Photo source: Visual China

Blue Whale News, August 7 (Reporter Wang Jianwen) On the evening of August 6, GM announced that Hongdou Group, the controlling shareholder of the company, transferred 6.92% of the company's shares to Jiuyi Investment in consideration of 0.437 billion yuan. This is not the first time that the Chow family, the actual controller of the company, has reduced their holdings. Since 2021, by reducing their holdings of Hongdou shares and GM shares, the Zhou family has cashed out more than 1.15 billion yuan.

As the other party to this transaction, in addition to acquiring shares in GM, Jiuyi Investment also took a stake in two listed companies, Leon Technology and Chaoxun Communications, during the year. Currently, Jiuyi Investment has achieved a profit of nearly 30 million yuan with these two investments.

Jiuyi Investment took over GM shares and took shares in three listed companies during the year

General Rubber, the predecessor of GM Co., Ltd., was founded in 2002 with the participation of Nanfang Rubber, which is controlled by Hongdou Group, and listed on the Shanghai Stock Exchange in 2016. GM's main business is the R&D, production and sales of tires. It owns brands such as Qianlima, Red Rabbit Horse, Kima, Starcom, and Express.

GM's controlling shareholder is Hongdou Group, and the actual controllers are Zhou Haijiang, Zhou Haiyan, Liu Lianhong, and Gu Cui. Prior to this share transfer, the company's actual controller controlled a total of 43.81% of the company's shares, while the shares controlled after the share transfer fell to 36.89%. GM said that this change in equity will not result in a change in the company's controlling shareholder or actual controller. Through this reduction in holdings, the Zhou family was able to cash out about 0.365 billion yuan.

GM's profit level has continued to grow in recent years. From 2021 to 2023, GM's operating income was 4.256 billion yuan, 4.12 billion yuan, and 5.064 billion yuan, respectively; net profit to mother was 0.012 billion yuan, 0.017 billion yuan, and 0.216 billion yuan, respectively. According to the company's recently released performance forecast, in the first half of 2024, the company's net profit is expected to reach 0.27 billion yuan to 0.3 billion yuan, an increase of 364.86% to 416.51% over the previous year.

GM said that the increase in the company's performance in the first half of the year was mainly due to increased production and sales in the domestic automobile industry and strong demand in overseas tire markets.

In terms of stock price performance, on May 6 this year, GM shares closed at 6.69 yuan/share, a record high in the past 5 years. However, since then, the company's stock price has been falling. By the close of August 7, the company's stock price closed at 4.40 yuan/share, with a total market value of about 7 billion yuan. However, the current share transfer price of Hongdou Group to Jiuyi Investment was 3.97 yuan/share, 90% of the closing price on August 5.

As the other party to the deal, Jiuyi Investment frequently took steps to acquire shares in listed companies during the year.

On May 29 this year, communication network technology service company Leon Technology announced that Wang Gang, the company's actual controller, and Tianjin Hongrui, the company's co-operator, transferred 5.05% of the company's shares to the Jiuyi Steady Growth No. 1 private equity investment fund under Jiuyi Investment in consideration of 0.151 billion yuan.

On July 21, communications network service provider Chaoxun Communications also issued an announcement stating that Liang Jianhua, the controlling shareholder of the company, transferred 6.35% of the company's shares to the Jiuyi Composite Strategy No. 2 private equity investment fund under Jiuyi Investment in consideration of 0.243 billion yuan.

According to the official website of the Securities Association and Tianyan Research, Jiuyi Investment was founded in 2014 and completed private equity investment fund manager registration in April 2015. The company currently has 3 natural person shareholders: Wang Qian, Gu Keqi, and Gao Xinqi.

Judging from the current stock prices of Leon Technology and Supercom Communications, Jiuyi Investment is currently making profits. As of the close of trading on August 7, Leon Technology closed at 7.40 yuan/share, and Supercom closed at 25.13 yuan/share. In comparison, the price of shares obtained by the company from Leon Technology and Chaoxun Communications was 6.50 yuan/share and 24.30 yuan/share, respectively, and the cumulative profit was approximately 29.225 million yuan.

