Produced | Sohu Finance

Author | Tianlun Chen

A few days ago, WuXi AppTec, the leader of CRO, broke a big thunder, and its shareholders illegally reduced their holdings to cash out by nearly 3 billion, which aroused public outrage among shareholders.

On the evening of June 11, WuXi AppTec issued an announcement regarding shareholders’ violation of their commitments to reduce their shareholding in the company and an apology through the company. From May 14th to June 8th this year, the company’s shareholder Shanghai Yingyi Investment Center (hereinafter referred to as “Shanghai Yingyi”) reduced its holdings by approximately 17,249,700 shares, accounting for 0.6962% of the company’s total share capital. The price range for the reduction is From 143.49 yuan/share to 176.88 yuan/share, the total amount of reduction is 2.894 billion yuan.

After the reduction, as of the announcement date, Shanghai Yingyi only held 4,174,600 shares of WuXi AppTec, accounting for approximately 0.1419% of the total share capital.

Since May 10 this year, WuXi AppTec’s stock price has continued to rise, from 140.31 yuan/share (without restoring rights) to 180.99 yuan/share (without restoring rights), an increase of nearly 30%. The reduction of Shanghai Yingyi happened during the period when the stock price soared.

Before the implementation of this reduction, as a delegated voter, Shanghai Yingyi did not notify WuXi AppTec in advance, nor did it disclose relevant procedures such as the announcement of the implementation of the reduction plan through the company 15 trading days in advance.

WuXi AppTec said that after the company obtained the latest shareholder register sent by China Securities Depository and Clearing Co., Ltd. on June 8 due to the implementation of the 2020 equity distribution, it noticed the change in the number of shares held by Shanghai Yingyi and immediately approved the issue. Check with Shanghai Yingyi by letter and telephone inquiry and remind the relevant rules and the commitments it has made.

The feedback given by Shanghai Yingyi was that before the reduction, Shanghai Yingyi’s shareholding accounted for 0.8381% of the company’s total share capital, which was less than 1% of the total share capital. When the A-shares were listed, the commitment to reduce the shareholding of the company was made, and relevant regulations of the China Securities Regulatory Commission should be applied, which led to this violation of the commitment to reduce the shareholding. At present, the share reduction has been stopped, and I sincerely apologize for the impact on the company and all shareholders of the company due to the violation of the commitment.

WuXi AppTec’s prospectus shows that, as shareholders of the company, companies such as Shanghai Yingyi have made promises regarding the lock-up and reduction of the company’s shares:

“If the company reduces its holdings of the company’s shares issued before the company’s initial public offering, if the company uses a centralized bidding transaction method, it will disclose its shareholding reduction plan in advance 15 trading days before the first shareholding reduction, and reduce its holdings by other means. The company’s stocks will be announced three trading days in advance. The company is willing to bear the legal liabilities arising from the violation of the above-mentioned commitments. In the event of a situation that requires compensation to investors, the company shall bear the full liability for compensation.”

Public information shows that the executive partner of Shanghai Yingyi is Jiangsu Ruilian Investment, and its legal representative, Chen Zhijie, was the head of the M&A business and investment banking department of Huatai United Securities. Such professionals are not familiar with market rules, and this apology is naturally unacceptable to investors.

Attorney Zhang Yuanzhong, director of Beijing Wentian Law Firm, said that Shanghai Yingyi’s approach has clearly violated the provisions of Article 8 of the “Regulations on Share Reduction of Shareholders of Listed Companies, Directors, Supervisors, and Senior Executives” on the disclosure of information on reductions: “Listing The company’s major shareholders, directors, supervisors, and senior executives plan to reduce their shareholdings through a centralized bidding transaction on the stock exchange, and they shall report to the stock exchange 15 trading days before the first sale and disclose the share reduction plan in advance, and the stock exchange shall put it on record.”

