Three Major Changes Indicate That "Barbarian Business" Is Getting Far Away. Long Term Capital Dominates The Logic Of A-Share Price

Yang Ping, researcher of 21st Century Capital Research Institute

The A-share control market, which is often called "barbarian knocking on the door", is no longer the scene of that year.

The 21st Century Institute of capital studies has found that the current brand raising in China's capital market is quite different from the previous one in terms of the main body of the listing organization, the ability of industrial integration, the source of funds, the appeal for control rights, the types of listed companies sought, and the operation mode after obtaining the control rights of listed companies.

In view of a series of changes, the 21st Century Capital Research Institute issued the "2021 A-share brand new force Research Report".

According to the research, this trend is related to the specific background of the current A-share market and the mature development of the capital market.

The most typical change is that the "shell speculators" who excessively seek the capital utility of listed companies almost disappear.

According to the research conclusions of the 21st Century Capital Research Institute, there are four main types of capital entities participating in the promotion: first, the local state-owned assets of Zhejiang, Guangdong and other provinces, as well as Shenzhen, Zhuhai, Xiamen and other developed cities; Second, the state-owned assets platforms at the second and third tier cities or districts and counties, such as Shunde, Yuyao, Laoshan and Yangpu in Shanghai, are the main platforms; Third, it is mainly composed of platform type investment institutions such as Guangdong mintou and Hillhouse capital. Guangdong mintou is a private investment platform promoted by Guangdong provincial government and initiated by many large-scale private enterprises in Guangdong Province. Hillhead is one of the largest industrial investment platforms in China; Fourth, industrial units, such as TCL, Wen's shares and 3600, are listed as entity enterprises.

In addition, it also includes part of sunshine private placement and natural persons, which have diversified purposes.

At present, the first three types of capital entities have large-scale operation. Most of the investment cases have long-term characteristics. Most of them focus on industrial demands and become an important force to activate capital market pricing and reverse promote market value discovery.

The first chapter: the multi-dimensional changes of the licensing agencies

From the data of listed companies, in the past half a year, 35 listed companies have raised their cards in the capital side, of which only 4 natural persons and 2 sunshine private equity funds have raised their cards, and the others are institutions.

Industrial capital, long-term investors with strong industrial resources and capital strength are becoming more and more active in the process of card raising.

The 21st Century Capital Research Institute has found that in the past five years, under the guidance of the regulatory authorities and the increasingly mature capital market, there has been a new trend in the brand raising market: unlike the shell company acquisition which prevailed earlier, most of the listed companies were listed in the industrial category with healthy main business and good quality, while the listed companies mainly used long-term funds, From the perspective of resource integration and long-term return, value investment is no longer keen on short-term speculation such as "shell speculation" and "shell buying".

The most typical phenomenon is that "stamp collecting" has disappeared. Unlike the previous institutions, which used to raise a few or even more than ten listed companies, at present, for example, Guangdong private investment mainly focuses on important industrial entities or platforms such as Liaoning Chengda and China Bao'an; Wenshi shares rely on Wenshi capital to raise the brand of Huatong shares; Hillhouse capital increased its holdings of China Resources beer, Gree Electric appliances, etc., which were mainly strategic investment or industrial layout.

From the data level, the Capital Research Institute of the 21st century abstracts three major trends of the current A-share card raising behavior, which all support this change.

1.1 card raising trend: quantity decreasing and quality increasing

From the quantitative point of view, the brand raising market has cooled down compared with the peak five years ago, but after experiencing the low point in 2018, it has rebounded obviously this year. Especially since the second half of 2020, the card raising market has gradually become active, which has led to the recovery of M & a market.

In terms of the performance of the listed companies, the median net profit (2015 annual report data) was only 44.4666 million yuan in 2016, and dropped to 27.3507 million yuan in 2017.

In the "mainstream" sentiment of the market, there were as many as 26 enterprises whose performance was less than 10 million yuan in 2016, of which 18 enterprises were in the state of loss, accounting for 35.62% of the total. In 2017, the proportion was further innovated, accounting for 36.92%.

Starting from 2019, the market card raising behavior gradually returns to rationality, and the number of card raisers and the average performance scale of the enterprises are significantly improved.

The 21st Century Capital Research Institute found that the reason why the loss rate of listed companies (annual report performance in 2018) increased in 2019 was related to the flooding of "devaluation tide". After experiencing the M & a boom from 2014 to 2016 and the end of the three-year gambling period, a large number of listed companies' Mergers and acquisitions "stepped on thunder", causing huge goodwill impairment, resulting in huge performance losses, However, from the perspective of the market environment at that time, the main business operation of some enterprises is still worthy of recognition.

