditor’s rights declared by the bank, as well as the resumption of operation of relevant enterprises of Longxin group and the improvement of subsequent profitability.
According to the disclosure in the third quarterly report of last year, by the end of September 2021, Longxin holdings had consolidated total assets of 45.85 billion yuan, total liabilities of 33.618 billion yuan and net assets of 12.241 billion yuan. In the same period, the company deducted the total assets of its subsidiaries of 21.1 billion yuan, total liabilities of 18.235 billion yuan and net assets of 2.85 billion yuan.
According to the above data, Longxin’s stock assets used to pay off debts are only equivalent to a little more than one sixth of Chongqing Rural Commercial Bank Co.Ltd(601077) creditor’s rights. As the relevant parties have not disclosed the specific debt situation of Longxin system, it is not known to what extent the bank can recover its funds.
The relevant parties also did not disclose the debt repayment assets other than stocks. Data show that at the end of September last year, the main assets of Longxin holdings, excluding other receivables of 8.88 billion yuan, were mainly long-term equity investment of 11.73 billion yuan and available for sale financial assets of 1 billion yuan. A considerable part of other receivables came from Longxin group. By the end of 2020, the corresponding balance of Longxin group was about 4.05 billion yuan, and the amount involved by its three related parties was also. 700 million yuan, 350 million yuan, 300 million yuan.
share price downward pressure to be solved
In addition to the pressure on asset quality, the pressure on Chongqing Rural Commercial Bank Co.Ltd(601077) caused by related party loans is also the continuous downward pressure on the stock price.
In addition to Longxin department, Chongqing rural commercial village has also provided loans to a number of shareholders. By the end of June last year, the loan balance of Chongqing urban construction investment company, Yufu holding, Chongqing Caixin Environmental Protection Investment Co., Ltd., Caixin Hengli Real Estate Co., Ltd. and many other related parties in the bank had exceeded 500 million yuan.
Among the above-mentioned related parties, the loan balance of Caixin environmental protection and Caixin Hengli in Chongqing Rural Commercial Bank Co.Ltd(601077) by the end of June last year was about 516 million yuan, and both enterprises were subordinate to Caixin group. As of the end of September last year, Caixin group held 218 million shares of the bank, with a shareholding ratio of 1.92%, making it the sixth largest shareholder.
Public information shows that Caixin group directly holds 97% equity of Caixin environmental protection, and Caixin Hengli is fully funded by Chongqing Caixin real estate development group, which is also a wholly-owned subsidiary of Caixin group. The performance forecast shows that in 2021, the Casin Real Estate Development Group Co.Ltd(000838) net profit of Caixin real estate holdings is expected to lose 580 million yuan to 780 million yuan.
Since returning to a shares, Chongqing Rural Commercial Bank Co.Ltd(601077) share price has continued to decline. To this end, the bank has taken stability measures four times since its listing.
According to the disclosure of Chongqing Rural Commercial Bank Co.Ltd(601077) february 8, the closing price of A-Shares was lower than the audited net assets per share in the recent period for 20 consecutive trading days, triggering the conditions for measures to stabilize the stock price. To this end, the nine management plans to increase their shares in the bank according to their own funds that do not exceed 15% of their salary in the previous year.
Previously, the bank has stabilized its share price three times by increasing the management’s holdings of a shares. According to the data, from December 2019 to may 2020, Chongqing Rural Commercial Bank Co.Ltd(601077) then 11 management increased 112200 A shares with their own funds, with a total increase of 757000 yuan. Thereafter, from June to early December 2020, 11 executives increased their holdings of 69900 A shares again. Due to the continuous decline of share price, nine executives of the bank invested 330800 yuan and increased their holdings of 77800 shares from February to may 2021.
However, the management has not stabilized Chongqing Rural Commercial Bank Co.Ltd(601077) share price through previous holdings. Since June last year, with the withdrawal of bank shares, the bank’s share price has also fallen again, falling to 3.66 yuan at the lowest point. However, as of March 25, the latest closing price was 3.81 yuan, up.
From the first three quarters of last year, the asset quality and profit performance of Chongqing Rural Commercial Bank Co.Ltd(601077) have improved. In the first three quarters of last year, the bank’s net profit was 8.884 billion yuan, a year-on-year increase of 11.83%; The credit impairment loss was 6.203 billion yuan, a year-on-year increase of 9.61%, but the growth rate was significantly lower than 31.72% in the same period last year, and the non-performing rate also decreased by 0.04 percentage points to 1.27% year-on-year.
With the liquidation of Longxin series loans and the further improvement of asset quality and profits, as the first a + H listed agricultural commercial bank, will Chongqing Rural Commercial Bank Co.Ltd(601077) ‘s share price also perform synchronously?
