China Fund Morning News

At the beginning of 2023, the IPO wave of small and medium-sized brokers was getting higher and higher.

Recently, Hualong Securities, a veteran regional brokerage, issued a prospectus on the information disclosure platform of the CSRC and officially joined the IPO queue.

According to the prospectus, Hualong Securities intends to be listed on the main board of the Shanghai Stock Exchange and sponsored by CITIC Securities; It is estimated that no more than 2 billion shares will be issued, accounting for no more than 24% of the total share capital after issuance. After deducting the issuance expenses, all the raised funds will be used to increase capital and replenish working capital for the development of various businesses.

Coupled with the latest prospectus disclosed by Hualong Securities, Cinda Securities is in the issuance period and will soon become the first brokerage firm to land in A shares in 2023. Open source securities, Caixin Securities and Bohai Securities completed the pre-disclosure update, and the number of IPO queues was in the forefront. In 2023, "waist brokers" will usher in a wave of listing.

A broker under the Gansu provincial government

Problems left by minority shareholders to be solved

As a brokerage company located in the northwest, the name of Hualong Securities may not be loud enough, but its regional advantages in deepening the central and western regions should not be underestimated.

According to the prospectus, Hualong Securities was established in April 20001year with a registered capital of 6.335 billion yuan. Is a comprehensive full license securities business institutions. By the end of June 2022, Hualong Securities had 18 branches (5 in Gansu Province) and 79 sales offices (35 in Gansu Province).

Hualong Securities has 5 holding subsidiaries and 6 joint ventures. Among the holding subsidiaries are Jincheng Capital, a private equity subsidiary, Hualong Investment, and Hualong Futures, an alternative subsidiary. In addition, Hualong Securities directly holds 46% of the equity of Huashang Fund and is the main sponsor of Huashang Fund.

Hualong Securities stated in the prospectus that as the only comprehensive securities operation institution controlled by Gansu Provincial People's Government, it has received strong support from local governments. With the implementation of the national "One Belt, One Road" initiative, it is welcoming rapid development policy opportunities and historical opportunities, maintaining the absolute dominant position of Gansu's jurisdiction in the fierce market competition environment and playing an increasingly important role in the western capital market.

It is worth mentioning that Qi Jianbang, the current chairman of Hualong Securities, is also the chairman of Gansu Financial Holding Group Co., Ltd., and took up his new position in July 20021. At the end of 2022 1 1, Qi Jianbang said that he would continue to deepen the reform of state-owned enterprises, further improve the governance system, optimize the layout structure and shareholding structure, and fully promote the authorization of financial control and the IPO declaration of Hualong Securities.

On 20 14, Hualong Securities started the share reform and changed into a joint stock limited company as a whole. In 20 16, Hualong securities successfully listed on the new third board, and then delisted in August 20 18, preparing to sprint for a-share listing. On the sponsoring brokerage firm, Hualong Securities continued to choose CITIC Securities, the sponsoring brokerage firm when it was listed on the New Third Board, as its escort.

According to the prospectus, as of the end of the reporting period, Hualong Securities had no controlling shareholder. There are five shareholders holding more than 5% of the shares, among which Gansu Financial Holding Group Co., Ltd. ranks as the largest shareholder with 16.29% of the shares. In addition to Gansu Jinkong and its concerted actions, shareholders holding more than 5% of Hualong Securities also include Shandong SDIC, with a shareholding ratio of 7.89%.

The actual controller of Hualong Securities is Gansu Provincial People's Government, which holds and controls 38.94% of the shares of Hualong Securities through Gansu Jinkong, Gansu Gonghanglv, Gansu SDIC, Gansu Power Investment, Jiugang Group, Reader Media, Xinye Assets, Northwest Yongxin and Shenlong Rongfa.

Hualong Securities said that shareholders include Gansu Jinkong, the state-owned financial capital investment and management center in Gansu Province, Shandong Guotou, the only provincial-level state-owned capital operation company in Shandong Province, and other well-known local state-owned enterprises inside and outside the province, as well as some well-known private enterprises with strong capital strength and market influence. Hualong Securities further diversified its shareholding structure through listing the New Third Board on 20 16 and subsequent increase in holdings.

However, while the shareholding structure is diversified, the shareholder qualifications and equity of some shareholders of Hualong Securities are also flawed. By the end of the reporting period, five corporate shareholders companies of Hualong Securities did not meet the requirements for the supervision of shareholders' qualifications of securities companies below 5%, and their affiliated companies were in debt default, bankruptcy reorganization, bankruptcy liquidation and guarantee litigation.

In terms of natural person shareholders, there are also problems in the equity held by some shareholders of Hualong Securities. For example, a natural person shareholder of Hualong Securities holding 0.92% equity was sentenced to four years' imprisonment for embezzlement of public funds and bribery, and his equity was frozen for criminal cases. In view of the confidentiality of handling cases and other reasons, the specific nature of the relevant shares has been unknown.

Performance ranking industry "waist cut"

The asset management business has obviously been hurt.