Regarding this incident, Zhang Yuanzhong stated that relevant provisions of Article 197 of the Securities Law should be applied to impose fines and warnings. Since it is the shareholder’s own behavior to reduce shares in violation of regulations, listed companies do not need to bear the responsibility.

Article 197 of the “Securities Law” stipulates that if the information disclosure obligor fails to submit the relevant report or fulfill the information disclosure obligation in accordance with the provisions of this law, it shall be ordered to make corrections, be given a warning, and impose a penalty of more than 500,000 yuan and 5 million yuan. The following fines; the directly responsible persons in charge and other directly responsible persons shall be warned and imposed a fine of not less than 200,000 yuan but not more than 2 million yuan.

But in fact, incidents of illegal shareholding reduction are not uncommon. There are many reasons for violations, and the ultimate punishment is mostly thunder and rain.

In February of this year, Marumi’s third largest shareholder and largest tradable shareholder, L Capital Guangzhou Beauty Ltd., reduced its holdings by 260,000 shares in violation of regulations. The reason was that its staff changes were not handed over in time before and after the Spring Festival, and it was mistaken that it was still in the implementation period of the reduction plan. .

In early June, the incident had a result, and shareholders who violated the regulations received only one warning letter.

Attorney Zhang Yuanzhong said that the increasing number of shareholders’ illegal shareholding reductions is due to insufficient law enforcement, which is difficult to achieve from the perspective of prevention. The key is that follow-up punishments must be implemented in order to truly play the role of “killing chickens and monkeys.”

It is worth mentioning that at the same time that Shanghai Yingyi’s illegal shareholding reduction incident was announced, WuXi AppTec’s report on changes in equity disclosed that 22 companies including actual controllers, persons acting in concert, and delegated voting parties were involved as information disclosures. Obligors still have plans to reduce their holdings of WuXi AppTec’s shares in the next 12 months. They will reduce their holdings of WuXi AppTec’s shares according to market conditions and perform relevant information disclosure obligations; and they will not increase their holdings in the next 12 months. Mingkangde shares plan.

The announcement showed that after Shanghai Yingyi reduced its holdings, WuXi AppTec’s actual controllers Li Ge, Zhao Ning, Zhang Chaohui, and Liu Xiaozhong collectively controlled 25.16% of WuXi AppTec’s voting rights through these 22 institutions.

As of midday’s close, WuXi AppTec’s stock price fell 1.37% to close at 144.02 yuan, with a total market value of 423.5 billion yuan.

Source: Visual China

Reporter丨Chen Jing

The sensational Everbright Securities MPS incident has the latest developments.

On June 11, Everbright Securities issued an announcement to disclose the MPS matters and follow-up situation of the wholly-owned subsidiary Everbright Capital.

The announcement shows that JINXINNC. (Cayman Baptist), the subject of overseas project transactions of Shanghai Baptist Fund, filed fraudulent false statements and breach of tax commitments with individuals and institutions such as RICCARDO SILVA ANDREA RADRZZANI, the original seller shareholder of MPS, in the High Court of England and Wales. The litigation claims that the amount involved is approximately US$661 million (approximately RMB 4.2 billion).

Everbright Securities said that the company’s business operations are currently normal.

Originating from MPS, China Merchants Bank and Huarui Bank invested 3.2 billion in total

What is the MPS project? How did Everbright Securities step on the thunder?

The matter dates back to four years ago. This series of disputes are all related to the “Storm” of the British sports copyright company MP&Silva (the “MPS” project) acquired by Baptist Fund, the executive partner of Everbright Baptist in 2016.

Everbright Baptist, a subsidiary of Everbright Capital, serves as the executive partner of Baptist Fund.

In 2016, Everbright Baptist and Baofeng Investment and Shanghai Qunchang launched the Baptist Fund with a fund size of 10 billion and a total maturity of 5 years. According to Tianyan Check, Baptist Fund has a total of 14 investors, of which China Merchants Wealth holds 53.82%, and Everbright Capital holds 1.15%. The executive partners of Baptist Fund are Shanghai Qunchang Financial Services Co., Ltd. and Everbright Baptist Hui, Baofeng (Tianjin) Investment Management Co., Ltd. Huarui Bank and Shenzhen Hengxiang are also partners of Baptist Fund.