With large dividends and frequent holdings reductions, the Zhou family made a profit of more than 1.3 billion yuan

The establishment of Hongdou Group dates back 67 years. In 1957, cotton craftsman Zhou Linsen founded the Gangxia Knitting Factory in Wuxi, Jiangsu. This small factory was the predecessor of the Hongdou Group. In 1983, Zhou Linsen's son Zhou Yaoting came to work at the Hong Kong Knitting Factory. Under his impetus, Hongdou Group was formally established in 1993.

Currently, Hongdou Group owns two A-share listed companies, Hongdou Co., Ltd., and Yushan Pharmaceutical, a company listed on the New Third Board. In addition, Hongdou Group also has a presence in real estate, finance and other industries, holding shares in many companies such as Hongdou Real Estate, Tin Shang Bank, and Afu Small Loan.

In recent years, the revenue of Hongdou Co., Ltd. has continued to decline. From 2021 to 2023, the company's revenue was 2.384 billion yuan, 2.343 billion yuan, and 2.33 billion yuan, respectively; net profit to mother was 0.077 billion yuan, 0.015 billion yuan, and 0.03 billion yuan, respectively. Compared with this, Taxus Pharmaceutical's performance has grown rapidly. From 2021 to 2023, the company's revenue was 0.124 billion yuan, 0.178 billion yuan, and 0.205 billion yuan, respectively; net profit to mother was -0.004 billion yuan, 0.019 billion yuan, and 0.047 billion yuan, respectively.

Judging from the equity structure, the Chau family is at the helm of the Hongdou Group. In February of this year, due to her advanced age, Zhou Yaoting transferred her Hongdou Group shares to a third-generation member of the family. After the transfer was completed, Zhou Yaoting's children Zhou Haijiang and Zhou Haiyan, as well as Liu Lianhong (Zhou Haijiang's spouse) and Gu Cui (Zhou Haiyan's spouse) held a total of 83.51% of Hongdou Group's shares. Among them, Zhou Haijiang had the highest shareholding ratio of 58.49%.

According to the announcement, as of May of this year, 79.94% of Hongdou Group's holdings in Hongdou shares were pledged. In addition, 79.98% of its shares in GM stock are also pledged.

From 2021 to 2023, GM's dividends were 0.086 billion yuan, 0.047 billion yuan, and 0.089 billion yuan respectively, accounting for 740.57%, 279.65%, and 41.12% of the company's net profit for the year; the dividends for Hongdou shares were 0.15 billion yuan, 0.069 billion yuan, and 0.023 billion yuan respectively, accounting for 194.48% and 459.40% of the company's net profit for the year, respectively. 76.64% In particular, in 2021 and 2022, the dividends of the two companies far exceeded their profit levels for that year.

Based only on the rough calculation of the amount of shares currently held by the Zhou family in listed companies, the capital obtained from dividends of the two listed companies from 2021 to 2023 was about 0.206 billion yuan.

Furthermore, in addition to reducing their shareholding in GM shares this time, the Zhou family has also reduced their shareholding in Hongdou shares in recent years.

From June to August 2022, Hongdou Group reduced its shareholding by 1.92% of the company's shares at a price of 4.22-5.25 yuan/share, and cashed out about 0.187-0.232 billion yuan. In November of the same year, Hongdou Group also transferred 5.99% of the company's shares to Wenzhi Investment and cashed out 0.635 billion yuan. Furthermore, starting in September 2022, Zhou Yaoting's other son, Zhou Mingjiang, and the private equity fund Kuantou Uranus 26, which is wholly owned by the Zhou family, also announced a reduction in their shares in Hongdou shares. Among them, Zhou Mingjiang liquidated all 0.33% of his shares and cashed out 0.038 billion yuan. Kuantou Uranus 26 reduced its holdings of the company by 0.61%, to a consideration of 0.058 billion yuan.

By reducing their shares in listed companies, the Zhou family obtained at least 1.15 billion yuan in capital.

Recently, the Zhou family also planned to transfer the 2.76% investment share of the Suzhou Newerley New Strategy Venture Capital Partnership (Limited Partnership) held by Hongdou Group to Yushan Pharmaceutical at a price of 30 million yuan. However, at the shareholders' meeting in July of this year, small and medium shareholders voted against this bill, and the share transfer ultimately failed.