Financial Association, December 19 (Reporter Shi Sitong) Recently, Ruifeng Bank announced the completion of another round of measures to stabilize stock prices. On the first trading day after the announcement, Ruifeng Bank's stock price closed at 4.92 yuan/share. Compared with the closing price on the day the previous holdings increase plan was announced, a drop of 11.99%.

A reporter from the Financial Association News Agency noticed that before initiating the current stock stabilization measures, Ruifeng Bank had just completed the last stock stabilization plan and increase its holdings, but the stock stabilization measures two times in a row did not have an ideal effect in driving stock prices. However, since this year, six banks, including Ruifeng Bank, have successively completed the implementation of relevant measures, but they cannot escape this fate either.

A number of banking industry analysts told the Finance Association reporter that the bank's move to stabilize stock prices is a reflection of the implementation of its responsibility to stabilize the financial market and the confidence that it continues to be optimistic about the banking industry. However, whether stock prices can recover depends on the basic market, including the impact of multiple factors such as the economic environment, industry prospects, profit conditions, and policies. However, in the future, with the improvement in macroeconomic expectations, it may further promote the restoration of bank valuations.

Twice in a row triggering measures to stabilize stock prices, increasing holdings is difficult to stop the slump in stock prices

According to information, from February 9 to March 8 this year, Ruifeng Bank's stock met the conditions for triggering measures to stabilize stock prices because the closing price for 20 consecutive trading days was lower than the net assets per share of 8.81 yuan/share that were audited in the most recent period at the time, so the conditions for triggering measures to stabilize stock prices were met.

Then, at the end of March, Ruifeng Bank announced a plan to stabilize stock prices. According to the bank's actual situation and the viability of the relevant measures, it stabilized the stock price by increasing the stock holdings of current directors (excluding independent directors) and senior managers receiving remuneration at the bank. The total amount of the increase in holdings was not less than 867,600 yuan. The implementation period for the increase in holdings was within 6 months from the date of review and approval by the shareholders' meeting.

At present, as of December 17, Ruifeng Bank has completed the implementation of the above plan to increase its holdings. During the implementation of the current holdings increase plan, the bank's shareholders increased their holdings by a total of 271,800 shares of Ruifeng Bank shares through the Shanghai Stock Exchange trading system using their own capital through the Shanghai Stock Exchange trading system, accounting for 0.01% of the total share capital. The cumulative increase in holdings amount to 1,416,600 yuan per share, and the transaction price range was 4.81 yuan/share to 600 yuan/share.

However, as far as stock price performance is concerned, this increase in holdings has not had much effect of boosting stock prices. Data show that after the announcement of the plan to increase its holdings, Ruifeng Bank's stock price ushered in a wave of growth. The stock price rose from 5.5 yuan/share in early April to more than 6 yuan/share in early May, but even then there was a sharp decline. Overall, during the current increase in holdings, Ruifeng Bank's stock price fell to 4.71 yuan/share and rose to 6.44 yuan/share after many rounds of ups and downs.

Furthermore, it is worth mentioning that this is not the first time that Ruifeng Bank has triggered stock stabilization measures. In fact, on February 8 of this year, Ruifeng Bank's last holdings increase plan had just been completed.

According to reports, from April to May 2022, the closing price of the bank's stock for 20 consecutive trading days was lower than the net asset of 8.99 yuan/share per share, triggering the conditions for initiating stock price stabilization measures. At that time, the relevant increase holders increased their holdings of the bank's shares by a total of 741,100 shares, accounting for 0.05% of the total share capital. However, judging from the results, the effect of increasing holdings was clearly not ideal, and soon after, it triggered a new round of stock stabilization and capital increase plans.

According to information, Ruifeng Bank entered the capital market in June 2021. At the beginning of the listing, Ruifeng Bank's stock price experienced a brief highlight, rising from an issue price of 8.12 yuan/share to a peak of 12.88 yuan/share. Soon thereafter, it fell below the issue price, and the overall level remained fluctuating around 8 yuan per share. Since 2022, the bank's stock price began to “plummet” and fell to a record low of 4.45 yuan/share on October 8 of that year. Since then, until now, its stock price trend has maintained a fluctuating trend. As of the close of trading on December 19, its stock price was 4.92 yuan/share, with a total market value of 9.654 billion yuan.

Stock prices are affected by multiple factors, and subsequent bank valuation recovery is optimistic

According to information, since this year, six banks, including Bank of Chongqing, Ruifeng Bank, and Qilu Bank, have successively triggered measures to stabilize stock prices and have launched stock stabilization plans one after another. At the same time, six banks have announced that they have completed relevant measures one after another during the year. However, on the whole, it is generally difficult for banks to increase their holdings and stabilize stocks to have any significant effect.

“The ostensible reason why banks are taking steps to stabilize stock prices is that stock prices continue to be sluggish and bank stocks have been destroyed on a large scale. What is behind this is a reflection of the bank's confidence in implementing its responsibility to stabilize the financial market and continuing to be optimistic about the banking industry.”

According to Wang Pengbo, chief analyst in the financial industry at Broadcom Consulting, bank stocks are ballast bottomed large-cap stocks, large in volume and difficult to hype; bank performance growth is relatively stable, and competitive pressure for homogenization has always existed; banks are the cornerstone of financial stability, and stability has also led to banks not being able to transform too fast, and expectations for new models and sharp profit growth are low. This is also the reason why bank stocks are difficult to rely on increased holdings. At the same time, whether bank stock prices can achieve a sharp recovery still depends on the basic market, including the future development of the industry, profits, policies, and the macroeconomic environment, all of which will affect PE.

Previously, Ruifeng Bank responded to a “double break” (breaking prices, breaking net assets) at the semi-annual results meeting, saying that in the first half of 2023, the industry performed well in various aspects of business conditions such as performance growth, asset quality, and dividend levels; at the same time, the bank's current net market ratio is about 0.7, which is higher than the industry average; and changes in stock prices are affected by various factors such as market risk appetite, capital, and individual investor preferences. There is no information that should be disclosed but not disclosed.

From a business perspective, since 2018, Ruifeng Bank's revenue and net profit have achieved double growth for 5 consecutive years, and the overall performance has remained steady. Since this year, the bank has continued its previous growth trend. In the first three quarters, the bank achieved revenue of 2,897 billion yuan and imputed net profit of 1,258 billion yuan, up 7.09% and 16.88% year-on-year respectively.

Referring to the outlook for future trends in the banking sector, Wang Pengbo believes that as expectations for economic recovery increase, capital liquidity increases, policy aspects continue to improve, etc., it will help investors regain their confidence.

At the same time, Zhou Maohua, a macro researcher at the Financial Markets Department of Everbright Bank, also said that banking is one of the typical cyclical industries. China's economy has faced a complex environment in recent years. It is expected that with economic recovery and improved business operations, it will benefit bank profits and asset quality improvements. On the basis of low bank valuations, the subsequent banking sector valuation recovery is optimistic.