A-share small and medium-sized banks are listed by insurance funds or will be a new example!
Recently, Wuxi Bank announced that the bank received the relevant approval from the Wuxi Supervision Branch of the State Financial Supervision and Administration to approve the shareholder qualification of Great Wall Life Insurance Co., Ltd. (hereinafter referred to as "Great Wall Life"), and agreed that Great Wall Life Insurance Co., Ltd. would increase its holdings in Wuxi Bank within six months from the date of approval.
According to the relevant laws and regulations, when the shareholding ratio of a commercial bank plans to exceed the red line of "5%", it is required to report the application to the banking regulatory authority "in advance", and only after obtaining approval can the next step be taken to increase the shareholding.
At present, Great Wall Life's shareholding in Wuxi Bank is close to "5%". From December 2022 to mid-2023, Great Wall Life has increased its stake in Wuxi Bank several times. Combined with the review of shareholder qualifications, the market speculates that Great Wall Life Insurance may continue to increase its shareholding in Wuxi Bank to exceed 5%.
At present, there are not many cases of insurance companies raising bank stocks. Since 2015, there have been 9 bank listings, of which 8 were Hong Kong stocks of major state-owned banks or joint-stock banks. In the past eight years, there has been no case of insurance capital raising listed cities and rural commercial banks other than large banks and joint-stock banks.
The current valuation of bank stocks is at a historical bottom, and the characteristics of high dividend yields are in line with the long-term investment and holding style of insurance funds.
Great Wall Life Insurance may raise the bank of Wuxi.
According to the third quarter report of Wuxi Bank in 2023, as of the end of September 2023, Great Wall Life held 454%, ranking the fourth largest shareholder of Wuxi Bank.
In less than a year before that, Great Wall Life began to increase its holdings in Wuxi Bank with its own funds, and its shareholding ratio increased from 151%, step by step to increase the holdings so far 454% high.
Among them, in the first quarter of 2023, Great Wall Life increased its holdings of Wuxi Bank by more than 40 million shares, and the change in shareholding ratio reached 156%, rising to more than 4%. As of the end of the second quarter of 2023, Great Wall Life held more than 97 million shares of Bank of Wuxi, with a shareholding ratio of 454%。The shareholding ratio has not changed so far.
According to Article 28 of the Commercial Bank Law, "any unit or individual purchasing more than 5% of the total shares of a commercial bank shall be subject to the prior approval of the banking regulatory authority." ”
In addition, according to Article 4 of the Interim Measures for the Administration of Equity in Commercial Banks, "if an investor, its affiliates or persons acting in concert intend to hold or cumulatively increase their holdings of more than 5% of the total capital or shares of a commercial bank for the first time or in aggregate, it shall report to the CBRC or its dispatched agency for approval in advance." ”
Combined with the latest news of the approval of the shareholder qualification of Great Wall Life Wuxi Bank, most of the market speculates that Great Wall Life intends to exceed 5% of its shareholding.
Judging from Great Wall Life's increase in holdings in recent months, Wuxi Bank is not the only listed company that has increased its holdings in 2023. In June 2023, Great Wall Life also raised its cards to A-share listed companies Zhongyuan Expressway and Zhejiang Jiaotong Branch, which is also the only two actions of Great Wall Life since 2015.
Information**: Insurance Association of China).
The recent capital increase of Great Wall Life Insurance was approved by the Beijing Supervision Bureau of the State Financial Supervision and Administration of the People's Republic of China, and the registered capital increased to 621.9 billion yuan, with a total capital increase of about 109.3 billion yuan. According to the capital increase plan, the increased registered capital of Great Wall Life will be injected by the existing shareholder Beijing Huarong Comprehensive Investment*** and the two newly introduced state-owned shareholders.
Judging from the characteristics of bank stocks raised by insurance capital in recent years, most of the targets of insurance capital raising are concentrated in large state-owned banks in Hong Kong stocks, and few involve A-shares.
According to the information of the information of the insurance association's information disclosure platform compiled by securities firm China reporters, since 2015, insurance companies have raised bank shares a total of 9 times, including Taiping Life Insurance and Chinese Life Insurance and other insurance companies have repeatedly increased their holdings and raised H shares of Industrial and Commercial Bank of China and Agricultural Bank of China**, in addition, Centennial Life raised H shares of Zheshang Bank at the end of December 2020**.
