Why did Ping An's share price plummet?

The investment storm caused Ping An to suffer huge losses and reduced market confidence.

1. Commercial office real estate projects. On June 28 this year, Ping An of China issued an information disclosure announcement on large-scale real estate investments. It planned to invest no more than 33 billion yuan to acquire six projects including Raffles City from CapitaLand Group of Singapore and private equity funds.

A 60%-70% stake in a commercial office real estate project. The transaction is expected to be officially completed in the third quarter of 2021.

In this acquisition, Ping An acquired a project at a serious premium.

There is even a conclusion in the market that the total value of the assets acquired by Ping An does not exceed 10 billion. This means that there is a suspicion of a premium of more than 20 billion.

Although the transaction price actually corresponds to a valuation of approximately 46.7 billion yuan for the six projects, a 6.7% premium over the assessed value at the end of 2020, this still causes a decline in market confidence.

Following the announcement of the acquisition, Ping An's A shares fell 6.57% and Hong Kong stocks fell 4.53%.

2. At the same time as the acquisition of Peking University Founder, on January 29, Ping An announced that in order to promote the construction of a medical and health ecosystem and create a new engine for future value growth, it agreed that the company would participate in the substantive merger of Peking University Founder and its four subsidiaries within the scope of authorization.

Regroup.

As early as the third quarter financial report of Peking University Founder Group in 2019, it showed that as of the end of 2019, the debt ratio of Founder Group reached 82.84%. Due to debt problems, Peking University Founder Group began to embark on the road of restructuring in 2020.

As of January 18, 2021, 725 creditors*** of Peking University Founder, Founder Industrial Control, Peking University Medical, Peking University Information Industry, and Peking University Resources have declared 736 claims to the managers of Founder Group, with a total declared claim amount of 234.734 billion.

In the long run, the addition of Peking University Founder Medical is a powerful complement to Ping An's offline medical system and has a profound impact on the improvement of Ping An's comprehensive health ecosystem.

But in the short term, Founder Group may need to invest 37.05-50.75 billion, which seems to be a heavy burden for any company.

3. Acquisition of China Fortune Land Development In July 2018 and January 2019, Ping An acquired a total of 750 million shares from China Fortune Land Development’s major shareholder Huaxia Holdings at prices of 23.65 yuan/share and 24.597 yuan/share respectively, before and after*

** spent 18 billion, and its shareholding ratio reached 25.25% of the shares.

But in the first three quarters of 2020, China Fortune Land Development’s total liabilities exceeded 400 billion.

Among them, the scale of interest-bearing liabilities is 218.5 billion yuan, mainly short-term liabilities, of which short-term borrowings are about 34.3 billion yuan, non-current liabilities due within one year are nearly 59.8 billion yuan, and bonds payable are more than 52.5 billion yuan.

On February 1, China Fortune Land Development issued an announcement, admitting for the first time that the total amount of overdue debt principal and interest was as high as 5.255 billion yuan, involving bank loans, trust loans and other forms of debt.

In summary, Ping An’s three investments total more than 130 billion yuan. If they all suffer losses, it will be a disaster for any company. Although Ping An’s net profit attributable to shareholders of the parent company last year was 143.099 billion yuan.

, completely affordable, but the media seized on Ping An's three pitfalls and made a big fuss.

From the perspective of investors, for companies like Ping An, the market has shifted its valuation logic from growth stocks to that of traditional blue-chip stocks.

In addition, in the context of rising inflation and the continuation of the global flood, factors such as the interest rate environment and risk appetite, big funds pay more attention to the time cost of holding shares. When companies are going through a painful period, they are not willing to wait patiently for the end of the painful period of corporate reform.

, but choose some assets with good tracks or bright profit prospects for allocation. This is also the reason why big funds have sold off one after another, causing the stock price to plummet.