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Zhongcheng Insurance's new share expansion plan will start this year.

April 15, 2019 10:51
source: International financial newspaper

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Last week, the China Insurance Regulatory Commission approved threeInsuranceThe company's capital increase application. In the context of industry transformation, large-scale insurance companies seek to supplement their capital strength from a strategic perspective. Small and medium-sized insurance companies regard capital increase as an important means to ease the pressure of solvency in the transitional stage. Insurance companies are more eager for capital, and step up their blood supply. Improving solvency has become a common choice.

After nearly a year, Zhongcheng Insurance’s capital increase and share expansion finally settled.

Recently, the official website of the China Insurance Regulatory Commission approved the relevant plan for the capital increase of Zhongcheng Insurance, and approved its registered capital to be changed to 2.269 billion yuan. Before the capital increase, the company's registered capital was 1.5 billion yuan.

The "International Finance News" reporter learned from the relevant person in charge of Zhongcheng Insurance that the company will start the next round of capital increase plan this year.

Where is the fundraising of 1.5 billion?

The reporter noted that as soon as the listing of the New Third Board in 2016, Zhongcheng Insurance had issued a financing plan of 1.3 billion yuan, but it was not followed.

In this regard, Zhongcheng Insurance related people have previously explained: In the 2016 vote of the Zhongcheng Board of Directors on the capital increase plan,Guangzhou Automobile Group(601238) and its dispatched directors did not evade during the voting, violating the provisions of the “Listing Manual for the Issuance of Stocks of Listed Companies”, which caused the 2016 capital increase plan of Zhongcheng Insurance to be stranded.

After two years, in early 2018, Zhongcheng Insurance once again thrown huge financing plans. According to the issuance plan, Zhongcheng Insurance intends to present to eligible existingshareholderThe number of shares issued by qualified investors is not more than 768.75 million shares, and the fixed price is 3.33 yuan/share. It is estimated that the raised funds will not exceed 2.56 billion yuan. Among them, the majority shareholder of Zhongcheng InsuranceGuangzhou Automobile GroupIt has already intended to subscribe for 315 million shares, and the estimated subscription amount does not exceed 1.05 billion yuan, accounting for more than 40%.

On October 22, 2018, Zhongcheng Insurance was released again.announcementSaid to introduceNew sharesEast - Guangzhou Development Zone Financial Holding Group Co., Ltd. (hereinafter referred to as "Development Zone Gold Control"). Specifically, Guangzhou Automobile Group subscribed for 315 million shares of its fixed shares for 636 million yuan, and 414 million shares for the development zone's financial control with 917 million yuan.currencySubscription.

The final announced subscription plan is different from the original financing plan. The original price increase was originally 3.33 yuan/share, the subscription price was 2.02 yuan/share, the fixed increase plan was more than 1 billion yuan, and the raised funds totaled 1.553 billion yuan.

Regarding the purpose of this capital increase, the relevant person in charge of Zhongcheng Insurance told the reporter of the International Finance News to improve the company's ability to resist risks and solvency; to increase the capital of Dasheng Technology; to invest in insurance intermediary companies; Request to withdraw capital deposit.

Start the next round of capital increase this year

What is the new shareholder of Zhongcheng Insurance – what is the development zone’s financial control?

According to public information, Development Zone Jinkong is a strategic emerging industry investment and financing platform, technology entrepreneurship and financial investment operation platform and capital operation platform wholly owned by Guangzhou Development Zone. It is the state-owned sole proprietorship with the largest total assets of the development zone. Financial-based industry has formed including venture capital, emerging industry investment, financing guarantee, micro-credit, equity trading center, financial asset trading center, internet financeInformation serviceAnd other multi-level technology financial service system.

Then, how will Zhongcheng Insurance use the advantages of new shareholders to develop better?

The above-mentioned relevant person in charge said that the first is that Zhongcheng Insurance will use the technology and resource advantages of the development zone's financial control in science and finance to promote the breakthrough of insurance technology innovation.Insurance ProductsAnd lay the foundation for service innovation; second, through the introduction of the development zone financial control, Zhongcheng Insurance will cooperate with and cooperate with the business to provide perfect financial services for the development zone entity, which will help Zhongcheng Insurance to further expand the business market; The exchanges and references between the two sides in the construction of the financial system will help Zhongcheng Insurance to further improve the insurance service system and corporate governance, and promote the development of comprehensive financial services in the future.

When referring to the next step, the person in charge told reporters that the company plans to start the next round of capital increase and share expansion this year.

However, as for the specific matters of why the capital increase should be increased twice in a short period of time, as of the date of publication, Zhongcheng Insurance has not given a reply.

IPO path research

After seven consecutive years of losses, Zhongcheng Insurance achieved its first profit in the eighth year.

On March 29, Zhongcheng Insurance, which was listed on the New Third Board, disclosed that the 2018 annual report showed that the company achieved premium income of 1.521 billion yuan in the whole year of 2018, an increase of 9.86% over the same period of last year;Operating income14.21 billion yuan, an increase of 16.06% year-on-year;Net profit625.79 million yuan. This is the first year profit of Zhongcheng Insurance since its establishment in 2011.

Regarding the reasons for profit, the relevant person in charge of Zhongcheng Insurance told the reporter of the International Finance News that the company’s strategy of “best price/performance ratio” has been promoted since 2015, which has enabled the company to develop products, cost control, brand building and marketing. The core capabilities of human resources construction, customer relationship management and IT construction have been greatly improved, laying a solid foundation. At the same time, in 2018, the company further deepened the implementation of this strategy, the business situation has accumulated and made breakthrough progress.

Prior to this, Zhongcheng Insurance had a loss of 7 years, a loss of 42.967 million yuan in 2017, a loss of 32.974 million yuan in 2016, a loss of 826.747 billion yuan in 2015, a loss of 169 million yuan in 2014, a loss of 103 million yuan in 2013, a loss of 5808.49 in 2012. Ten thousand yuan, a loss of 40.131 million yuan in 2011.

Winning or losing does not matter. Backed by the large automobile group GAC, Zhongcheng Insurance naturally takes the auto insurance business as a breakthrough in entering the market. Its main business is motor vehicle insurance, other property insurance related to motor vehicle insurance, short-term health insurance and accident insurance.

However, compared with other property insurance types, the profit margin of China's auto insurance is relatively small, and it is difficult to make insurance.

For the previous loss, the person in charge explained that the property insurance company has a relatively long loss period compared to the general industrial and commercial enterprise. Zhongcheng Insurance currently has a relatively small number of institutions. On the one hand, the scale of premiums is relatively small, and there is no scale-up advantage; on the other hand, further development of branches requires continuous cost investment. In addition, in terms of business structure, Zhongcheng Insurance, as a professional auto insurance company, currently accounts for an absolute proportion of auto insurance business.

The reporter also noticed that the ambition of Zhongcheng Insurance is far more than the New Third Board. The successful financial support and market recognition for listing on the Main Board is the goal. As early as the listing of the new three board in 2016, Zhongcheng Insurance plans to sprint the IPO within three to five years, achieving a three-board transfer to the motherboard.

What are the plans for Zhongcheng, who will achieve profitability for the first time and successfully increase capital?

In response, Zhongcheng Insurance responded that the listing path is currently under study. "We are actively promoting the research of the IPO path. The company's operational ability is good, turning losses into profit, will be conducive to the implementation of our company's IPO and other major projects."

(Article source: International Finance News)

                (Editor: DF052)

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