Source: Brokerage China
Authors: Xu Ying, Sun Xiangfeng

On the evening of March 16, GTJA announced a series of announcements, stating that it plans to change its company name to GTJA Haitong Securities Co., Ltd., and simultaneously disclosed significant matters such as the candidates for the Board of Directors of the merged company and the arrangements for the merging of customers and businesses after the merger and delivery.

According to the relevant announcements from GTJA, the issuance of shares related to this merger and reorganization has been completed. The newly exchanged 5.986 billion A-shares and 2.114 billion H-shares will be listed and traded on the Shanghai Stock Exchange and Hong Kong Stock Exchange, respectively, on March 17. The 0.626 billion A-shares issued for fundraising purposes will have a 60-month restriction period and will not be traded on the market at this time. The stock abbreviation for the newly listed shares on March 17 will still be GTJA, and it will be changed to the new company name accordingly after the completion of the procedures such as approval by the shareholders' meeting.

It is proposed to change the name to 'GTJA Haitong Securities.'

According to the announcement, GTJA's Chinese name is proposed to be changed to GTJA Haitong Securities Co., Ltd., and the securities abbreviation is proposed to be changed to GTJA Haitong. This proposed change of the company's name has been preliminarily approved by the State Administration for Market Regulation and is pending approval by the shareholders' meeting; the proposed change of the securities abbreviation still requires review by the Shanghai Stock Exchange and the Hong Kong Stock Exchange.

As the first major Brokerage merger and reorganization since the implementation of the new 'Nine Policies,' the name of the company after the merger between GTJA and HENGTOU SEC has always attracted attention, and there were various speculations online prior. 'The company name after the merger being GTJA Haitong was expected.' An industry insider analyzed that compared to other names previously speculated in the market, the name GTJA Haitong is more advantageous, as it reflects the core elements of both company names, highlights historical heritage, carries forward both parties' brand reputations, and also incorporates some innovation, reflecting the principle of strong alliances and complementary advantages of the two companies.

It is worth mentioning that the omission of "Jun'an" has triggered many feelings of nostalgia among veterans in the Securities Industry. At the end of the last century, in August 1999, the then Guotai Securities merged with Jun'an Securities, which led to the birth of Guotai Junan. According to reports, Guotai Securities was initiated by China Construction Bank in 1992 in Shanghai and was actually taken over with an investment of 1.8 billion from the Shanghai government in 1998; whereas Jun'an Securities was founded in 1992 in Shenzhen, jointly funded by five state-owned enterprises.

Many people from Haitong also feel a sense of loss. Over the years, Haitong Securities has been the only brokerage in the industry that was established early but never underwent significant restructuring or renaming, which many Haitong employees took pride in.

In recent years, it has become common for brokerages to change their names. For instance, in 2022, the "Wangxin Securities" under Beijing Compass Technology Development was renamed to "Maigao Securities", "Huarong Securities" was renamed to "Guoxin Securities", and "New Era Securities" was renamed to "Chengtong Securities". In 2023, "Anxin Securities" was renamed to "Guotou Securities" and "Jiuzhou Securities" was renamed to "Huayuan Securities". In February this year, "Guolian Securities" was renamed to "Guolian Minsheng". Additionally, in August 2024, HENGTAI SEC, which is the listing entity under Haitong in Hong Kong, announced that the Board of Directors proposed to rename "Hengtai Securities" to "Financial Street Securities", but this renaming plan has yet to be realized.

The list of candidates for directors of the new company has been released.

The announcement shows that the 32nd temporary meeting of the sixth Board of Directors of Guotai Junan has approved the nomination of candidates for non-independent directors of the seventh Board of Directors. Among the candidates, Zhu Jian, Li Junjie, and Nie Xiaogang serve as the company's executive directors. There are another 8 candidates nominated by shareholders holding 3% or more of the company's shares, among which, Zhou Jie and 4 other candidates are recommended by the shareholder Shanghai International Group, Heilman is recommended by the shareholder Shanghai Guosheng Group, Sun Minghui is recommended by the shareholder Shenzhen Investment Holding Company, and Chen Yijiang is recommended by the shareholder Xinhua Life Insurance Company. Subsequently, the directors elected at the shareholder meeting will form a new Board of Directors together with the employee directors.

