Incidents:
The company is planning to acquire control of Minsheng Securities and raise supporting capital by issuing A-shares. Trading of the Company's A shares will be suspended from the opening of the market on April 26, 2024 (Friday). It is expected that trading will be suspended for no more than 10 trading days.
Opinions:
In March 2023, Wuxi Guolian Development (Group) Co., Ltd. competed for 3.471 billion shares in Minsheng Securities. On December 15, 2023, the China Securities Regulatory Commission officially approved Guolian Group as the main shareholder of Minsheng Securities. Guolian Securities plans to acquire a total of 10.87 billion shares of Minsheng Securities held by counterparties such as Wuxi Guolian Development (Group) Co., Ltd. and Luxin Venture Capital by issuing shares to purchase assets, accounting for 95.48% of its total share capital.
After the integration of Guolian Securities and Minsheng Securities is completed, major businesses such as investment banking, fixed income, research, and asset management will enter the first tier of the industry. Integration will rapidly increase the size of wealth customers, achieve regional complementarity, better meet customer needs, and enhance overall competitiveness. It is expected to achieve optimal allocation of resources, promote complementary advantages between the two sides, and achieve “1+1>2”, thus promoting leapfrog development. In 2023, Minsheng Securities had 18 IPOs, ranking third in the industry in terms of number of IPOs; 20 were issued and listed, ranking fourth in the industry; 18 companies were listed in the equity transfer system, ranking third among the host brokerage firms.
The State Council issued a report on the research, processing and rectification of the opinions on the review of the special report on the management of state-owned assets of financial enterprises. The report shows that efforts are concentrated to build a “national team” for the financial industry, promote the standardized development of non-bank financial institutions, and promote the strengthening and improvement of leading securities companies. Adjusting the share of state-owned financial capital in banking, insurance, securities and other industries in a timely and reasonable manner through capital supplementation and profit conversion will further strengthen industry mergers, acquisitions and restructuring efforts. The merger of the company Minsheng Securities will raise expectations for industry integration and establish a demonstration effect for mergers and acquisitions in the securities industry.
Profit forecast and investment rating: The merger and acquisition of Minsheng Securities will strengthen the company's overall strength, and capital utilization efficiency and ROE are expected to further improve. The company's net profit for 2024-2026 is estimated at 697 million yuan, 805 million yuan, and 1,015 million yuan. The current stock price corresponds to PB of 1.59, 1.45, and 1.23 times. Maintain a “buy” rating.
Risk warning: capital market reform risk; capital market fluctuation risk; risk of performance falling short of expectations; risk of macroeconomic uncertainty; risk of uncontrollable risks such as black swans; risk of statistical bias.