Financial Services Association, Feb. 20 (Reporter Shi Sitong) Since launching a plan to increase holdings in November last year, Youngor, the third-largest shareholder of the Bank of Ningbo, is already halfway through its plan to increase its holdings. Yesterday evening, Bank of Ningbo revealed the latest progress in increasing its holdings. Within a period of 3 months, Youngor intensively increased its holdings of Bank of Ningbo by 42.679 million shares, far exceeding the planned “no less than 20 million shares”. At the same time, the shareholding ratio also increased from 9.35% to 10.00%.

A Finance Association reporter noticed that previously in 2020, Youngor sold Bank of Ningbo shares in large quantities and continued to reduce its holdings by 296 million shares within half a year, with a total cash package exceeding 10 billion yuan. However, less than a year after the completion of the holdings reduction plan, Youngor began the path of continuing to increase its holdings.

Industry insiders told the Financial Federation reporter that on the one hand, the increase and reduction of Youngor's holdings is based on changes in Ningbo Bank's performance and asset quality; on the other hand, it also obtains certain asset returns through continuous increases and decreases in holdings, reducing shareholding costs. However, during the second half of the plan to increase its holdings, whether Youngor will continue to increase its holdings also depends on the subsequent stock price trend of Bank of Ningbo.

According to the data, the performance of banks in Ningbo has maintained steady growth in recent years. In 2023, it achieved revenue of 61,584 billion yuan and net profit of 25.535 billion yuan (unaudited), with growth rates of 6.40% and 10.66% respectively. Meanwhile, as of the close of trading on February 20, Bank of Ningbo's stock price was 21.75 yuan/share.

The increase in holdings of 42.67 million shares in March has exceeded expectations

Specifically, Youngor's current plan to increase its holdings dates back to November 2023. At the same time, Bank of Ningbo announced that its shareholder Youngor plans to increase the bank's shares by no less than 20 million shares through the Shenzhen Stock Exchange trading system within 6 months from November 16, and the increase price will not be higher than 26.00 yuan/share.

Shortly after announcing this plan to increase its holdings, Youngor intensively carried out a series of actions to increase its holdings, and within just a few days, it reached the “no less than 20 million shares” expected by this holdings increase plan. According to the disclosure, from November 27 to 30, 2023, Youngor successively increased its A-shares holdings of Bank of Ningbo by 5.738 million shares, 5.6796 million shares, 6.3792 million shares, and 4.165,800 shares. The total increase in holdings has reached 21.9554 million shares.

However, this did not stop Youngor from increasing its holdings. Over the next period of time, Youngor continued to “buy buy” until half of the planned time to increase its holdings. Within 3 months, it increased its holdings of Bank of Ningbo by a total of 42.679 million shares, accounting for 0.65% of the bank's total share capital.

“Judging from the stock price trend, Bank of Ningbo's short-term stock price is relatively sluggish, and Youngor is also taking advantage of the low to absorb chips.” According to Zheng Jiawei, chief analyst at Yongxing Securities Research Institute, Youngor's intention is to increase its holdings of the Bank of Ningbo intensively and to hold shares, but instead takes more into account financial benefits. Meanwhile, Wang Pengbo, chief financial analyst at Broadcom Consulting, believes that the continued increase in Yagor's holdings shows that it is optimistic about Ningbo Bank's performance and increases its share ratio on the basis of acknowledging the company's future development prospects.

However, it is worth mentioning that as early as July 2020, Youngor proposed a plan to reduce its holdings of Bank of Ningbo, and continued to reduce its holdings of 296 million shares (4.94% of the total share capital) during the subsequent half-year holdings reduction period, reaching a total cash package of 10.01 billion yuan (average reduction price of 33.73 yuan/share). At the same time, its shareholding ratio also fell from 13.26% to 8.32%.

Just 10 months after the completion of the holdings reduction plan, Youngor has begun another path of increasing its holdings of the Bank of Ningbo: from December 2, 2021 to November 15, 2023, Youngor increased its holdings of Bank of Ningbo shares by 118 million through participation in allotments and centralized bidding, and the shareholding ratio increased by 1.03%. Before the start of this round of plans to increase its holdings, Youngor's shareholding ratio had reached 9.35%.

Why did you increase your holdings again after cashing out 10 billion dollars?

From Youngor's perspective, the previous reduction in holdings took into account “the needs of its own strategic arrangements,” while this increase was “based on an analysis of the company's investment value and prediction of future prospects.”

“The initial sell-off was probably not very optimistic about the external environment, but after seeing the Bank of Ningbo's profit growth rate and business layout and diversified asset business structure in recent years, it regained confidence.” Wang Pengbo believes that the increase and reduction of Youngor's holdings is mainly based on changes in Ningbo Bank's performance and asset quality.

According to Zheng Jiawei's analysis, Youngor has made frequent moves in recent years. On the one hand, it has obtained certain asset returns through continuous increases and reductions in holdings; at the same time, it can also reduce the cost of holding shares in Bank of Ningbo itself and hold more equity. “Bank of Ningbo's stock price rose quite well a few years ago, bringing good returns to shareholders. Shareholders who choose to reduce their holdings of some stocks can fall back on their pockets. The bank's stock price has continued to fall in the past two years, and shareholders can also take the opportunity to increase their holdings and reduce shareholding costs.” he said.

Judging from the performance, the performance of banks in Ningbo has maintained steady growth in recent years. From 2020 to 2022, Bank of Ningbo achieved operating income of 41.11 billion yuan, 52.77 billion yuan, 57.88 billion yuan, and net profit of 15.05 billion yuan, 19.55 billion yuan, and 23.08 billion yuan respectively. At the same time, the bank achieved revenue of 61,584 billion yuan and net profit of 25.535 billion yuan (unaudited) in 2023, with growth rates of 6.40% and 10.66% respectively. As of the end of 2023, its non-performing loan ratio was 0.76%, and the provision coverage rate was 461.36%.

Looking at the capital market, bank stocks were experiencing a round of general rise when Youngor's holdings were previously reduced, while the trend of bank stocks was exactly the opposite during this plan to increase its holdings. Specifically, Bank of Ningbo. Shortly after Youngor proposed this plan to increase its holdings, the bank's stock price began to decline continuously at the end of November last year. The stock price fell from around 25 yuan/share to around 19 yuan/share in a month and a half, a drop of 30%. According to the latest data, as of the close of February 20, the Bank of Ningbo reported 21.75 yuan/share, an increase of 2.21% on the same day.

At present, Youngor is halfway through its plan to increase its holdings. As of February 16, 2024, Youngor holds about 660 million shares of Bank of Ningbo, with a shareholding ratio of 10.00%. According to Zheng Jiawei, whether Youngor will continue to increase its holdings in the future also depends on Bank of Ningbo's stock price trend. He believes that if the bank's stock price exceeds the share price requirements of Youngor's plan to increase its holdings, the latter may suspend the move to increase its holdings; if the bank's stock price is still below 26 yuan/share, Youngor may continue to increase its holdings.