Author | Xie Mei bath
Edit | Gao Yan
Source | Unicorn Finance
With a career spanning finance, steel, and politics, Li Wei was caught in an investigation storm in the year of Ershun.
In the financial sector, Li Wei was at the helm of Zhongtai Securities (600918. SH) for up to 17 years.
Since July 2003, Li Wei has served as the chairman of Qilu Securities (the predecessor of Zhongtai Securities). It was not until Zhongtai Securities successfully landed on the A-share market that Li Wei resigned from this position at the end of 2020.
As of the end of 2023, the total assets of Zhongtai Securities were 195.659 billion yuan, a decrease of 3.235 billion yuan or 1.63% from the end of the previous year, and in 2023, Zhongtai Securities achieved operating income of 12.762 billion yuan, a year-on-year increase of 36.86%, and net profit attributable to shareholders of the parent company of 1.8 billion yuan, a year-on-year increase of 204.94%.
It is worth noting that in 2023, Zhongtai Financial International Co., Ltd. (hereinafter referred to as "Zhongtai International") is the only loss-making subsidiary of Zhongtai Securities.
In less than four years since it landed on the A-share market, including Li Wei, Zhongtai Securities has had three chairmen, and the management changes are very frequent. On the other hand, Zhongtai Securities still has internal control concerns, and its branch centers frequently receive fines.
As of the close of trading on April 19, the share price of Zhongtai Securities was 6.36 yuan / share, with a total market value of 44.32 billion yuan, compared with the high point of 22.55 yuan / share in 2020, the share price of Zhongtai Securities has fallen by 7%.
When promoting the transformation of wealth management business, the former chairman is suspected of serious violations of discipline and law, when will Zhongtai Securities successfully break into the first phalanx of the industry?
1
Li Wei was investigated,
Luxin Group and Zhongtai Securities have a long history
Li Wei was born in 1962 and started his career in Laiwu Iron and Steel Group Co., Ltd. (hereinafter referred to as "Laiwu Iron and Steel Group") in 1983, working from the grassroots to the high-level, shuttling between the three major fields of finance, steel and politics.
In 2002, after nearly 20 years of hard work of Laigang Group, Li Wei served as the general manager and chairman of Luyin Investment (600784.SH) under Laigang Group. Just a year earlier, in May 2001, Qilu Securities, the predecessor of Zhongtai Securities, was established, and the major shareholder of the brokerage company, Shandong Qilu Asset Management Co., Ltd., which held 32.53% of the shares of the brokerage company, was the enterprise controlled by Luyin Investment.
Laigang Group was the major shareholder of Zhongtai Securities in 2016, until it was replaced by Zaozhuang Mining (Group) Co., Ltd. (hereinafter referred to as "Zaozhuang Mining") in 2022 and retired to the second largest shareholder, and the actual controller of Zhongtai Securities is still the State-owned Assets Supervision and Administration Commission of Shandong Province.
Source: Canned Gallery
In July 2003, Li Wei, then the chief economist of Laigang Group and the chairman of Luyin Investment, began to serve as the chairman of Zhongtai Securities, and in 2007, he stepped down as the chairman of Luyin Investment, focusing on Zhongtai Securities.
From 2004 to 2020, Zhongtai Securities' revenue climbed from 97.9603 million yuan to 10.352 billion yuan, and its asset scale increased from 1.56 billion yuan to 174.51 billion yuan. During this period, Li Wei has been serving as the chairman of the board and led the brokerage to complete its IPO in 2020, becoming the first listed brokerage in Shandong. On the eve of the listing, Zhongtai Securities officially announced a comprehensive transformation of wealth management.
Li Wei once said that the A-share listing will be an important milestone in the development of Zhongtai Securities, which will help the company enhance its capital strength, expand its business scale, optimize its business structure, and help the company hit the first phalanx in the industry.
However, in April 2019, Li Wei has taken over from Ji Binchang as the chairman of Shandong Luxin Investment Holding Group Co., Ltd. (hereinafter referred to as "Luxin Group").
The relationship between Luxin Group and Zhongtai Securities can be traced back to 2001. According to the "Economic Herald" new media "Shandong Financial Report" article, when Qilu Securities was established in 2001, the second shareholder was Shandong International Trust and Investment Company, holding 20.58% of the shares. Shandong Guotuo is a state-owned enterprise invested and established by the Shandong Provincial Development Planning Commission in February 1988, and the company was later merged with Shandong High-tech Investment Co., Ltd. to form a new enterprise, which is Luxin Group.
