Recently, Haihong Holdings announced that the company's board of directors has passed a resolution. The company intends to change its name to Guoxin Health Insurance Service Group Co., Ltd., which is referred to as “Guoxin Health”.

At the end of last year, Haihong Holdings introduced the “national team” funds, from private enterprises to listed companies with state-owned assets, and adjusted management structure and business adjustment. This renaming also represents the "new era" in which Haihong Holdings has entered the development.

During the same period, Haihong Holdings disclosed the 2017 annual performance report. During the reporting period, it achieved an operating income of 184 million yuan, down 15.15% year-on-year; the net profit attributable to shareholders of listed companies was 0.17 billion yuan, down 40.49% year-on-year.

Since Haihong Holdings introduced the national team funds, the capital market has placed great expectations on it. After the announcement of the plan at the end of last year, the stock price of Haihong Holdings rose sharply and continued to rise for many days. At present, the market value of Haihong Holdings has exceeded 40 billion yuan, which is “doubling” before the introduction of the national team and business adjustment.

What will the introduction of the national team funds for Haihong Holdings, how will its business direction be adjusted, what is the expectation of the capital market, and its future development trend? The arterial network is intended to answer the above questions.

500 million vs. 22 billion, how can the “national team” fund be small?

In November 2017, Haihong Holdings announced that the company’s actual controller has changed and Guofeng Investment Fund has become the actual controller of the listed company. The National Venture Capital Fund is known as China State-owned Capital Venture Capital Co., Ltd. and was incorporated in Shenzhen Qianhai in August 2016.

As a “national” investment fund, Guofeng Investment Fund was initiated by China Guoxin as the promoter and controlling shareholder, and jointly launched by China Postal Savings Bank, China Construction Bank and Shenzhen Investment Holding Co., Ltd., with a scale of 100 billion yuan for the first period. The scale will reach 200 billion yuan. It will focus on the technological innovation and industrial upgrading projects of central enterprises, play the role of state-owned capital radiation, amplify the function of state-owned capital, and promote social investment.

Since the establishment of the National Venture Capital Fund, a number of heavy investments have been completed. The investment targets include Lian Ying Medical , Vision Technology Face++, 3DMed Ideas, and Cambrian.

According to the agreement, Guofeng Investment Fund will be capitalized by the “curve” of Haihong’s shareholder Zhonghaiheng Industrial Development Co., Ltd., which is a capital increase listed company. Guofeng Investment Fund accounts for 75% of Zhonghaiheng Industrial, while Zhonghaiheng Industrial holds Haihong Holding 27.74% of the shares. In other words, Guofeng Investment Fund will hold approximately 20.80% of Haihong Holdings.

Table 1: Haihong Holdings introduces investor and equity relationships

The investment method of Guofeng Investment Fund is:

1) Paying an increase of RMB 500 million to Zhonghaiheng Industry, of which 300 million yuan is included in the registered capital of Zhonghaiheng, and the remaining 200 million yuan is included in the Zhonghaiheng Capital Provident Fund;

2) According to the transfer agreement, the parties agree that under the premise that Zhonghaiheng continues to be legal and valid and there is no debt dispute, the National Venture Capital Fund can see the actual situation of Zhonghai Henghe Haihong Holdings within five years from the registration date. In the business situation, the State Investment Fund decided to invest 3.696 billion yuan in Zhonghaiheng;

At the same time, the parties also agreed on the terms of the repurchase. The parties agreed that Hainan Zhongheng (or its designee) will repurchase the entire equity of Zhonghaiheng held by the National Venture Capital Fund in any of the following circumstances:

1) Regarding the follow-up capital investment of the agreed national venture capital fund, it will be completed for five years from the registration date (calculated on the basis of 365 days per year), and Guofeng Investment Fund decides not to implement it;

2) Zhonghai Heng is sued for bankruptcy, reorganization or dissolution at any time;

The share repurchase price under the above circumstances is the total amount of the capital increase actually paid by the National Venture Capital Fund before the repurchase date and the interest calculated by the 5% interest per annum. The specific matters concerning the share repurchase shall be separately signed by the relevant parties in the equity repurchase agreement.

The above terms indicate that Guofeng Investment Fund is expected to spend a total of 4.196 billion yuan, which will receive approximately 20.80% of Haihong Holdings. The first phase of the National Venture Capital Fund will contribute 500 million yuan, and the follow-up funds can be replenished within 5 years. Considering that the national wind investment may be in the income of Haihong Holdings stock, this investment may bring great value-added space.

Some commentators also said that the National Venture Capital Fund, with a fund of 500 million yuan, has instigated more than 20 billion listed companies (the market value of Haihong Holdings is about 22 billion yuan when Guofeng invested in the main), which is the "most successful" national team. fund.

Since the announcement of Haihong Holdings, the country’s investment fund, Haihong’s share price has soared for many days. At present, the market value of Haihong Holdings has exceeded 40 billion yuan, which is “doubling” before the introduction of the national team.

Table 2: Haihong Holdings Market Value Trend

Haihong Holdings announced on April 13 that the company's board of directors has passed the “Proposal to change the company name and securities abbreviation” and will be renamed as Guoxin Health Insurance Service Group Co., Ltd., and the securities abbreviation will become “National New Health”.

In the same period, Haihong Holdings' new board of directors has also been confirmed. It was decided to nominate Jia Yanyan, Jiang Kaihong, Han Wei, Wang Zhigang, Zhang Ling and Liu Yingjie as candidates for non-independent directors of the 10th Board of Directors; they decided to nominate Qian Qingwen, Huang Anpeng and Wang Xiuli as candidates for independent directors of the 10th Board of Directors.

Table 3: Haihong Holdings' new board of directors

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