According to reporters from Brokerage China, the company's party committee has already been established after the merger, with Zhu Jian serving as the head of the party committee and Li Junjie as the deputy head. Li Jun will be transferred to other Shanghai municipal enterprises. Based on the internal party positions, Zhu Jian and Li Junjie are expected to serve as the chairman and president of the merged company, respectively; however, these positions are pending governance procedures. Additionally, it is reported that other leaders from Guotai Junan and Haitong Securities, aside from those retiring due to age, are expected to remain in their positions.

Industry insiders analyze that the configuration of the leadership team of the merged company maximally integrates the original backgrounds of Guotai Junan and Haitong Securities, which will benefit cultural inheritance, team stability, and integration, and will release the synergy effect of "1+1>2" more quickly.

Clarify the arrangements for customer and business migration and merger.

That evening, GTJA also disclosed a joint announcement from two companies regarding the implementation of customer and business migration consolidation, making arrangements for customer service after the absorption and merger. Specifically, the following information points are worth noting:

Firstly, HAITONG SEC customers and businesses will migrate to the merged company. HAITONG SEC customers will become clients of the merged company, which will provide related services, and all main businesses and services will continue as normal. After the migration of HAITONG SEC customers into the merged company, customer rights, entrustment methods, and fund transfers will remain unchanged.

Secondly, the subsidiaries' businesses and services will continue normally. From the date of absorption and merger delivery, the equity of subsidiaries held by HAITONG SEC will belong to the merged company, which will appropriately address issues such as intra-industry competition among subsidiaries after the merger, completing the integration work steadily and orderly. Before the implementation of the solution, the business and services of each subsidiary will continue normally.

Thirdly, the HAITONG SEC customer service hotline will undergo changes.

Additionally, the announcement also specifically reminds that during the implementation of customer and business migration consolidation, some cross-period settlement services need to be cleared or suspended in advance, and some business rules, processes, and contract terms will change accordingly. This will temporarily affect related businesses that HAITONG SEC customers participate in. The specific timing for the suspension and resumption of related businesses, as well as the handling plans and other outstanding matters, will be published in subsequent announcements by the merged company.

Brokerage industry mergers and capital increase activities have increased.

From the overall trend of the securities industry, recently, not only is the merger and reorganization among brokerages continuing to advance, but capital increases have also seen marginal loosening.

The latest research reports from SWHY indicate that brokerage capital increases are encountering marginal loosening. In the past week, Tianfeng's capital increase (raising no more than 4 billion yuan, with the controlling shareholder being Hongtai Group) has been accepted by the Shanghai Stock Exchange; previously, Guolian Minsheng's issuance of shares to buy assets and the accompanying fundraising of 2 billion has been completed, and GTJA's share swap absorption and accompanying fundraising of 10 billion is in progress. In addition, Guosen, Zhongtai, and Nanjing Securities' capital increases or issuance of shares to purchase assets are also underway, significantly enhancing the overall capital operation activity of brokerages.

Zhao Ran, the non-bank chief at China Securities Co.,Ltd., believes that the performance low point in the Securities Sector has passed, and it is expected that the fundamental trend will improve in the first half of the year, with industry merger and acquisition events likely to serve as periodic market catalysts throughout the year.

Zhao Ran analyzes that starting from October 2024, the sustained activity in market trading will solidify the performance foundation for brokerages' core businesses such as brokerage and proprietary trading. Meanwhile, the IPO review rate has significantly accelerated this year, and multiple factors combined are expected to show a considerable improvement in demand within the brokerage industry in the first half of the year. Additionally, according to company announcements and Statistics, there are currently at least 8 to 9 brokerage firms actively promoting merger and acquisition-related matters, which are likely to achieve efficient resource integration among brokerages, encouraging other brokerages to actively explore business models and product innovation, thus providing strong support for the improvement of brokerage valuations from a supply-side perspective.

Editor/Jeffy