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Fortune Securities Might Use Valin for Back Door Listing

Source: Morning Herald, May 18, 2016, 15:40:57

On the evening of May 17, Valin Steel, a Hunan local stock which has been delisted for nearly two months, finally disclosed the core content about its major assets reorganization, that is, the company plans to sell its steel assets and purchase the financial and energy-saving power generation assets owned by Hunan Caixin Financial Holding Co., Ltd. through private placement.  

A Hunan local securities trader and specialist in private placement pointed out after analysis, “Currently, the financial assets of Caixin Financial Holding are most concerned in the market, and Fortune Securities is most likely to be injected. Once the major assets reorganization takes place, Fortune Securities is very likely to have a back door listing.”

Since the plan of controlling shareholder Valin Group involves a big event of the company’s business, Valin Steel’s secondary market stock was delisted on March 28. In addition, since this big event caused major assets reorganization to Valin Steel, the company’s stock entered the procedure of major assets reorganization on April 19.

According to the original plan, Valin Steel was supposed to publicize the information on the major assets reorganization on May 18. Nevertheless, it announced on the evening of May 17that the delisting would continue.  

What draws the market’s attention is that Valin Steel revealed the basic condition of this planned major assets reorganization at the same time. The dealers that had been preliminarily determined were Hunan Caixin Financial Holding Co., Ltd. and Valin Group. The major assets reorganization was planned to be implemented by listed company’s selling assets, issuing stocks, purchasing assets and raising supporting funds. The preliminary plan was to sell the company’s assets related to steel and purchase highly profitable assets of finance, energy-saving power generation and other industries.

 “To put it simple, Valin Steel will abandon its steel assets and substitute with financial assets like Fortune Securities, Hunan Trust and Jixiang Life through private placement while Fortune Securities uses this opportunity to have a back door listing. This is a result of the current trend,” explained by the aforementioned specialist.

This major assets reorganization is still in the phase of preparation and promotion now. Valin Steel has announced that it has not signed intention agreement with the other dealer, nor have it and other relevant parties required the preliminary approval from government departments.

Caixin Financial Holding: The only local financial holding group in Hunan.

Replacing steel business with financial assets is quite beneficial for investors holding the stock of Valin Steel.

The data of annual report indicates that Valin Steel gained RMB 41.406 billion in 2015, dropping by 25.53% compared with last year with a loss of RMB 2.959 billion. In the same period in 2014, it achieved profit of RMB 74.6343 million.

Hunan Caixin Financial Holding established on Jan. 21 this year is the only local financial holding group in Hunan and the provincial state-owned large backbone enterprise with the most complete financial certificates. It owns 25 wholly-owned or partially-owned subsidiaries including Hunan Trust, Fortune Securities, Hunan Assets Management Company and Hunan United Assets and Equity Exchange.

Among the 25 subsidiaries, there are 15 financial or finance-related enterprises. Moreover, the company also has a number of financial platforms for trust, securities, insurance, guarantee, property right transaction, equity transaction, futures, foundation, assets management, pawn etc.

By the end of 2015, Hunan Caixin Financial Holding had total assets of RMB 45.7 billion and net assets of RMB 8.2 billion. According to the data released on its own website, Fortune Securities’ total assets had exceeded RMB 34.0 billion and its net assets RMB 4 billion by June 30, 2015.

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