After the completion of this round of capital increase, the self-operated balance of Ant Group's micro-loan business, which Ant Consumption Gold can undertake up to, will increase to about 400 billion yuan. If all are used for joint loans, the balance of "credit loans" and "credit purchases" can be increased to 1.3 trillion yuan
Wen | "Caijing" reporter Tang Jun, Zhang Wei
Editor| Zhang Wei
Ant Group's rectification and corresponding response work have made the latest progress.
On December 24, China Cinda (1359. HK) disclosed that it will cooperate with Ant Group, Yuyue Medical (002223. SZ), Shun Yu Optics (2382. HK), Guangzhou Boguan Information Technology Co., Ltd. (hereinafter referred to as "Boguan Technology"), Yufu Capital and other companies jointly increased their capital in cash to Chongqing Ant Consumer Finance Co., Ltd. (hereinafter referred to as "Ant Consumption"). Among them, Boguan Technology was established in 2003, the main business is the design and production of game software, and its ultimate beneficial controller is Net Ease. Inc (NetEase, 09999.HK; NASDAQ: NTES).
After the completion of the capital increase, the capital of Ant Consumption Will increase from 8 billion yuan to 30 billion yuan.
Since the suspension of the IPO in 2020, the market supervision environment has undergone tremendous changes, and ant group's micro-loan technology business is facing rectification. According to the rectification plan, "Huabei" and "Borrowing" will all be included in ant consumption gold, and consumer finance business will be carried out in accordance with the law. "As a formal financial institution, the regulatory requirements of consumer gold companies are much higher than those of small loan companies, which helps to better prevent financial risks." Dong Ximiao, chief researcher of Zhonglian Finance and part-time researcher of the Institute of Finance of Fudan University, told Caijing reporter.
According to the prospectus of Ant Group, as of the end of June 2020, the balance of consumer credit represented by "Huabei" and "Borrowing" was 1.73 trillion yuan. Previously, the principal of ant consumption funds was only 8 billion yuan, and under the constraints of regulatory documents such as the "Measures for the Administration of Internet Loans of Commercial Banks" on the leverage ratio, it was difficult for it to undertake the consumer credit business of more than one trillion yuan in ant body.
Many analysts pointed out that ant consumption gold's large-scale capital increase is mainly to meet the leverage ratio requirements of the regulatory authorities for licensed consumer gold companies. According to CITIC Securities, the capital of 30 billion yuan is expected to be up to 1.3 trillion yuan of consumer credit balance. "What is certain is that the balance of consumer credit of Ant Group cannot be fully undertaken by Ant Consumption Gold, and some businesses still need to be compressed." Dong Ximiao pointed out.
It is worth noting that the capital increase price is 1 yuan per 1 yuan of registered capital, according to this estimate, the current overall valuation of Ant Consumption Is 30 billion yuan. Many analysts reminded that after undertaking the "Huabei" and "borrowing" business, there are still variables in the valuation logic of Ant Consumption Gold.
Sun Haibo, president of the Institute of Financial Regulation, wrote that if the central bank strictly implements the new rules on credit reporting, Ant Consumption Gold may exist mainly as a lending tool for credit business terminals, that is, a pure financial institution; but if Ant Group is still willing to support Ant Consumption Gold, and the central bank's policy is relatively loose, Ant Consumption Gold can also rely on existing customer data to export value-added services to financial institutions, thus existing as an asset-light financial technology company. Between different positioning, the valuation gap will reach several times.
However, Dong Ximiao said bluntly that as far as Ant Group itself is concerned, it is no longer possible to value technology companies. In particular, he pointed out that after Ant Group's application to establish a financial holding company is approved, the impact on its valuation logic will be more significant.
"Ant Consumption Gold undertaking the 'Huabei' and 'borrowing' business is one of the important measures for Ant Group's rectification." Wang Pengbo, a senior analyst in the financial industry at Broadcom Analysis, told the "Finance" reporter.
According to the previous rectification plan, Ant Group should complete the brand rectification work of "Huabei" and "Borrowing" within 6 months of the opening of Ant Consumer Finance Company. After the completion of the rectification, "Huabei" and "Borrowing" will become the exclusive consumer credit products of Ant Consumer Finance Company, and the consumer credit issued by other financial institutions with the help of data and information provided by Ant Group will no longer be labeled with the names of "Huabei" and "Borrowing".
In June 2021, Ant Consumption Gold was approved to open for business; in November, Ant Group's "Borrowing" and "Huabei" successively launched brand isolation work. According to the announcement, "borrowing" and "Huabei" will become the exclusive brands of Ant Consumption Gold, while the credit products independently provided by banks and other financial institutions will be listed under the brands of "credit loan" and "credit purchase". A "Huabei" user told Caijing that Alipay had previously pushed the "Huabei" service upgrade agreement to it. As of press time, the "Huabei" entrance has not been changed to "Huabei | credit purchase", and at present, only the "credit purchase" quota provided by a bank is used normally, and the quota provided by "Huabei" has not yet taken effect.
"Finance" reporter previously reported that Ant Group's prospectus shows that in the first half of 2020, Ant Group's micro-loan technology platform contributed to a total credit balance of 2.15 trillion yuan. Among them, the balance of consumer credit represented by "Huabei" and "Borrowing" (the main body is Chongqing Ant Small and Micro Micro Loan Co., Ltd. and Chongqing Ant Shangcheng Small Loan Co., Ltd.) totals 1.73 trillion yuan.
