The Hong Kong Securities Regulatory Commission has frozen more than 10 billion assets of the same client of the three brokerages; Hong Kong independent stock commentator David Webb deduces that the client is Yang Zhizhi, the actual controller who lost contact with Landing International
David Webb, a well-known independent stock commentator in Hong Kong, recently posted several articles on the Internet, pointing out that the Hong Kong Securities Regulatory Commission has recently frozen the accounts of the same client of three brokerage firms.(02799.HK) are closely related.
On September 28, the Hong Kong Government Gazette published five notices from the Hong Kong Securities Regulatory Commission, three of which mentioned that multiple securities accounts of a client of Kingston Securities, Zhongnan Financial, and HSBC Financial Securities Asia were frozen., with a total value of HK$10.170 billion, on suspicion that the client conspired with the listed company and/or its subsidiaries (hereinafter referred to asSome management personnel of the group planned fraudulent schemes, which caused the group to suffer losses of approximately HK$10.17 billion.
The Hong Kong Securities Regulatory Commission document mentioned that the frozen securities client is the chairman of a Hong Kong listed company. The company is said to have lost contact with this person. Recent news reports indicate that this person is under investigation for a suspected corruption case.
This description is in line with Yang Zhizhi, the actual controller of Landing International who has lost contact with Kingston Securities and has business dealings with Kingston Securities.On October 1, David Webb also inferred in an article published on his website that the client mentioned by the Hong Kong Securities Regulatory Commission was Yang Zhizhi, and the above-mentioned one that suffered tens of billions of losses should be China Huarong.
Yang Zhihui is the controlling shareholder, chairman and executive director of Landing International. Landing International currently mainly operates resort projects such as casinos in Jeju Island, South Korea, and has also expanded its business to the Philippines in recent months.On August 23, Landing International announced that the company was unable to contact Chairman Yang Zhihui.On the evening of October 2, Landing International announced again that it still failed to contact or contact Yang Zhihui.
In addition, data from the Central Clearing and Clearing System of the Hong Kong Stock Exchange shows that Landing International shareholders have 50.48% of their shares deposited in Zhongnan Financial, and 10.10% of their shares are deposited in Kingston Securities.The number of shares owned by Yang Zhihui in Landing International is the same as the number of shares deposited in Zhongnan Finance.
Another brokerage firm - Kingston Securities, has played an important role in Landing International's equity transactions for many years.In 2013, on behalf of Landing International, Kingston Securities made an acquisition offer to Jiahui Chemicals, and Landing International successfully entered the Hong Kong stock market through a backdoor; in 2015 and 2017, Landing International hired Kingston Securities as the underwriter for the two rights issues of Landing International;A rights issue initiated by Landing International in 2017 was also assisted by Kingston Securities.
The chairman of Kingston Financial (01031.HK), which belongs to Kingston Securities, Zhu Woyu and his wife, CEO Zhu Liyuehua, have a very good personal relationship with Yang Zhihui.Hong Kong media have reported that on August 3 this year, Chu Li Yuet Wah invited more than 400 guests to Landing International's casino in Jeju, South Korea to celebrate her 60th birthday. Among the attendees were many Hong Kong celebrities.Zhu Li Yuehua is known as a queen in the Hong Kong market. She ranked seventh on the Forbes Hong Kong Rich List in 2018. She is also the richest woman in Hong Kong, with a net worth of about US$12 billion.
The Hong Kong Securities Regulatory Commission document mentioned that the client held a total of 4.64 billion Hong Kong dollars in securities and cash in the accounts of the three brokerages.Kingston Financial responded by uploading an announcement on the Hong Kong Stock Exchange on October 1, saying that the information referred to in the incident belonged to a client’s personal assets, not the assets of the company or its subsidiaries, and the client’s assets under the securities account of Kingston Securities wereA relatively small percentage of the total amount in media citations.
Suspected of collusion with the management of the group
According to the SFC, in relation to the first transaction involving the client, there were reasonable grounds to suspect that the person conspired with the management of the group to carry out a scheme whereby a subsidiary of the listed company of the group bought another company from a company wholly owned by the client.Shares of a public company on terms unfavorable to the buyer and inconsistent with the purported purpose associated with the transaction.The SFC said there were reasonable grounds to suspect that the true purpose of the transaction was to allow the client to benefit from the transaction at the expense of the group.
David Webb believes that the first transaction should be an equity transaction between Yang Zhihui and Huarong International through its major shareholder Zhonghui International (01143.HK, later renamed Huaxia Health Industry) at the end of December 2015.David Webb was a non-executive director of the Hong Kong Stock Exchange (00388.HK) and a member of the Takeovers and Mergers Committee of the Hong Kong Securities Regulatory Commission.
According to public information, at that time, Huarong International, an overseas subsidiary of China Huarong, bought 146 million shares from Yang Zhihui, the major shareholder of Zhonghui International, at an average price of 9.9 Hong Kong dollars through directly or indirectly held subsidiaries, with a total cost of 1.44 billion Hong Kong dollars.Huarong International's shareholding ratio rose to 29.4%, while Yang Zhihui's shareholding ratio fell to 30.6%, but it is still the controlling shareholder.