Let's look at the performance and main financial indicators of Hualong Securities during the reporting period:

According to the prospectus, in 2065.438+09, 2020, 2026.5438+88.6 million yuan and the first half of 2022, Hualong Securities realized operating income of 2.092 billion yuan, 65.438+90.8 million yuan, 65.438+86.8 million yuan and 674 million yuan respectively. The net profit of returning to the mother was 365 million yuan, 494 million yuan, 724 million yuan and 2,654.38+0.6 million yuan respectively.

According to the ranking of operating performance indicators of securities companies published by China Securities Association in 20021year, Hualong Securities ranked 63rd in total assets, 46th in net assets, 60th in operating income and 5th1year in net profit. Judging from the ranking, the indicators of Hualong Securities are at the "waist" level as a whole.

As far as the main business operation is concerned, Hualong Securities, as a fully licensed brokerage firm, still takes brokerage business and credit trading business as the "big head" in its revenue proportion, and its proportion has been increasing in recent years. By the first half of 2022, the brokerage business income of Hualong Securities will be 290 million yuan, accounting for 43.04% of the revenue; The credit business income was 65.438+0.38 billion yuan, accounting for 20.45% of the revenue; The combined income of the two accounts for more than 60%.

In terms of self-operated business, the level of 20 19-202 1 of Hualong Securities was stable, but in the first half of 2022, "Waterloo" appeared, and its revenue and proportion dropped sharply. It only reached 63.769 million yuan in the current period, accounting for 9.46%.

Among all the businesses, the asset management business of Hualong Securities was badly hurt. In 20 19, 2020, 202 1 and the first half of 2022, the income from asset management business of Hualong Securities was-77,084,800 yuan,-20,483,600 yuan, 72,654,300 yuan+079,800 yuan and-3,690,400 yuan respectively, accounting for-.

As for the reasons for the fluctuation of income from asset management business, Hualong Securities said that the investment profit and loss and the fair value change profit and loss of the product share of asset management plan invested by its own funds fluctuated mainly due to market conditions. By the end of the reporting period, there were 23 asset management plans managed by Hualong Securities Asset Management Headquarters, and the scale of entrusted asset management funds was 6.76 billion yuan.

According to the prospectus, Hualong Securities expects to issue no more than 2 billion shares this time. After deducting the issuance expenses, all the raised funds will be used to increase the company's capital and supplement the company's working capital for the development of various businesses of the company.

Specifically, it includes: consolidating its own advantageous businesses such as bond underwriting and fixed income, upgrading the scale of traditional businesses such as brokerage, asset management and sponsorship underwriting, expanding innovative businesses, enhancing the attraction of professionals, strengthening corporate governance and improving enterprise management system.

The aftershocks of the blue mountain science and technology case continue.

In 2022, the fine was repeated.

In the process of IPO sprint of Hualong Securities, the fraud case of Blue Mountain Technology is a "hurdle" that it can't bypass.

20211/CSRC issued a written decision on administrative punishment to Hualong Securities, which punished some statements in the issuance recommendation letter that were inconsistent with the facts, contained false records, and failed to fulfill their diligence obligations in the process of sponsoring Lanshan Technology to publicly issue shares and select hierarchical listing, and confiscated the income of Hualong Securities 1.5 million yuan.

Hualong Securities said that after receiving the above administrative punishment, the company attached great importance to it, timely completed the rectification of investment banking business in accordance with relevant regulations, and seriously dealt with the relevant directly responsible personnel.

Although the penalty amount is not high, the case was listed as 20 typical illegal cases in 20021year by the CSRC. The CSRC pointed out that the case was a typical fraudulent issuance case of the New Third Board Company. Hualong Securities, ZTE Caiguanghua, etc. Providing relevant securities services for Lanshan Technology, but failing to carefully check according to the business rules, the report issued has false records. The case warned that the New Third Board Company should respect the laws of the market and should not "go through the customs with illness". Relevant intermediaries should be diligent and conscientious to jointly safeguard the healthy development of the New Third Board market.

According to the prospectus, after the above-mentioned incidents, the investors of Lanshan Technology filed a lawsuit with the Beijing Financial Court for the dispute over the liability of securities misrepresentation, and took Hualong Securities as the defendant on the grounds that Lanshan Technology entrusted brokers and selected listed sponsors, demanding to bear the liability for compensation. As of June 30, 2022, the people's court has served 29 cases of false statements by Hualong Securities Lanshan Technology, involving a sum of11363,300 yuan.

Also because of the Blue Mountain Science and Technology case, the National Stock Transfer Company publicly condemned Hualong Securities and two Baodai in March 2022.

In June, 2022, China Securities Regulatory Commission took measures to supervise Hualong Securities, pointing out that the internal control of investment banking business of Hualong Securities is not perfect, the internal control system is not perfect, the implementation is not in place, the internal organizational structure is chaotic, the key nodes of "three lines of defense" exist in name only, the risk prevention and control mechanism of clean business is not perfect, the risk assessment of clean business is not in place, and the risk prevention and control of hiring a third party is not in place.

In addition, the prospectus shows that during the reporting period, some business departments of Hualong Securities still had four small tax administrative penalties, ranging from 1 10 yuan to 2,000 yuan. In addition, Sichuan Branch and Chengdu Renmin South Road Securities Business Department recommended the sale of wealth management products that were not sold by the company. The backstage staff had marketing customers and were issued a warning letter by Sichuan Securities Regulatory Bureau.

Editor: Huang Mei