Since 2020, the trend of industrial M & A is more obvious.

According to the data of the 21st Century Capital Research Institute, the median net profit of the listed companies (annual report performance in 2019) has gradually increased by more than 70 million yuan. On the one hand, the operating performance of A-share listed companies is gradually improving, on the other hand, the quality of the listed companies is significantly improved.

In 2020 and 2021, the proportion of listed companies with loss or performance less than 10 million is also significantly lower than that in 2016 and 2017.

1.2 change of subject matter: industry oriented, bid farewell to "shell stocks"

In recent half a year, the listed companies with dispersed ownership structure and low valuation are the main ones.

From the perspective of industry distribution, the companies with a large number of brands are located in public utilities, building decoration, computer, mechanical equipment, building materials, household appliances, real estate, electrical equipment and other industries. Among them, five public utilities have been raised, and four building decoration, computer and mechanical equipment have been raised respectively.

In addition, compared with four or five years ago, nine of the 73 listed companies listed in 2016 were given risk warning, and nearly 30% were "shell stocks" with low performance and weak main business; Among the 65 enterprises that were listed in 2017, 9 were risk warning stocks. In addition, there were many shell stocks such as Xinhuangpu and Kangqiang electronics.

In recent years, the median market value of listed enterprises has also increased significantly compared with previous years. In 2016 and 2017, the median market value of listed enterprises was 3.354 billion yuan and 3.555 billion yuan, respectively. By 2020 and 2021, the value reached 4.884 billion yuan and 5.378 billion yuan respectively.

1.3 changes in the licensing Party: the rise of long-term capital and the disappearance of insurance capital

Since 2020, obvious changes have taken place in the brand raisers. Industrial capital, state-owned assets and other long-term investors have become the dominant players in the brand-raising market. Most of them have industrial resources or capital resources, which bring more empowerment to listed companies, rather than seek short-term stock price rise and fall.

Different from the previous wave of card raising (i.e. from 2016 to 2017), most of the new round of card raisers are based on industrial capital or long-term capital.

According to the ifnd data of flush, among the 35 enterprises that have been raised since November 2020, eight of them are state-owned institutions, six are listed companies or enterprises with industrial resources, and three are financial capital holding long-term capital.

Among them, since 2020, insurance capital has almost disappeared in the A-share "river and lake", while sunshine private placement, trust and asset management plan are occasionally seen in the campaign, but they all deny seeking control of listed companies.

In addition, different from the previous multi agreement transfer, since last year, more and more purchasers have chosen not to negotiate with the original shareholders, but directly through the secondary market bidding transaction.

Chapter two: "the logic of control value" is quite different

There are three main types of tactics for foreign investors to list companies on the market

One is pure financial investment or speculation. Zhongke merchants, the "king of hoarding shell" who once "dominated" A-shares, knew this well. During the stock disaster in 2015, it raised more than 16 listed companies. In July 2015, it held 10.93% shares of Dingtai new materials through Zhongke Huitong twice, which cost about 260 million yuan. Later, Shunfeng holdings successfully borrowed the shell of Dingtai new material to be listed, and Dingtai new material had 11 one character boards in succession, China and Kuwait have made a lot of money from investment promotion. However, due to the introduction of the strictest "new regulations on restructuring" at the end of 2016 and the successive attacks of the CSRC, the "mode" of China Science and technology investment promotion finally withdrew from the historical stage, and it was also "depressed" in the long years since then.

Second, the injection of assets to complete the backdoor. That is to find an individual stock with dispersed equity, low market value, low growth potential, which is likely to be backdoor, obtain control right through direct purchase in the secondary market, or even raising cards, fixed increase, agreement transfer, and so on, and then inject assets. When the shell company completes the asset restructuring, the shell borrowing is successfully completed. A typical example is Rongxin's acquisition of mengwang technology by fixed increase after the change of ownership, Finally, mengnet technology successfully realized "backdoor"; After the change of ownership, Hongte has been injected into Internet finance related assets, and has been renamed derivative technology.

Third, with the help of the financing and asset integration functions of listed companies, it will be built into a capital platform. For example, after the acquisition of Hanting Yuyou, Pingtan state-owned assets has stripped off all its original business, relocated and renamed (now renamed as Strait innovation), and plans to build it into a smart city and intelligent medical industry platform in Pingtan city. At present, Taiwan Strait innovation has participated in many construction projects of Pingtan state-owned assets such as haoyiyou Internet hospital in Pingtan comprehensive experimental zone.

Judging from the current card raising ecology, the vast majority of card raisers no longer seek the hype value of the secondary market.

