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MarketScreener Homepage  >  Equities  >  SHENZHEN STOCK EXCHANGE  >  Zhongtian Financial Group Company Limited    000540   CNE000000FL2

ZHONGTIAN FINANCIAL GROUP COMPANY LIMITED

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Tomorrow Group-linked shares tumble after China seizes affiliated financial firms

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07/20/2020 | 02:31am EDT
People walk past the building with the listed address of Tomorrow Holdings' Beijing office

Shares in three companies with connections to troubled Chinese conglomerate Tomorrow Holdings Co Ltd slumped on Monday after regulators seized control of nine firms affiliated with the group.

Chinese financial regulators announced on Friday they had temporarily taken over brokerages, trust companies and insurers linked to the embattled group, amid a campaign to stem systemic financial risks in a slowing economy. Regulators took control of Baoshang Bank, controlled by Tomorrow Group, in May 2019 in China's first bank seizure in nearly two decades.

Meanwhile, Tomorrow's founder Xiao Jianhua was investigated more than three years ago amid a state-led crackdown on conglomerates, and has not been seen in public since 2017.

Shanghai-listed Xishui Strong Year Co Ltd Inner Mongolia, a cement and clinker manufacturer with a 51% stake in Tianan Property Insurance - one of the nine companies seized by regulators - fell by the daily limit of 10% in morning trade on Monday.

Baotou Tomorrow Technology which produces and sells chemical products and is minority owned by Tomorrow also saw its shares drop 4% on the Shanghai bourse on Monday.

Shenzhen-listed Zhongtian Financial Group Co Ltd, which said in 2017 it planned to buy up to 25% https://www.reuters.com/article/us-zhongtian-fincl-huaxia/chinas-zhongtian-financial-to-buy-up-to-4-7-billion-stake-in-huaxia-life-idUSKBN1DL052 in Tomorrow-linked Huaxia Life Insurance, dropped by over 8% during the morning session before it narrowed losses to 3.9% in the afternoon. Huaxia Life was another company seized by the government on Friday.

The benchmark Shanghai Composite Index was up 3.11% on Monday, while the main Shenzhen index rose 2.68%.

Xishui Strong Year said in a statement on Monday that the ultimate impact on it of Tianan Property Insurance's seizure was still uncertain. It added that it would actively cooperate with the regulators.

Zhongtian Financial Group said in a statement that its stake purchase was still underway and it was still assessing what the government takeover means and would communicate once that was clear.

On Saturday, Tomorrow lashed out at the state takeovers, in a rare example of public criticism of official action. The statement was quickly removed from its social media account.

ONE-YEAR DEALS

Regulators said on Friday that they had taken over the companies for one year, during which their operations will remain normal. They said the takeovers won't change their debt obligations or creditors' rights.

Creditors had total exposure of between 40 to 50 billion yuan ($7.15 billion) in the nine firms, state-backed Shanghai Securities Journal reported on Monday, citing unnamed regulatory sources. It added that the risk of wider contagion was limited.

Regulators took over Baoshang Bank in 2019, citing serious credit risks and sending shockwaves through the financial system.

"Beijing is clearly interested in cleaning up its financial system and taking down some larger companies that have no strategic value to China. The relationship between Tomorrow Group and the troubled Baoshang Bank may have tipped the balance for Tomorrow Group," said Andrew Collier, founder of Orient Capital Research.

In May 2020, regulators announced they had extended Baoshang Bank's one-year takeover by a further six months.

"As the asset clean-up of Baoshang Bank comes to an end, regulators need to concentrate on handling the complicated web of debt of other Tomorrow Holdings affiliates," said Wang Yifeng, analyst at Everbright Securities.

By Julie Zhu and Cheng Leng


Stocks mentioned in the article
ChangeLast1st jan.
BAOTOU TOMORROW TECHNOLOGY CO., LTD. -1.19% 2.5 End-of-day quote.-32.98%
EVERBRIGHT SECURITIES COMPANY LIMITED -3.06% 21.23 End-of-day quote.62.06%
FIRST BANK 2.61% 7.48 Delayed Quote.-32.31%
INNER MONGOLIA YILI INDUSTRIAL GROUP CO., LTD. -4.01% 40.45 End-of-day quote.30.74%
S&P/CITIC 300 INDEX -0.25% 4090.33 Delayed Quote.15.17%
S&P/CITIC 50 INDEX -0.43% 4111.8 Delayed Quote.10.03%
SHANGHAI U9 GAME CO.,LTD. 0.00% 2.03 End-of-day quote.-12.50%
SHENZHEN STOCK EXCHANGE A SHARE INDEX -1.90% 2303.0845 Real-time Quote.27.79%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.00% 6.6642 Delayed Quote.-4.24%
XISHUI STRONG YEAR CO.,LTD INNER MONGOLIA -2.08% 6.12 End-of-day quote.-31.92%
ZHONGTIAN FINANCIAL GROUP COMPANY LIMITED -0.90% 3.32 End-of-day quote.-0.30%
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Financials
Sales 2019 21 198 M 3 171 M 3 171 M
Net income 2019 1 108 M 166 M 166 M
Net Debt 2019 16 135 M 2 414 M 2 414 M
P/E ratio 2019 21,0x
Yield 2019 -
Capitalization 23 152 M 3 462 M 3 464 M
EV / Sales 2018 2,52x
EV / Sales 2019 1,86x
Nbr of Employees 5 697
Free-Float 46,4%
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Managers
NameTitle
Zhi Zhang Executive President, General Manager & Director
Yu Ping Luo Chairman
Mei Li Chairman-Supervisory Board
Zhi Liang He Chief Financial Officer
Wei Guo Shi Vice Chairman