Financial Services Association, April 17 (Reporter Shi Sitong) Recently, the Alibaba Judicial Auction Platform revealed that the Bank of Chengdu's ten shares will be publicly auctioned on April 22, totaling 50 million shares, with a total starting price of 667.5 million yuan.

A Financial Services Association reporter noticed that this 50 million stock was not an ordinary judicial auction, but an asset auction involving a criminal case. At the same time, the above starting price is only the “display price”. The actual starting price will be based on the average closing price of the Bank of Chengdu in the 20 trading days before the auction day multiplied by the total number of shares.

Industry experts pointed out that disputes involving private shareholders of some banks in criminal cases may also lead to legal auctions of shares under their names, but “criminal assets” generally do not make the auction more difficult; the price is the key that affects whether the shares can be successfully auctioned. The pricing method described above is a fair market-based price, but it has no obvious advantage over the secondary market, and the starting price below the market price is more easily accepted by the market.

Bank of Chengdu's 50 million shares were auctioned off, showing a starting price of 668 million yuan

Specifically, the 50 million shares of the Bank of Chengdu will be auctioned in ten lots. Each of the 5 million shares will have a starting price of 66.75 million yuan, with a total starting price of 667.5 million yuan. Currently, none of the ten stock auctions have been registered. Among them, the most watched equity auction announcement has attracted 2,176 onlookers and 69 people set reminders.

A CIFA reporter noticed that the above starting price is only a display price; it is not an actual price. According to the auction announcement, the 10 shares will be calculated using the average closing price (MA20) of the Bank of Chengdu in the 20 trading days before the auction date multiplied by the total number of shares as the actual starting bid price, while the starting price of this online video auction until the public announcement date was calculated based on MA20 on the announcement date (April 3).

“Due to the large impact of stock changes, the actual starting price will be adjusted accordingly before the auction date of April 22, 2024. The adjusted price is the actual starting price for this auction.” The announcement said.

“Calculated by multiplying the average price of the closing price in the 20 trading days before the auction date by the number of shares, it is a fairly fair market-based price.” Zheng Jiawei, chief fixed income analyst at Yongxing Securities Research Institute, pointed out that at present, Bank of Chengdu's recent stock price and high dividend ratio are favored by capital, but the key to the success of the auction also depends on investors' expectations for the industry's performance and future stock price growth.

According to information, the Bank of Chengdu was established in December 1996 and listed on the main board of the Shanghai Stock Exchange in January 2018, with an issue price of 6.99 yuan/share. In recent years, the bank's stock price has remained above 10 yuan/share for a long time. Since this year, its stock price has continued to rise, rising from 11.29 yuan/share at the beginning of the year to around 14 yuan/share. As of the close of April 17, the Bank of Chengdu reported 14.07 yuan/share.

In terms of operating performance, in the first three quarters of last year, the bank's revenue was 16.702 billion yuan, up 9.55% year on year; net profit attributable to shareholders of the parent company was 8.157 billion yuan, an increase of 20.81% year on year. Meanwhile, in terms of asset quality, its non-performing loan ratio was 0.71%, down 0.07 percentage points from the end of the previous year; the provision coverage rate was 516.47%, up 14.90 percentage points from the end of the previous year.

The sixth largest shareholder was involved in a “securities dispute”, and 50 million shares became criminal assets

It is worth mentioning that the ten shares mentioned above are all Bank of Chengdu shares under the name of Shanghai Dongchang Investment and Development Co., Ltd. (actually held by the executee Che), but these shares are not normal judicial auctions, but rather criminal assets.

According to the three-quarter report, Shanghai Dongchang Investment is the 6th largest shareholder of the Bank of Chengdu holding 2.5803% of the shares. The number of shares held reached 98.4098 million, of which 50 million shares are frozen. The ten shares auctioned this time are the 50 million shares that have been frozen.

There was not much explanation in the auction announcement as to why the shares became criminal assets, and the Changsha Intermediate People's Court did not disclose the relevant case. However, judging from enterprise investigation information, the cause of the case involving the subject of the above auction was a “securities dispute.”

According to the enterprise survey, Shanghai Dongchang Investment was established in September 1999 with a registered capital of 304 million yuan. The company's business scope includes automobiles and auto parts, domestic trade (excluding franchising and special approval), property management, car leasing, and investment in high-tech, industrial, agricultural, and real estate industries (non-financial enterprises).

Zheng Jiawei told the Financial Federation reporter that legal auctions of criminal assets are also not uncommon on auction platforms such as Ali Auction. Mainly, private enterprise shareholders of some banks are involved in disputes in criminal cases, and shares under their names may involve the legal auction process.

In his view, the nature of criminal assets generally does not make auctions more difficult; price is the key that affects whether shares can be successfully auctioned. “If the starting price can be discounted from the current price and the auction is lower than the market price, the auction success rate for this share may be higher.”

Wang Pengbo, a senior financial analyst at Broadcom Analytics, also pointed out that using the average closing price of the previous 20 trading days of the auction seems fair, but as an asset with a criminal dispute, this time there is no obvious price advantage over the secondary market compared to the secondary market. At the same time, there is also a certain threshold requirement for buyers, so this pricing is likely to be less accepted by the market.