Incident: On 4/25, the company announced plans for major asset restructuring and suspended trading. It plans to acquire control of Minsheng Securities and raise supporting funds by issuing A-shares, and simultaneously terminates previous fixed increase applications.
An agreement has been reached with 95.48% shareholders of Minsheng Securities, and the integration plan is progressing step by step. 1) According to the company's announcement, Guolian Securities has reached a cooperation agreement with 45 shareholders holding 95.48% of Minsheng Securities in total, including the Guolian Group, and the parties to the transaction agreed to actively provide necessary cooperation to fully advance the restructuring; 2) The restructuring method was for Guolian Securities to purchase assets with supporting fundraising. Arrangements such as the specific target asset scope, transaction method, transaction plan, share price, and underlying asset pricing of the restructuring are still being determined; 3) In December of last year, the Securities Regulatory Commission approved Minsheng Securities's major shareholders' changes and preliminary integration applications in accordance with the restructuring plan. Plan and be steady Proceed in an orderly manner.
Integrated solutions and supporting fund-raising are combined, and comprehensive strength is expected to advance to the next level. At the same time, the company announced the termination of the previous fixed increase of 5 billion dollars and simultaneously raised supporting funds in this restructuring plan. It is expected that the comprehensive strength will be further strengthened on the basis of the integration of the two parties: 1) form a collaboration with Minsheng Securities's investment banking advantages and regional layout to enhance business competitiveness; 2) greatly increase net capital and comprehensive strength after the absorption and merger, and prepare for long-term development. Based on data from the end of '22, the net assets of Guolian Securities are 16.8 billion, and the net assets of Minsheng Securities are 15.2 billion. After the merger, the net assets will reach 31.9 billion dollars/rank 21st in the industry. In addition, supporting fund-raising is expected to enter the top 20.
Referring to historical experience, it took about 1 year from the initial suspension of trading to the completion of the equity transfer. Judging from past brokerage merger cases, after the first suspension of trading, it is necessary to go through processes such as board review, shareholders' meeting review, and approval by the Securities Regulatory Commission, and a second suspension of trading when the Securities Regulatory Commission reviews mergers, acquisitions, and restructuring matters. The process took a total of about 1 year: 1) Fangzheng Securities absorbed and merged Minzu Securities for the first time until the final equity transfer was completed, and it took nearly 1 year (2013/8/27-2014/8/6); 2) Shenyin Wanguo's absorption and merger of Hongyuan Securities took 15 months (2013/10/30-2015/1/26); 3) CITIC Securities absorbed and merged Guangzhou Securities for a little over 1 year (2018/12/24-2020/1/14).
Investment Analyst Opinion: Maintaining the “Highly Recommended” rating. The estimated net profit of the 2024-2026E company will be 760 million yuan, 90 billion yuan, and 1.13 billion yuan, respectively, +14%, +18%, and +26% year-on-year (without considering Minsheng Securities). The 4/25 closing price corresponds to the company's 24-26E dynamic PB 1.63x, 1.59x, 1.54x, respectively, and dynamic PE 39x, 33x, and 26x respectively.
Risk warning: Asset restructuring is progressing less than expected; restructuring plans are uncertain; capital markets fluctuate greatly