As of the end of 2023, Luxin Group holds a 3.98% stake in Zhongtai Securities, making it its fourth largest shareholder. In addition, Luxin Group also participated in Zaozhuang Mining, the largest shareholder of Zhongtai Securities, and appointed a senior manager to serve as a director of Zaozhuang Mining, which holds 32.62% of Zhongtai Securities' shares.
Source: Zhongtai Securities' 2023 annual report
In August 2022, Li Feng, then Secretary of the Party Committee and Chairman of Zhongtai Securities, and his party visited Luxin Group for a discussion and exchange. Chen Xiuxing, Secretary of the Party Committee and Chairman of Luxin Group, said that he hoped that the two sides would further explore and carry out in-depth cooperation in corporate investment and financing, wealth management, etc., so as to achieve mutual benefit and win-win results for both sides.
It is worth mentioning that Li Wei, who is now suspected of serious violations of discipline and law, in addition to being at the helm of Zhongtai Securities for 17 years, is also the second chairman of Luxin Group to be investigated. On January 6, 2023, Ji Binchang, who has served as the chairman of the Qingdao CPPCC in Shandong Province, was investigated while in office.
2
Three chairmen in four years, performance on a "roller coaster"
Including Li Wei, in less than four years after landing on A-shares, Zhongtai Securities has had three chairmen.
At the end of 2020, with Li Feng, then deputy director of the Shandong Department of Finance, becoming the chairman of Zhongtai Securities, Zhongtai Securities officially ushered in a new leadership team, but in August 2022, Li Feng, who had been in office for less than two years, was transferred to the party secretary of the Shandong Provincial Department of Finance.
In December 2022, Wang Hong officially became the chairman of Zhongtai Securities, and before that, he served as the manager of the international business department of Shandong Transportation Development and Investment Company, and the deputy secretary of the Party Committee and president of Shandong State-owned Assets Investment Holding Co., Ltd. (hereinafter referred to as "Shandong Guotou").
In July of that year, Shandong SDIC and Zhongtai Securities signed a strategic cooperation agreement and launched the "1+N" comprehensive financial service, at that time Wang Hong and Bi Yuguo, general manager of Zhongtai Securities, signed the agreement on behalf of both parties.
Source: Canned Gallery
With the two changes in leadership, the management of Zhongtai Securities also changes frequently.
According to a previous report by the "Financial Associated Press", less than three months after Li Feng took office, Zhongtai Securities held a middle-level meeting at the level of general managers of branches in February 2021, at which personnel appointments were directly made and general managers of each branch were announced. It is worth mentioning that Li Feng is also personally in charge of investment banking and asset management business.
In addition, in the first half of 2022, Li Hengdi, chief risk officer, Zhang Yunwei, general counsel, and Zhong Jinlong, deputy general manager of Zhongtai Securities, left one after another. In October of the same year, Bi Yuguo resigned as general manager of Zhongtai Securities, Feng Yidong took over, and director Cao Mengbo resigned due to work adjustment. In December, Bi Yuguo became vice chairman. In March 2023, Deputy General Manager Sun Peiguo resigned.
The intensive replacement of the leadership team has also had an impact on the performance of Zhongtai Securities. In 2022, Zhongtai Securities' revenue and net profit will plummet, with operating income of 9.325 billion yuan, down 29.09% year-on-year, and net profit attributable to shareholders of the parent company of 590 million yuan, down 81.55% year-on-year.
It is worth mentioning that in 2022, the net income of the four major businesses of Zhongtai Securities, including brokerage, proprietary trading, investment banking and asset management, will be 3.68 billion yuan, -351 million yuan, 1.018 billion yuan and 552 million yuan respectively. Among them, the loss of proprietary business directly affected the personnel adjustment of the proprietary department of Zhongtai Securities.
According to "Phoenix Net Finance", on May 19, 2023, the four heads of Zhongtai Securities were dismissed. Among them, Pan Dong was removed from the post of general manager of the securities investment department, Chen Jining was removed from the post of co-general manager of the securities investment department, Wang Haotian was removed from the post of co-general manager of the securities investment department, and Wang Shengqing was removed from the post of deputy general manager of the securities investment department.