The 21st century economic reporter has noticed that at present, most of the listed companies promise to bring industrial cooperation, financial support, or help enterprises to integrate resources. They attach importance to the resource endowment of listed companies and are willing to empower them with their own strength.

A typical case is the case of TCL appliance group raising its brand of Omar in 2021. On the evening of May 10, after four months of increasing its holdings, TCL appliance group formally took control of Omar.

The former once said in the letter of notification that TCL appliance group will provide enabling support according to the company's operation and development strategy in the future to ensure the healthy and independent development of the company's core business.

Although Omar electric lost 540 million yuan in 2020, it was mainly affected by the company's financial business, and its holding subsidiary Omar refrigerator achieved relatively stable performance. Under the influence of the epidemic situation, Omar refrigerator still achieved 8.337 billion yuan of operating income in 2020, an increase of 16.09% compared with the same period of last year, which was attributable to the net profit of 458 million yuan of listed companies, which was also the key to win TCL's favor.

"TCL is a representative enterprise in the field of large-scale household appliances, especially TV sets. But now, competitors like Midea Haier are diversifying into the home appliance industry, with rich products covering almost all kinds of home appliances. At this time, TCL can improve its home appliance product matrix and enrich its product line through M & a, At the same time, enrich product channels and use their own channels to empower Omar. Therefore, in addition to the role of value discovery, there are also the benefits of business integration. " Central South University of Finance and law pan Helin said.

In addition, the Taiwan Strait innovation case is also quite typical. The cross-strait innovation has a series of interactions with the industries in Pingtan, which also effectively improves the industrial platform capacity of listed companies.

The predecessor of Taiwan Strait innovation was Han Ding Yu you. At the initial stage of listing, its main business was smart city business. Due to the downturn in the construction industry, the company's performance declined year after year. Subsequently, it carried out a series of transformation businesses, which had been involved in Internet finance, internet medical and other industries, but the effect was not good.

In 2020, Hanting Yuyou, which was dragged down by the Internet financial business, officially changed its ownership of Pingtan state-owned assets. The latter stripped off all its non-performing assets and relocated to Pingtan City, renamed "Taiwan Innovation". Under the promotion of Pingtan state-owned assets, Taiwan Strait innovation finally returned to the development strategy of "focusing on smart city and smart medical care as the core business".

In recent years, Pingtan has a deep layout in medical, aesthetic, sports, tourism culture, construction and other industries, and actively promotes the "5g global coverage" characteristic smart Island, National Offshore data center, international digital economic port, smart global tourism, unmanned driving, National Tourism and health care demonstration area. In the first half of 2020, Taiwan Strait innovation and Pingtan smart Island signed a strategic cooperation agreement. During this period, Taiwan Strait innovation also participated in the construction of Pingtan's first Internet hospital, haoyiyou Internet hospital in Pingtan comprehensive experimental zone.

Chapter three: the specific trend of brewing under specific background

"More and more card raising activities led by long-term capital and industrial capital appear, which is related to the current market environment. With the implementation of the registration system, shell business is no longer feasible. The atmosphere of strict supervision also provides a good opportunity for the development of industrial funds. The upstream and downstream layout can be carried out, and the competition and cooperation of peers can be strengthened. In the process of cooperation and exchange, some of the licensed parties and the listed companies can form a win-win mode of resource sharing and complementary advantages An investment bank in South China pointed out in an interview.

The "intensive cultivation" and "multi win" of various capital entities are related to the specific development trend of capital market.

According to the data of the 21st Century Institute of capital, in the past half a year, 35 listed companies have raised their cards in the capital side, and most of them are industrial listed companies with dispersed ownership structure and low valuation.

Ruan Chao, founder of Fuxin literature and art, pointed out: "since the registration system reform, the" 28 February effect "of the capital market is obvious, and the resources are concentrated in the head companies. Many small and medium-sized listed companies have very low valuation, which is a very suitable target for M & A

From the perspective of industry distribution, the companies with a large number of brands are located in public utilities, building decoration, computer, mechanical equipment, building materials, household appliances, real estate, electrical equipment and other industries. Among them, five public utilities have been raised, and four building decoration, computer and mechanical equipment have been raised respectively.

From the perspective of valuation level, excluding Vanke A (as of May 18), the average market value of 34 listed companies was about 13.118 billion yuan, and the median market value was 5.2 billion yuan, significantly higher than the median market value of about 3.3 billion yuan in 2016 and 2017. However, compared with the hot areas in the market, the value of the card raisers is obviously underestimated.

If we push backward from the result, many card raising behaviors will actually release the opportunity signal of capital market ahead of time.