Taking a closer look at the transaction, Yang Zhihui spent a total of 604 million Hong Kong dollars to subscribe for 71.5% of the shares of Zhonghui International in May and November of that year. With the subscription price at that time and the price sold to Huarong International, Yang Zhihui at least made a profit800 million Hong Kong dollars.On the day Huarong International became a shareholder, Zhonghui International's share price was as high as HK$11.
In March 2016, Zhonghui International announced that it would split its shares by 10, and the share price of Huarong International was split into HK$0.99 per share.After that, the stock price of Zhonghui International took a sharp turn. Within four months, the stock price plummeted by nearly 90% to HK$0.13, and has remained at around HK$0.2 per share since then.According to the information disclosed by the Hong Kong Stock Exchange, Huarong International’s position on October 13, 2017 was 0, and the resale price was HK$0.198.Based on this calculation, this transaction caused Huarong International to lose approximately HK$1.154 billion.At present, Yang Zhihui is still the largest shareholder of Huaxia Health Industry, with a shareholding ratio of 25.5%.
As for the second transaction, the SFC said that there were reasonable grounds to suspect that the client had conspired with the management of the group to enable him, through a company wholly owned by him, to pay substantially inflated prices for the shares subscribed by the group.Several funds sold a substantial interest in another non-listed company, thereby defrauding the group and detrimental to the group to make substantial profits for themselves.
David Webb pointed out in the article that Huarong's balance sheet is huge. According to the listing rules, there has not been any acquisition that meets the threshold of "reportable transactions", so it is impossible to judge which investments in the past are based on wisdomIn addition, since the customer sold a non-listed company, there is no clue to follow, but this transaction caused the buyer a loss of HK$9.02 billion, and it can be inferred that the transaction size is at least HK$9.02 billion.
China Huarong's profit attributable to shareholders in the first half of this year fell from 13.36 billion yuan to 684 million yuan year-on-year.Auditor Deloitte issued a reserved opinion on Huarong China Daily because Huarong failed to assess the possible impact of former chairman Lai Xiaomin's involvement in the financial statements, including the valuation and recovery of certain special-structured fund investments and loans.
Pledged equity to Huarong, Bo Rong was involved in market manipulation
Two other notices from the Hong Kong Securities Regulatory Commission on September 28 also involved Huarong.
The two notices pointed to the same incident: HKD 2.9 million assets in a customer account of Zhongtai Securities were frozen, and the customer’s accounts in Zhongtai Securities and Jiehao Securities were prohibited from trading in the stock market between 15:59 and 16:00.out any transaction.
After investigation, the Hong Kong Securities Regulatory Commission pointed out that the client had bought 30 million shares of a listed company at HK$0.52 from May 23 to 24 this year.From March 28 to June 1, it was the main buyer of the company, accounting for about 84.2% of the total market buying.During the above-mentioned open market trading period, the customer bought a small amount of shares at a high price one minute before the daily market close, pushing up the closing price, and then sold 4 million shares at an average price of HK$2.11 from June 4 to 6, and finally wonThe profit was about 2.9 million Hong Kong dollars, so it is suspected that the customer has engaged in false transactions and price manipulation.
The Hong Kong Securities Regulatory Commission document pointed out that the client had similar behaviors in the following June, July, and August; as of August 31, the client had cash and securities worth 36 million Hong Kong dollars in the accounts of the two securities firms.
David Webb wrote in an article on October 3 that judging from the above characteristics, the listed company is Bairong Group Holdings (08316.HK) listed on the Growth Enterprise Market in Hong Kong, and Zhang Weijie, Chairman of the Board of Directors of Bairong, at the end of August 2017.67% of the shares are pledged to a subsidiary established by China Huarong in Macau, but it is impossible to determine who the customer is.
David Webb also discovered that after Zhang Weijie took over Bo Rong in March 2017, he made a full purchase offer, which increased his shareholding to 84.32%. In July 2017, he placed 74.52 million shares at HK$0.5 per share to maintainThe public shareholding, this part of the allotment shares is then gradually transferred to Win Wind Capital.
Win Wind Capital belongs to Vivada Holdings (00622.HK), and is one of the members of the Zhongnan Department, another major faction in the Hong Kong stock market. People's Securities, which helped Bairong complete the allotment of shares, also belongs to the Zhongnan Department.Zhongnan is also a participant in many dazzling transactions in the Hong Kong stock market. David Webb often writes to remind investors not to touch it.
David Webb continued that the shareholding of Win Wind Capital decreased from 74.52 million to 63.66 million shares by the end of September 2017. On June 7 this year, Dazhong Securities bought the 63.66 million shares at a price of HK$1.25.2.5 times the allotment price.David Webb questioned how much Zhang Weijie got when he pledged his shares to Huarong Macau, and who sold the shares at a high price to Dazhong Securities for a profit of 1.5 times.
The SFC declined to comment on David Webb's judgment.
As of the close on October 4, Landing International fell 4.21% to HK$1.82. Since Yang Zhihui lost contact, Landing International’s share price has been cut in half; Kingston Financial fell 1.98% to HK$1.98; China Huarong fell 2.82% to HK$1.98.1.38 Hong Kong dollars.■
