① Tianqi Lithium's financial report for the first quarter caused the company's stock price to fall to a halt today, and Hong Kong stocks fell by more than 19%; ② China Taibao and its holding subsidiaries listed Tianqi Lithium lost more than 60%; ③ data shows that insurance companies have generally faced book losses in the past two years. A number of insurance companies put up their licenses to buy at a phased high point.
Financial Services Association, April 24 (Reporter Zou Juntao) Lithium mining giant Tianqi Lithium's first quarter earnings explosion caused market shock.
On April 24, Tianqi Lithium (002466.SZ) A-shares fell to a standstill. As of the afternoon close, the stock reported $40.63 per share; at the same time, Tianqi Lithium (09696.HK) Hong Kong stock also fell nearly 19% to close at HK$28.5 per share.
On the evening of April 23, Tianqi Lithium announced its performance forecast. The net loss for the first quarter of this year is estimated at 3.6 billion yuan to 4.3 billion yuan. Compared with the net profit of 4.875 billion yuan in the same period last year, there was a clear shift from profit to loss. On the evening of the same day, the Shenzhen Stock Exchange issued a letter of concern to Tianqi Lithium, requesting a quantitative analysis of the reasons for the sharp increase in losses in the first quarter.
A Financial Services Association reporter noticed that as Tianqi Lithium's stock price falls, the “Taibao” investment that was previously listed faces the risk of growing losses. Furthermore, insurance capital has generally experienced losses in the past two years.
“Taibao” listed Tianqi Lithium lost more than 60%
According to an announcement from the China Insurance Industry Association, in July 2022, China Taibao and its two holding subsidiaries Taibao Life Insurance and Taibao Financial Insurance announced the listing of Tianqi Lithium (9696.HK) Hong Kong shares. All three companies participated in Tianqi Lithium's Hong Kong stock IPO as cornerstone investors, and commissioned Taibao Asset to invest and participate in the listing through Taibao Asset Management's corporate account.
According to the “Cornerstone Investment Agreement”, China Taibao and its holding subsidiaries invested a total of 124.454 million shares of Tianqi Lithium's Hong Kong shares, involving an amount of approximately HK$1,021 million. According to this estimate, the average price of Tianqi Lithium's Hong Kong shares when “Taibao” insurance funds were subscribed to was about HK$80.35 per share.
After the listing, China Taibao, Taibao Financial Insurance, and Taibao Life Insurance each held Tianqi Lithium Hong Kong shares accounting for 0.58%, 1.40%, and 5.60% of their H share capital, respectively. The total shareholding ratio of the three companies was 7.58%.
On July 13, 2022, Tianqi Lithium's H shares were listed and traded on the Hong Kong Stock Exchange at an issue price of HK$82 per share. After a month, its share price soared to HK$83.48 per share, but then the share price continued to decline.
According to market data, as of today's close, Tianqi Lithium's H share price fell to HK$28.5 per share, a decrease of 65.24% compared to the issue price. Compared with the average subscription price in the “Cornerstone Investment Agreement”, the “Taibao” investment lost 64.53%.
It is worth mentioning that the “Taibao” insurance fund has also listed another lithium battery company. According to an announcement from the China Insurance Industry Association, in February 2020, China Taibao and its holding subsidiaries Taibao Life Insurance, Taibao Financial Insurance, Taibao Union Health Insurance Co., Ltd. and Anxin Agricultural Insurance Co., Ltd. announced that Ganfeng Lithium Hong Kong shares were listed.
According to the disclosure, the five companies purchased a total of 2,4052 million H shares of Ganfeng Lithium through Hong Kong Stock Connect on February 24 of the same year, involving capital of about HK$75.35 million. It is estimated that the average purchase price was around HK$31.33 per share. After this listing, China Taibao and its holding subsidiaries held a total of 10.32,400 H shares of Ganfeng Lithium, accounting for 5.16% of the H shares already issued by Ganfeng Lithium.
On April 24, Tianqi Lithium's stock price plummeted due to explosive performance, and Ganfeng Lithium's stock price, which is also a lithium battery company, was also affected. As of today's close, Ganfeng Lithium's H shares fell more than 4% to close at HK$21.25 per share, falling below the previous listing purchase price.
Insurance capital has generally lost money on the books in the past two years
A Financial Services Association reporter noticed that insurance funds have been listed too many times in the past two years, but judging from subsequent stock price performance, book losses are quite common.
According to an announcement from the China Insurance Industry Association, after “Taibao” listed the Hong Kong stock of Tianqi Lithium, in November 2022, Taiping Life listed the Hong Kong stock of ICBC. In January 2023, China Life Insurance increased its holdings and listed Wanda Information; in February 2023, Sunshine Life held Hong Kong shares for the first time; in March 2023, Taibao Life listed Everbright Environmental Hong Kong Stocks; in June 2023, Great Wall Life listed Zhejiang Communications Technology A shares and Zhongyuan Expressway A shares; in October 2023, Sunshine Life listed Tiantu Investments.
Market data shows that after the above listing announcement, with the exception of the overall increase in ICBC's Hong Kong stock market, the stock prices of the listed companies all declined as a whole. Among them, the stock price of Wanda Information fell from 15 yuan per share after listing to 5.55 yuan per share at today's closing price, a drop of 63%. It is worth mentioning that many of these insurance companies held licenses to buy at a phased high point.
It is worth noting that from January 1, 2023, the China Banking Insurance Regulatory Commission requested listed insurance companies to implement the 2017 Ministry of Finance's revision and issuance of “Corporate Accounting Standard No. 22 - Confirmation and Measurement of Financial Instruments”. Compared with the original standard, the new financial instrument accounting standard changes the classification of financial assets from “four categories” to “three categories”, namely financial assets (AC) measured at amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income (FVTPL), and financial assets measured at fair value and whose changes are included in current profit and loss (FVOCI).
Orient Securities analysis points out that under the old accounting standards, enterprises can classify equity investments as “financial assets that can be sold,” and to a certain extent, this account can be used to adjust the pace of profit release, but under the new accounting standards, this operation is unsustainable. Furthermore, under the new accounting standards, all equity instruments, regardless of their classification, must be measured at fair value.
According to the industry, under the new accounting standards, changes in equity investment will have an increased impact on the profits of insurance companies. Industry insiders pointed out that in order to cope with fluctuations in performance caused by the new accounting standards, strengthening high-dividend blue-chip stocks and strengthening FVOCI asset allocation is undoubtedly one of the strategies, which will help listed insurers smooth performance fluctuations.