In May 2016, Baptist Fund raised 5.2 billion yuan to complete the acquisition of 65% of MPS. MPS used to be the world’s top sports media company, with business covering more than 200 countries and regions around the world, with more than 90 global event property rights, and more than 30 event rights agency partners. LeTV Sports is its largest partner in China. Against LeEco, the Storm Group at the time also aimed at the sports sector, hoping to formally enter the sports industry.

Among the 5.2 billion yuan raised by the Baptist Fund, Everbright Capital contributed 60 million yuan as an inferior investor. The priority investor China Merchants Bank invested 2.8 billion yuan, and Huarui Bank invested 400 million yuan through Aijian Trust; other investors included Zhaoyuan Yongjin invested 600 million yuan, Shenzhen Hengxiang, Baofeng Department and Everbright Capital jointly invested billions .

In October 2017, MPS lost to rival IMG in the Serie A international copyright bid. In the same year, BeIN Sports took away the Ligue 1 copyright from MPS. Since then, MPS has been losing ground in the sports copyright market. Due to the inability to pay copyright fees, some major copyright owners terminated their contracts with MPS early and even took them to court. In October 2018, with the bankruptcy and liquidation order of the High Court of the United Kingdom, MPS became history. The 5.2 billion yuan investment was “flooded” and the investors encountered Waterloo.

Since then, many partners of the Baptist Fund have demanded compensation from the Everbright Department and the Baofeng Department.

In July 2019, Feng Xin, the actual controller of Baofeng Group, was arrested. Baofeng was in deep crisis and could not protect itself. Everbright Capital has become the main claim target of all investors. Everbright Securities’ 2018 annual report shows that the stakeholders of the Baptist Fund’s priority limited partners have presented a letter of replenishment stamped by Everbright Capital, promising that if the priority limited partners cannot exit, they will be funded by the inferior ones. People Everbright Capital assumes the corresponding obligation to make up the difference.

Everbright Capital was sued or arbitrated by China Merchants Bank, Zhaoyuan Yongjin and Huarui Bank, and Shenzhen Hengxiang, and the amount of “debt collection” involved exceeded 4.1 billion yuan. Among them, the amount involved in China Merchants Bank’s lawsuit against Everbright Capital is approximately 3.489 billion yuan, and the amount involved in arbitration applications for Huarui Bank and Shenzhen Hengxiang is 452 million yuan and 168 million yuan respectively. The arbitration initiated by Zhaoyuan Yongjin involved an amount of 100,000 yuan.

On May 31, 2019, Everbright Securities disclosed that the case was at the stage of filing and acceptance, and the impact on Everbright Capital could not be accurately estimated for the time being.

After the MPS incident, Everbright Securities also experienced a series of executive changes.

In April 2019, Xue Feng resigned as chairman and director of Everbright Securities, and Party Secretary Yan Jun replaced Xue Feng as chairman of the company. In January 2020, Liu Qiuming, the original chairman of CM Investment, was newly appointed as the president of Everbright Securities. The former president Zhou Jiannan resigned due to personal reasons. Several senior executives, including the chief risk officer, compliance director, business director and directors of Everbright Securities, have also changed.

Everbright Securities is also constantly trying to hold Storm Group responsible. In April 2020, Everbright Securities disclosed the result of the first instance of the MPS case. The Shanghai Financial Court ruled that Everbright Capital, a wholly-owned subsidiary of Everbright Securities, should pay approximately 3.116 billion yuan to China Merchants Bank and interest from May 6, 2019 to the date of actual settlement. Loss, and bear part of the litigation fees, property preservation fees and other expenses; pay the investment principal of 400 million yuan to Huarui Bank, pay the investment income from January 1, 2018 to the date of actual performance, and bear litigation fees, preservation fees, etc. Currently, Everbright Capital has filed an appeal, and the relevant litigation is still in the process of performing judicial procedures.

