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Will Large-Scale Reduction Of Large Shareholders' Cash Arbitrage And Increase Of Individual Investors' Holdings Of Oriental Wealth Become The Chinese Version Of Jiaxin Financial Management?

2021/2/4 12:46:00 0

ShareholdersRetail InvestorsOverweight

The public lover in a shares is listed on the Oriental Fortune list, and a large number of investors are gathered in Dongcai app, stock bar, Tiantian fund and choice data, which are used to watch the market and trade.

In the pursuit of individual investors, Oriental Wealth rose as high as 182% in the past year. On January 25, the intraday price also reached a record high of 40.57 yuan.

What is unexpected is that in the happy atmosphere of the stock price rising continuously and reaching new highs, the major shareholders of Dongfang fortune want to reduce their holdings substantially.

On the evening of February 1, Dongfang fortune announced that Shen Yougen, acting in concert with the controlling shareholder of the company, had reduced his holdings of about 107 million shares, accounting for 1.24% of the total share capital of the company; the average price of the reduction was 26.95 yuan / share, with a total reduction of 2.884 billion yuan.

On February 3, Dongfang fortune's share price rose slightly on the trading day before the end of the trading day, and fell 4.1% in depth, closing at 35.34 yuan.

Although many individual investors have a green eye on Dongfang fortune, the substantial reduction of the controlling shareholder's holdings will still make the market nervous. Investors can't help but ask whether the controlling shareholder's large-scale reduction of holdings is really out of the need for funds or is it safe to close the bag when the situation is good?

Large shareholders reduce their holdings and retail investors increase their holdings

Shen Yougen, acting in concert with the controlling shareholder of Dongfang fortune, has reduced his holdings by about 107 million shares, which is not the first time that the company has reduced its holdings.

In fact, the reduction of major shareholders began as early as July last year.

On July 10, 2020, Dongfang fortune announced the reduction announcement in advance.

According to the announcement, Mr. Shen Yougen, acting in concert with the shareholders of Dongfang fortune, holds 217 million shares of the company (accounting for 2.69% of the total share capital of the company), and plans to reduce the company's shares by no more than 161 million shares, that is, no more than 2.00% of the total share capital of the company.

At that time, Dongfang fortune's share price continued to rise, closing at 27.16 yuan / share on July 9, 2020. On July 10, Dongfang fortune fell 5.63% due to the reduction information.

According to public information, Shen Yougen is the father of Shen Jun, the founder of Oriental wealth. At present, Dongfang fortune's largest shareholder actually holds 440 million shares, accounting for 5.1% of the total share capital. Lu Lili, the fourth largest shareholder, is Shen Jun's wife with a shareholding ratio of 2.46%.

At the same time, the company's senior executives also joined the ranks of reducing shares. On September 5 and September 26, 2020, the company successively issued the pre disclosure announcement of the reduction of shares held by senior executives.

However, with the reduction of large shareholders, the number of shareholders of the company has increased explosively.

As of September 30, 2020, the number of shareholders of Dongfang fortune was 628200, an increase of 270400, or 75.56%, compared with 357800 on June 30.

Different from many listed companies, the share price of Dongfang fortune has gone up under the pressure of major shareholders and senior executives.

The core value of Oriental Wealth

At the beginning of its establishment, Dongfang fortune had Internet gene. Its predecessor was Shanghai Dongcai Information Technology Co., Ltd., which was established in January 2005, and was renamed as Dongfang fortune Information Co., Ltd. in January 2008.

In March 2010, Dongfang fortune landed on the gem of Shenzhen Stock Exchange. In January 2021, the market value of Dongfang fortune exceeded 300 billion, second only to CITIC Securities, and surpassed large traditional securities companies such as CICC, China CITIC construction investment and China Merchants Securities.

At present, Dongfang fortune owns securities, fund sales, financial data, Internet advertising, futures brokerage, public funds, private funds, securities investment advisory and small loan business sectors.

The outstanding performance of Oriental Wealth in the secondary market is directly related to its performance. On the evening of January 22, Dongfang fortune released a performance forecast, which predicted that the net profit attributable to shareholders of Listed Companies in 2020 would be 4.5-4.9 billion yuan, with a year-on-year increase of 145.73% - 167.57%.

On the substantial growth of performance, Dongfang fortune explained: "because the income related to securities business increased significantly year-on-year and that of financial e-commerce service business increased significantly year on year."

From the perspective of Dongfang fortune 2020 interim report, its business income mainly comes from 62% of securities service business, 34% of financial e-commerce service, and 4% of financial data service and advertising.

According to Wu Pingping, an analyst at China Galaxy Securities, with the low commission strategy (no more than 0.25 ‰), Dongfang fortune's market share has continued to increase. By the end of September 2020, the market share of the company's brokerage business has reached 3.18%, and the interest income of the two financing businesses has reached 1.26 billion yuan, an increase of 87.93% year-on-year.

Industry insiders said that the biggest advantage of Oriental Fortune and traditional securities companies is large flow and low cost of customer acquisition.

The 21st century economic report reporter also learned that the current Huatai Securities new effective user (refers to the new account opened in a natural year and the daily average assets of the account ≥ 10000) needs to pay about 320 yuan for the channel, and the traditional securities companies also need to recruit employees to develop customers, which are all labor costs. Oriental wealth can not only seize the incremental market, but also seize the market share of traditional securities companies.

On January 19, China settlement data showed that the number of new investors in December 2020 was 1.6218 million, up 100.39% year-on-year. By the end of December 2020, the number of investors at the end of the period was 178 million, with a year-on-year increase of 18.02 million and a year-on-year increase of 11.28%.

Chinese version of Jiaxin financial management?

Oriental wealth is often referred to as the Chinese version of Jiaxin financial management.

As the largest online securities company in the United States, Ka Shin financial management manages more than 6 trillion US dollars of customer assets and 28 million brokerage accounts. The biggest difference from famous big investment banks such as Merrill Lynch and Goldman Sachs is that it focuses on individual investors and investment advisory services.

From the perspective of income structure, Jiaxin financial management mainly comes from interest margin business, asset management and wealth management business and brokerage business, which account for more than 90% of the total revenue. In 2019, revenue based on asset management and wealth management accounts for 30%, transaction based revenue accounts for 6%, net interest income accounts for 61%, and other income accounts for 3%.

In terms of the market value in January, in the investment banking and brokerage business, the market value of credit card management is second only to Morgan Stanley, and second in the industry, higher than that of Goldman Sachs.

From the perspective of securities business, the main business of Dongfang fortune and Jiaxin financial management is similar, but there are essential differences, because Dongfang fortune, which started with Dongfang fortune.com, brings a large number of user traffic, and securities dealers and funds are the core means of realization at present.

In 2019, credit management announced on its official website that "from October 7 this year, the company will completely cancel the online trading commission of listed stocks, ETFs and options in the United States and Canada."

Zero Commission is a dimension reduction attack for peers. Although there are successful cases of the transformation of credit management to wealth management in overseas countries, the overall transformation pace of domestic securities companies is still slow, and the income of wealth management business mainly comes from the sales of financial products, and the scale is relatively small.

Huaxi Securities believes that the Eastern wealth space exceeds that of Jiaxin financial management, because the industry structure is relatively scattered, and the company's innovation and breakthrough under the Internet thinking, the market share will continue to increase.

However, some people from Shenzhen securities companies said that the moat of Internet securities companies is mainly low-cost traffic entrance. When other large traffic platforms enter the industry, such securities companies also have to consider how to continuously improve their core competitiveness.

 

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