(Image source: Visual China)

BLUE WHALE NEWS, November 13 (Reporter Shi Yu) Recently, ST Lianzhong (300096.SZ) announced a capital increase for its shareholding company Haibao Life Insurance Co., Ltd. (hereinafter referred to as “Haibao Life”).

ST E-Lianzhong revealed in the announcement on “Relinquishing the Right to Prioritize Capital Pledging Contributions to Participating Companies” that Haibao Life plans to increase capital due to development planning needs. The capital increase is based on Haibao Life's total shareholders' equity assessment value of 1.356 billion yuan on the evaluation reference date of December 31, 2023. Taking into account the overall situation of the market environment, a premium of about 12.8% is used as the final valuation based on the asset evaluation results, that is, the subscription price is 1.02 yuan per share; it is proposed that Haibao Life's shareholder Haima Investment Group Co., Ltd. (hereinafter referred to as “Haima Group”) will increase the capital.

ST E-Lianzhong, on the other hand, chose to relinquish Haibao Life's priority funding rights for this capital increase. In response, it stated that it was a careful decision based on the company's development strategy, which is in line with the company's current actual business situation.

It is unclear whether the remaining shareholders will follow up on the capital increase. In this regard, the Blue Whale News reporter interviewed the relevant person in charge of Haibao Life Insurance, and no response had been received as of press release. Haibao Life's capital increase has yet to be approved by the regulatory authorities, and there is also some uncertainty.

Judging from Haibao Life's current shareholding structure, the company has 8 shareholders, of which Haima Group is the largest shareholder; Hisilicon Pharmaceuticals Group Co., Ltd. holds 20% of the shares; HeRui Medical (Beijing) Medical Devices Co., Ltd. and Shenzhen Zhixin Lida Investment Co., Ltd. hold 13.5% of the shares respectively; ST Yilian holds 6.5% of the shares, making it the fifth largest shareholder of Haibao Life. The remaining three shareholders all held 4.9% of the shares.

(Image source: Haibao Life Solvency Report)

It is worth mentioning that as the sponsor shareholder, ST E-Lianzhong initially held 20% of Haibao Life's shares, and transferred 13.5% last year to optimize the company's asset structure and resource allocation. It also indicated that it will facilitate the remaining 6.5% share transfer in the future. Judging from the reason behind this, it is possible that ST Lianzhong's own business is not doing well, while the joint venture Haibao Life Insurance also lost business, causing investment pressure.

ST Lianzhong's 2024 semi-annual report also mentioned that on December 8, 2023, its 6.5% stake in Haibao Life Insurance was frozen by the People's Court of Xiaoshan District, Hangzhou City, Zhejiang Province.

Established in May 2018, Haibao Life Insurance is currently still in a period of growth. From 2018 to 2023, the company's premium amounts were 0.282 billion yuan, 1.174 billion yuan, 1.429 billion yuan, 0.892 billion yuan, 0.831 billion yuan, and 1.129 billion yuan, respectively. In terms of profit, apart from achieving marginal profit of 0.009 billion yuan in 2021, the company remained at a loss for the rest of the year, losing 0.179 billion yuan and 318 million yuan respectively in 2022 and 2023.

According to the latest performance data, in the first three quarters of this year, the company achieved income of 1.29 billion yuan from the insurance business and a net loss of 0.213 billion yuan during the same period. Haibao Life's comprehensive solvency ratio at the end of the third quarter was 157.39%, up 0.36 percentage points from the end of the previous quarter. The core solvency ratio was 116.97%, down 4.48 percentage points from the end of the previous quarter. The comprehensive risk rating results for the 2nd quarter of 2024 were upgraded from B to BB.

Haibao Life Insurance, which has been in business for about six and a half years, is facing tests under the industry's “seven peace and eight profit” rule. In May of this year, on the occasion of Haibao Life's 6th anniversary, Haibao Life Chairman Zhao Shuhua proposed that as a private small to medium insurance company, it is not easy for Haibao Life to withstand pressure and develop steadily. Facing the next three years, it must have four “persistence”: adhere to high-quality development, adhere to steady investment, adhere to compliance management, and adhere to strategic work.