MPS risks are fully accrued, and China Everbright is stepping out of the haze

Following a sharp rebound in performance in 2019, Everbright Securities has achieved a three-fold increase in net profit in 2020.

According to the company’s annual performance report released on March 25, the company achieved a total of 15.866 billion yuan in operating income in 2020, an increase of 58% year-on-year, and a net profit of 2.334 billion yuan attributable to the parent, an increase of 311% year-on-year.

However, dragged down by the MPS incident, Everbright Capital has suffered three consecutive years of performance losses in 2020, with losses of 1.634 billion yuan and 2.909 billion yuan in 2018 and 2019, respectively. As of December 31, 2020, Everbright Capital had total assets of 2.980 billion yuan, net assets of 2.442 billion yuan, and losses of 2.069 billion yuan.

Everbright Securities accrued a liability of 1.55 billion yuan for MPS matters in 2020. In the past two years, it has accrued liabilities of 3.011 billion yuan. Up to now, Everbright Securities has accrued liabilities of 4.565 billion yuan for MPS. In the MPS incident, the largest amount of funds contributed by the stakeholders of the two priority partners-China Merchants Bank and Huarui Bank. According to the announcement on the judgment of the first instance disclosed by Everbright Securities, in addition to the priority principal, a certain amount of interest must be paid. However, as far as the current situation of Everbright Securities’ accrued accrual is concerned, Everbright Securities has made a full accrual for this matter.

Everbright Securities stated that since the occurrence of the MPS incident, the company has deeply analyzed the problems reflected in the risk event, focusing on comprehensively recreating the style from improving the risk management system, achieving full coverage of risk management, implementing the responsibilities of relevant personnel at all levels, strengthening professional management and expert decision-making, etc. Control compliance system. The company has carried out a series of risk investigations and rectifications, comprehensively strengthened the management and control of subsidiaries, further built a sound and prudent risk culture, improved the risk compliance system, and improved risk prevention and resolution capabilities. Judging from the 2020 annual results announcement disclosed by Everbright Securities, the company has stepped out of the haze of MPS risk events, the risks have been basically cleared, and the company’s development will become more healthy.

Accordingly, in 2021, the enterprise expects net revenue of 5,375 billion dong, after-tax profit of 806.4 billion dong, up by 289.76 percent and 302.7 percent respectively compared to the implementation in 2020. Of the VND 5,375 billion net revenue, VND 4,030 billion came from the real estate sector; 3,203.5 billion VND from construction and trade; 1,156.6 billion dong in the energy sector; 300 billion VND in production and agriculture; VND 323.7 billion in other fields; and revenue deductions are -3,638.7 billion. It is expected that by 2021 there will be 400 MWp of solar power generated. BCG’s 2021 strategy will continue to define itself as a leading development group in the renewable energy sector in Vietnam. In particular, the research and development to the LNG gas power segment, the total power output in the portfolio is from 2,000 MW to 2025. For the real estate sector, quickly complete unfinished projects in 2020 to record revenue for 2021, observe the market and deploy new projects cautiously on the basis of making use of available land. In the construction field, Tracodi has become a leading construction contractor in Vietnam. In addition, the enterprise also submits to shareholders the 2020 dividend plan at the rate of 10%. Of which, 8% is in cash and 2% is in stocks. It is known that in the annual shareholders meeting in 2020, the enterprise expects dividends to be 12%. Thus, the dividend rate has decreased 2% compared to the plan. Entering 2021, the dividend rate is expected to increase to 12%. It is known that dividends in 2020 are expected to be paid in the second quarter or the third quarter of 2021. A noteworthy content is that the business plans to continue offering to sell 148.77 million shares, equivalent to a rate of 50% to existing shareholders at the price of 12,000 VND / share. The amount expected to mobilize is 1,785.24 billion for the purpose of supplementing working capital of the business. Expected time is quarter III / 2021. Previously, the enterprise has just successfully offered to sell 68 million shares to existing shareholders at the price of 10,000 dong / share in March 2021. In addition, the enterprise also plans to offer 60 million individual shares to supplement working capital, the expected time in 2021. Closing the session on March 23, BCG shares stood at the reference price of 12,850 dong / share.