On December 24, China Cinda (1359. HK) and several other companies have successively announced that they will increase their capital in cash and ant consumption of a total of 22 billion yuan. After the completion of the capital increase, the capital of Ant Consumption Will increase from 8 billion yuan to 30 billion yuan.
"Capital increase and share expansion are expected and inevitable." Dong Ximiao told the "Finance" reporter that the original capital of Ant Consumption Gold, calculated according to 13 times leverage, can only support less than 110 billion yuan of credit level, and the capital increase and share expansion are to meet the needs of undertaking the balance of 1.73 trillion yuan of consumer credit.
According to CITIC Securities, after the completion of this round of capital increase, the self-operated balance of Ant Group's micro-loan business that Ant Consumption Gold can undertake up to increase from about 100 billion yuan to about 400 billion yuan. If all of them are used for joint loans, the balance of "credit loans" and "credit purchases" that Ant Consumption Can accept has increased from about 350 billion yuan to 1.3 trillion yuan.
"As for how much it can undertake, it depends on its business model, including self-operated business, the proportion of joint loans, and how the loan assistance business is carried out, and it needs to be continued to be observed." Dong Ximiao added.
After "Huabei" and "Borrowing" are undertaken by Ant Consumption, how will Ant Group's micro-loan business change?
CITIC Securities pointed out that since Ant Consumption Fund can undertake up to 1.3 trillion yuan of consumer credit balance, based on the 1.73 trillion yuan at the end of June 2020, at least 400 billion yuan of balance will rely on the loan assistance model, that is, independent lending by banks. "Considering that ant consumption is more engaged in self-operated business in the early stage, the balance that needs to be digested in the loan assistance model should be higher than this calculation." It is expected that the growth of Ant Group's micro-loan business will also come more from the loan assistance model in the future. ”
Sun Haibo pointed out, "If it is a loan, it actually has nothing to do with ant consumption, it is Ali or Ant Group and financial institutions, and it is subject to the new rules on credit reporting, and it is necessary to make inquiries and customer portraits through ant credit in the future." According to the Measures for the Administration of Credit Reporting Business, internet platforms carrying out loan assistance and other related businesses that meet the definition of credit reporting business are within the scope of credit reporting supervision. Recently, Ant Group, together with Zhejiang Tourism and other companies, applied to the central bank to set up Qiantang Credit Information. Many analysts pointed out that in the future, Ant's loan assistance business may be carried out through Qiantang Credit.
According to the above logic, Ant Consumption May become a lending channel for Ant Group's micro-loan business, that is, a pure financial institution. "There is a certain gap in the valuation of financial institutions that only do financial business and financial institutions equipped with financial technology business." Wang Pengbo said bluntly. At the same time, he also pointed out that there are also consumer finance companies that export some financial technology services to financial institutions. Therefore, whether Ant Group will provide technological value-added services to financial institutions through Ant Consumption Gold depends on the follow-up specific business execution.
Sun Haibo shares the same view. He bluntly said that the future valuation of Ant Consumption Gold mainly depends on the positioning of Ant Group and the strictness of the central bank's implementation of the new rules on credit reporting. If ant group is still more inclined to support ant consumption, even if the latter cannot obtain incremental customer data directly from the group, it relies on existing customer data and more convenient data verification to develop a risk control system, which can also truly turn data into financial assets and introduce financial institutions. This scenario requires the central bank's relatively loose policy environment and the key support of Ant Group. "Such ant consumption is not only a traditional banking financial institution, but an asset-light financial technology company, which mainly serves traditional banking financial institutions, and the valuation may also double several times." Sun Haibo pointed out.
Dong Ximiao believes that for Ant Group, it is no longer possible to value according to technology companies. After Ant Group's application to establish a financial holding company is approved, the impact on its valuation logic will be more significant. However, Wang Pengbo also pointed out that after the completion of the rectification work, the compliance of Ant Group's business will be strengthened and the uncertainty will be reduced, which will add to its valuation itself.
It is worth noting that after this round of capital increase, the shareholding ratio of state-owned capital in Ant Consumption Will Increase significantly. China Cinda will become the second largest shareholder of the institution through a direct and indirect (Nanyang Commercial Bank) holding 24.003% of the shares of Ant Consumption, Yufu Capital will hold 2.6% of the shares, the eighth largest shareholder, and China Huarong will hold 1.331% of the shares, making it the eleventh largest shareholder. Among them, the actual controllers of China Cinda and China Huarong are both the Ministry of Finance of china, while the actual controllers of Yufu Capital are the Chongqing State-owned Assets Supervision and Administration Commission. The total shareholding ratio of the three major shareholders exceeds 25%.
Image source: Yuyue Medical Announcement
Wang Pengbo said that the increase in the proportion of state-owned assets has made the equity structure of Ant Consumption Gold more reasonable. For Ant Group, on the one hand, it can increase its compliance motivation; on the other hand, it is also conducive to its refined operation. "The participation of two state-owned shareholders can enhance the stability of the development of Ant Consumption Gold," Dong Ximiao believes, "At the same time, as a financial investor, it also provides strong capital support for Ant Consumption Gold." ”