Based on Hillhouse capital, it has the label of "value discoverer", which has become an important banner of capital market; The main management team of Guangdong mintou is from e-fund, which is directly led by Ye Junying, former chairman of e-fund. E fund is the largest mutual fund in China, which makes some investment behaviors of Guangdong mintou very consistent with the "value investment logic" of public funds.

For example, after the Guangdong People's investment in Baoan, China, the market's attention to China's Bao'an is mainly focused on its "undervalued" characteristics. The brand raising of Guangdong mintou has brought the market an opportunity to recalculate the value of China's Bao'an.

All kinds of local state-owned assets also rely on the platform of listed companies to revitalize regional industrial resources. Affected by macro-economy, financial policies, the characteristics of enterprises and the development difficulties of controlling shareholders, the pricing of some domestic industrial listed companies has been underestimated to a certain extent, which also makes some state-owned assets smell the opportunity.

Different from other investors, the current brand raisers should have a more comprehensive and profound understanding of listed companies, especially their industry counterparts, and the investment logic of their implementation is also more clear.

"Listed companies should be the platform to realize industrial value, not the platform for capital operation in the past."

From the historical context, with the steady progress of the registration system, the queuing time of direct listing has been sharply reduced, the IPO efficiency has been greatly improved, and the "shell" value has been greatly reduced, and the industrial value of listed companies has become the core; In addition, regulatory authorities have begun to encourage listed companies to carry out industrial mergers and acquisitions of assets related to high-tech industries and strategic emerging industries in line with the national strategy, and the "industrial investment" nature of the behavior of brand raising has become increasingly prominent.

Chapter four: long term capital promotes the return of "value"

From the source of funds, the current card raisers are mainly long-term funds, and their preference is more small and medium-sized market value companies. This kind of activity is expected to promote the valuation return of small and medium-sized market value companies in a shares.

A typical example is Bao'an of China, where the Guangdong people put up their cards. Before the Guangdong people raised their hands, the stock price of Bao'an in China remained around 7 yuan, with a total market value of less than 20 billion yuan.

However, on February 1, 2020, Shaoguan Gaochuang Enterprise Management Co., Ltd., a subsidiary of Guangdong mintou, officially triggered the lifting of its brand. So far, the stock price of Bao'an in China has risen by 38.11%.

Through more than 30 years of transformation and development, Bao'an has gradually become an investment enterprise. Although its investment business is huge, such as Ma Yinglong, a listed company successfully controlled by the listed company, beiteri, Dafo pharmaceutical, lvjin hi tech, etc., the main business is not ideal and the effect of diversified development is not good.

It is the card raising event that strengthens the market's new understanding of Baoan's high-quality industries, further increases market confidence, and promotes investors to have a new understanding of the investment value of Baoan, China.

Good brand raising and cooperation are good for listed companies. While the market is wary of "barbarian" brand raising, it should also pay attention to the performance of shareholders' responsibilities, rather than limited to financial investment or asset injection after buying a shell.

Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, pointed out that compared with short-term fund speculation in other markets, raising cards belongs to a relatively long-term investment behavior, which is usually closely related to M & A and restructuring. Through increasing the number of shares of listed companies and holding up their cards, they closely link up with the main business of the company to carry out the related coordination of some upstream and downstream businesses, It is of strategic significance to improve the current situation of the real economy.

Another case of Guangdong mintou shows the characteristics of positive interaction.

In February 2020, Guangdong mintou acquired 12.46% shares of Liaoning Chengda through the secondary market increase and agreement transfer, and promoted to the largest shareholder. In December 2020, Guangdong mintou further increased its shareholding in Liaoning Chengda, increasing its shareholding ratio to 15.02%, further widening the gap with the second largest shareholder, and further stabilizing the equity of listed companies. In April 2020, Xu Biao, a non independent director elected by Guangdong mintou, has officially entered the board of directors of Liaoning Chengda.

It then made a commitment to recognize and respect the status of Liaoning SASAC as the actual controller of Liaoning Chengda in the next 12 months, and will not seek actual control of Liaoning Chengda alone or jointly with other parties in any way.

According to the speculation of the 21st Century Capital Research Institute, on the eve of the expiration of the commitment not to seek control right, by giving up part of the voting right to continue not to seek control, or for the consideration of Chengda biological listing, this move may be to remove the obstacles for the subsidiary companies to be listed separately.

"If we follow the original development path of a brand-raising enterprise, the underestimation may not necessarily be due to the" 28:20 "phenomenon. Generally, there is a reason for the underestimation. According to the original development path of the enterprise, the enterprise is likely to continue to decline and lose the investment of the card raiser in vain. The best investment situation is to integrate the listed enterprises into their own system to enhance the competitiveness of the main business or obtain synergy effect. " Pan and Lin also said.