Benefiting from multiple mergers and acquisitions business expansion and scale improvement, Country Garden’s performance continued to rise, but the company’s revenue growth rate fell for the first time in three years, and the growth rate of net profit attributable to the parent company declined for two consecutive years. In addition, subject to the integration of mergers and acquisitions, the company’s urban service business gross profit margin has also declined.

Since the company went public in 2018, Country Garden Services’ stock price has risen more than 8 times. As of April 22, the company’s total market value reached 231.38 billion Hong Kong dollars, surpassing the parent company Country Garden. As a “first listed property company”, behind the frequent acquisitions of Country Garden Services, it is not difficult to see that scale is still the core demand for the development of property companies at this stage, and the property management industry may enter the peak of mergers and acquisitions in the future.

Although mergers and acquisitions are an effective way to accelerate expansion, this kind of performance growth brought about by acquisitions cannot be replicated. Under the sustained rapid growth in recent years, for Country Garden’s services, which have formed a relatively high base in various indicators, how to maintain “quality” while pursuing “quantity” is a bigger problem.

It is worth noting that the major shareholder of Country Garden Services JPMorgan Chase & Co. and the company’s president Li Changjiang have successively reduced their holdings of Country Garden Services stocks since 2021, and the two have reduced their holdings by more than 10 million shares in total.

Scale expansion, performance growth, revenue and profit growth slowdown

During the reporting period, in addition to the “three supply and one industry” business, Country Garden’s service property contract management area reached 821 million square meters, an increase of 136 million square meters from the end of 2019; the property charge management area reached 377 million square meters, which was newer than the end of 2019 An increase of 101 million square meters. As of December 31, 2020, the company managed a total of 3277 properties, a year-on-year increase of 36.26%.

Benefited from the expansion of the scale of property management, the company’s performance continued to rise, but the growth rate has slowed down. The annual report shows that the company’s operating income in 2020 was 15.6 billion yuan, a year-on-year increase of 61.75%; the net profit attributable to the parent was 2.686 billion yuan, a year-on-year increase of 60.78%. Among them, the company’s revenue growth rate fell for the first time in three years, and the revenue growth rate fell by about 40% year-on-year; the net profit growth rate attributable to the parent fell by about 20% year-on-year, which has been declining for two consecutive years.

The proportion of revenue from basic property management services declines and focuses on businesses outside the concept of traditional real estate

From the perspective of changes in the revenue structure in the past three years, property management services are the main source of income for Country Garden services. In the past three years, the proportion of revenue from this business has exceeded 50%, but the proportion has been declining year by year, from 73.7% in 2018 to 55.17% in 2020.

Among them, income from properties developed by Country Garden Group accounted for approximately 72% of total property management service income, and income from properties developed by independent third-party developers accounted for 28% of total property management service income, an increase of 3.7% from the same period last year and compared with 2018 An increase of 16.6%. In the company’s total new contract area, brand expansion accounted for 53.3%, while the area from the Country Garden system accounted for 35.1%. The company’s dependence on the parent company’s residential incremental market has decreased.

In addition, Country Garden Services has developed many businesses beyond the traditional concept of real estate, including commercial asset operations, urban services, community group purchases, community media, house leasing, insurance brokerage, etc.

The annual report shows that the company’s urban service business has increased significantly. The company’s urban service business revenue increased from 68 million yuan in 2019 to 884 million yuan in 2020, with a revenue share of 5.67% (approximately 0.71% in the same period in 2019), an increase of 1192.5%, mainly due to business growth brought about by acquisitions To.