Source: Canned Gallery
Entering 2023, Zhongtai Securities' performance has rebounded significantly. According to the 2023 financial report, Zhongtai Securities achieved operating income of 12.762 billion yuan, a year-on-year increase of 36.86%, and net profit attributable to shareholders of the parent company of 1.8 billion yuan, a year-on-year increase of 204.94%.
Zhongtai Securities explained in its 2023 annual report that the company's performance growth was due to the significant year-on-year growth in investment banking, asset management, investment and other incomes, as well as the equity revaluation income generated by the merger of Wanjia Fund Management Co., Ltd. in the current period.
In the past two years, Zhongtai Securities' performance has experienced a sharp decline and soaring, leaving the current chairman Wang Hong with many tests.
3
There is a long way to go in transformation, and there are still concerns about internal control
Zhongtai Securities said in its 2023 annual report that the company's wealth management transformation has achieved remarkable results, launching the "Zhongtai Wealth" brand, with more than 8.5 million wealth management customers and more than 1.2 trillion yuan of customer assets under management.
In fact, in the context of performance growth, the performance of Zhongtai Securities' wealth management business is not satisfactory, with revenue of 3.298 billion yuan in 2023, a year-on-year decrease of 17.84%, mainly due to the year-on-year decrease in the company's agency securities trading business income, and a gross profit margin of 10.2%, a year-on-year decrease of 20.42%.
Source: Zhongtai Securities' 2023 annual report
On the other hand, Zhongtai International has become the only loss-making subsidiary of Zhongtai Securities in 2023.
In 2023, Zhongtai International completed 2 Hong Kong stock sponsorship projects, ranking joint 13th in the Hong Kong market in terms of the number of sponsors, completed 16 IPO underwriting projects with an underwriting amount of US$99 million, ranking 11th in the Hong Kong market in terms of the number of projects, and completed 97 offshore debt projects with an underwriting amount of about US$1.288 billion in 2023, ranking joint 19th in the Hong Kong market in terms of the number of projects.
As of December 31, 2023, Zhongtai International has total assets of 8.13 billion yuan and net assets of 870 million yuan. In 2023, it will achieve an operating income of 68.0369 million yuan, a main business income of 73.4337 million yuan, an operating profit of -683 million yuan, and a net profit of -689 million yuan. In 2023, a credit impairment provision will be made for the bonds held by Zhongtai International.
Zhongtai Securities said that in 2024, Zhongtai International will promote the transformation of wealth management business, strengthen the empowerment of financial technology, expand the customer base and develop existing customers, strengthen the development of investment banking business, and focus on Hong Kong stock listing sponsorship and underwriting and offshore bond issuance in key market areas to enhance revenue contribution and market reputation.
In addition, the branches of Zhongtai Securities are also "frequent visitors" in the regulatory list.
Source: Canned Gallery
In March this year, Lin Run, an employee of the securities business department of Zhongtai Securities Zhangzhou Yan'an North Road, promised to give gifts to customers and promise that the principal would not be lost, and provided economic compensation to individual customers when they suffered losses. To this end, the Fujian Securities Regulatory Bureau has taken regulatory measures to issue a warning letter to it in accordance with the law.
In January this year, Yang Wenming, Hunan Branch of Zhongtai Securities, issued a regulatory warning. The regulator pointed out that during Yang Wenming's tenure as the head of the Hunan branch of Zhongtai Securities, the branch and himself provided investment advice that conflicts of interest with the private equity fund custody business, directly recommended private equity products that were not issued or distributed by Zhongtai, directly obtained commissions by introducing customers or relatives to other institutions, provided undisclosed information on the company's custody products to others, lacked WeChat group management, incomplete mobile phone filing information, and non-standard fixed asset management.
For the development outlook for 2024, Zhongtai Securities said in the annual report that the company will strengthen the "three investment linkage" of investment banking, investment and research, focus on key industries, improve research level and professional capabilities, and create differentiated advantages of industry specialization; will focus on high-quality customers, continue to improve the level of professional and comprehensive services, increase IP0, refinancing and other diversified business layout, explore innovative bond financing products, continuously improve income generation and profitability, and consolidate the industry ranking.
Do you think Zhongtai Securities can successfully break through the first echelon of the industry? Welcome to leave a message in the comment area to discuss.