In recent years, there has been only one case of listing an A-share listed bank, that is, at the end of December 2015, Chinese People's Property Insurance listed Huaxia Bank. If Great Wall Life Insurance subsequently raises the listing of Wuxi Bank, it will be the second A-share listed bank since 2015.
The market value of Wuxi Bank has just stood at 10 billion yuan.
From the perspective of the targets of insurance capital listing, there have been no cases of small and medium-sized banks being listed since 2015.
In the capital market, bank stocks are heavyweight stocks, with typical characteristics of high dividends and low valuations. Except for the large state-owned banks with a market value of one trillion yuan, the total market value of most small and medium-sized banks is between 10 billion yuan and 100 billion yuan. Undoubtedly, it is difficult for large banks to raise insurance funds in terms of capital volume.
However, there are currently five banks with a market value of less than 10 billion yuan, including Sunong Bank, Jiangyin Bank, Zhangjiagang Bank, Capital Bank and Ruifeng Bank.
In terms of total market capitalization, Wuxi Bank is only higher than the above five banks, just standing on a scale of tens of billions of yuan. As of the last trading day of 2023, the total market capitalization of Wuxi Bank is 1086.3 billion yuan, with a stock price of 505 yuan per share, the price-to-book ratio is 06 times.
Judging from the current top three shareholders of Wuxi Bank, the proportion of shares held by Wuxi Taihu New Town Asset Management *** Guolian Trust Co., Ltd. and Wuxi Xingda Nylon *** respectively 16%。Among them, the first two major shareholders are state-owned legal person shareholders, and the third is domestic non-state-owned legal person shareholders.
Among the top 10 shareholders of Wuxi Bank, two institutional shareholders have pledged or frozen shares. Among them, Wuxi Wanxin Machinery, which ranks fifth as a shareholder, holds a shareholding ratio of 409%, but nearly half of the shares are pledged;In addition, Hualin ** shares *** hold 175% of the shares, all of which are currently frozen.
The total assets of Wuxi Bank have reached 2,333 by the end of the third quarter of 20236.2 billion yuan, and an increase of 10 percent from the end of the previous year28%。In terms of profitability, the bank's revenue growth rate was less than 1%, and net profit growth rate was more than 15%. In the first three quarters of 2023, Bank of Wuxi achieved operating income of 349.2 billion yuan, a year-on-year increase of 089%；Net profit attributable to shareholders of the listed company 167.6 billion yuan, a year-on-year increase of 1614%。Weighted average return on equity was 1214%。
From the perspective of the income statement, the bank's provisions will be significantly reduced in 2023. The third quarterly report shows that in the first three quarters of 2023, Wuxi Bank's credit impairment loss will be 56.7 billion yuan, compared to 95.2 billion yuan, a year-on-year decrease of more than 40%.
Bank stock valuations are at an all-time low.
At present, the valuation of A-share listed banks is at an all-time low.
In the second half of 2023, the stock price performance of listed bank stocks was sluggish, and the A-share banking sector collectively broke the net. According to Choice data, as of December 29**, the price-to-book ratios of 42 A-share listed banks were below 08 times, the average price-to-book ratio is less than 052 times.
Since the beginning of this year, the frequency of major shareholders and senior executives of listed banks has increased significantly. Among them, due to the triggering of stock price stabilization measures, there are many cases of institutions and executives passively increasing their holdings, but more major institutional shareholders of banks have initiated active increases in holdings, and the signal of "disk protection" is strong.
Among them, in February 2023, Bank of Chongqing received a plaque from Chongqing Water Conservancy Investment (Group)**hereinafter referred to as "Water Investment Group"), a local state-owned shareholder.
On February 10, 2023, the Water Investment Group increased its stake in Bank of Chongqing by 35930,000 shares, after the increase, the proportion of shares held in Bank of Chongqing reached 5%. Subsequently, the water investment group has increased its holdings several times, and its shareholding ratio in Bank of Chongqing has reached 850%。
Under the combined effect of the bottom of the performance and the bottom of the valuation, many brokerage research reports believe that the subsequent economic recovery trend will bring about an improvement in the valuation of this sector.
CITIC**'s dismantling of the bank's profit model shows that the industry's ROE is expected to bottom out in 2024-25. According to the CITIC ** research report, looking forward to 2024, under the combined effect of bank performance and valuation, the valuation of the industry can be expected to increase, and the trend of bank stocks may change synchronously with the improvement of credit expectation margin.
Editor-in-charge: Luo Xiaoxia.
Proofreading: Zhao Yan.
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