In 2020, the company’s community value-added service revenue will be 1.731 billion yuan, and the total revenue will account for 11.1%. The amount of revenue will increase by 100.10% year-on-year, becoming the company’s second largest revenue growth point. Among them, the company’s value-added service innovation business revenue increased by 268.6% year-on-year, and community media service revenue increased by 273.6% year-on-year.

It is worth noting that the company’s revenue from non-owner value-added services has declined. Revenue from this business dropped from 1.422 billion yuan in 2019 to 1.370 billion yuan in 2020, a year-on-year decline of about 3.7%. The company stated that it was mainly due to the change in the consulting service business model in this service.

Mergers and acquisitions “double-edged sword”: urban service gross margin declines due to accelerated expansion, adding more than 3 billion goodwill

In response to high-performance plans and high-growth demands, Country Garden Services has made multiple mergers and acquisitions in the past year, with the intention of increasing scale and expanding its business.

According to data, in September 2020, the company acquired 65% of the equity of City Zongheng (Shanghai) Culture Media Co., Ltd. (hereinafter referred to as “City Zongheng”) to increase its community media service business. In October of the same year, the company acquired 70% of the equity of Country Garden Manguo Environmental Technology Group Co., Ltd. (hereinafter referred to as “Manguo”) and 60% of Fujian Dongfei Environmental Group Co., Ltd. (hereinafter referred to as “Dongfei”), a leading company in the sanitation industry. Equity. In addition, the company also acquired Wenjin International Insurance Brokers Co., Ltd. (hereinafter referred to as “Wenjin Insurance Brokers”) and several other property management companies.

Since 2021, Country Garden’s service has continued to increase its size on the material enterprise track. On April 13, Country Garden Services announced the acquisition of four commercial management subsidiaries of Country Garden Holdings for 20 million yuan. On April 19, the company spent over 4 billion yuan to complete the acquisition of 71.17% shares of Blu-ray Garbo Services.

It is worth noting that although mergers and acquisitions are an effective way to accelerate expansion, this kind of performance growth brought about by acquisitions cannot be replicated. In addition, subject to third-party acquisitions and acquisitions of the target asset quality, the future profitability of property companies will also be affected. Data shows that with the company’s overall gross profit margin growth, the company’s gross margins in community value-added services, “three supplies and one industry” business, and urban service segments all declined. Among them, due to the low gross profit margin of the Manchuria and Dongfei businesses acquired during the year, the gross profit margin of the company’s urban service segment decreased from 38.7% in 2019 to 32.5%.

In addition, due to multiple acquisitions of Country Garden Services in 2020, the company’s new intangible assets will reach 4.672 billion yuan, including 3.145 billion yuan in new goodwill. If the performance of the acquired target in the later period is not as good as expected, Country Garden Services will have a certain risk of goodwill impairment.

Increase in income tax rate affects profits, important shareholders successively reduce their holdings

In 2020, the income tax rate of Country Garden’s main subsidiary of Country Garden Services will be changed from the preferential tax rate of 15% in the same period of the previous year to 25%. Corporate income tax expenses rose from 358 million yuan in 2019 to 933 million yuan, a year-on-year increase of approximately 160.84%. If the 25% income tax rate continues in the future, the profitability index of Country Garden Services will also be under pressure as the scale grows.

In addition, WIND data shows that since the beginning of this year, all shareholders have reduced their holdings of 11.508 million shares of the company. Among them, President Li Changjiang reduced his holdings of 240,000 shares on April 1, with an average price of about 80 Hong Kong dollars per share; the third largest shareholder JPMorgan Chase & Co. successively reduced their holdings of 11.2608 million shares. In the past year, Li Changjiang has reduced his holdings of 2.12 million shares, and has cashed out approximately HK$87,277,400.

The actions of leading companies are the vane of industry development. From the annual report of Country Garden Services, it can be seen that the current mergers, acquisitions, outsourcing and multi-format simultaneous development are still the new trends of the current property management industry, and the industry may enter the era of great integration in the future.

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