"Star Daily" reported on October 9 (Reporter Wu Xuguang) According to the latest announcement by Beijing Balance Medical Technology Co., Ltd., the company's controlling shareholder and actual controller Jin Lei intends to use own funds or self-financed funds for this round of shareholding increase.

"The company plans to increase its stake by self-financing, and does not rule out the way of increasing the company's shares through bank's 'special shareholding loans.'" A company insider said.

On the evening of October 8, Jin Lei, Chairman of Beijing Balance Medical Technology Co., Ltd., told the reporter of "Star Daily" that the reason banks are willing to lend to him to increase his stake in the company is mainly due to being bullish on Beijing Balance Medical Technology Co., Ltd. At present, the company is in a period of rapid development. 2024 is a critical period for the company to make breakthrough progress. The company's new products, involving a ball expansion valve for aortic valve intervention and smooth progress in the audit of the intervention valve, are expected to bring performance growth to the company.

"In the context of the medical instruments sector performing poorly, the stock price of Beijing Balance Medical Technology Co., Ltd. is undervalued by the market," Jin Lei added.

Based on October 8, calculated at a closing price of 139.18 yuan per share, Jin Lei currently directly holds 83.972092 million shares of Beijing Balance Medical Technology Co., Ltd., with a daily unrealized gain of 1.948 billion yuan.

The ultimate controller intends to increase the shareholding using own funds or self-financed funds

"Star Daily" reporters noted that Beijing Balance Medical Technology Co., Ltd.'s recent announcement has attracted widespread attention, stemming from a disclosure made by the company.

On the evening of October 7, Beijing Balance Medical Technology Co., Ltd. announced that its controlling shareholder and actual controller Jin Lei plans to use bank-specific loans to increase holdings of the company's shares. This is the first A-share listed company that intends to use special loan funds to increase its holdings of the company's shares.

However, the initial plan for this shareholding scheme was to use special loan funds, but a later announcement on the Shanghai Stock Exchange website revealed that the fund arrangement was changed to the actual controller planning to increase holdings of the company's shares using self-owned or self-raised funds.

Regarding the reasons and purposes for the proposal by the company's actual controller to repurchase shares, on October 8, Jin Lei told a reporter from the Star Daily that on one hand, it is to respond to the People's Bank of China's policy guidance, increase holdings of the company's shares, and promise not to reduce holdings in the next 12 months, demonstrating "strong confidence in the company's future development, which effectively enhances public investors' confidence in the company."

Beijing Balance Medical Technology Co., Ltd. is a domestically leading innovative platform for animal-sourced interventional medical devices, mainly used in structural heart diseases such as heart valve diseases, congenital heart diseases, and soft tissue repair field.

As of now, the company has obtained approvals for 20 Class III medical instruments, including artificial biological heart valves such as bovine pericardial valves and valve forming rings.

In the first half of the year, Beijing Balance Medical Technology Co., Ltd. achieved revenue of 191 million yuan, a year-on-year increase of 13.74%; the net income attributable to the company's shareholders decreased by 20.42% to 35.1907 million yuan.

Financially, as of the end of June this year, Beijing Balance Medical Technology Co., Ltd.'s debt-to-asset ratio was 10.96%, an increase of 2.36 percentage points from the first quarter of this year. Currently, the company has 1.68 million yuan in cash and cash equivalents, total debts of 1.39 billion yuan, of which current liabilities due within one year are 34.69 million yuan.

Listed companies are actively engaging in share buybacks.

The reporter of 'Star Daily' noticed that in addition to Beijing Balance Medical Technology, on the first trading day after the National Day holiday, October 8th, multiple A-share listed companies such as Crystal Optoelectronics and Tongwei Co., Ltd. have announced large and important shareholder shareholding plans.

Specifically, most companies plan to increase their shareholdings through controlling shareholders and actual controllers.

Crystal Optoelectronics announced that the controlling shareholders, actual controllers, and chairman Lv Hanquan plan to increase their shareholdings through self-owned funds or self-raised funds within 6 months starting from October 9, 2024, with the total amount not exceeding 30 million yuan; Tongwei Group also announced plans to increase their shareholdings with self-owned and self-raised funds, planning a minimum increase of 1 billion yuan, up to a maximum of 2 billion yuan.

In addition, a person in charge of a Science and Technology Innovation Board company in a city in Jiangsu Province told the reporter of 'Star Daily' that the company has been in contact with banks recently, consulting on special loan-related business, and has 'approached many banks'.

An investment banking professional from a brokerage in East China told the reporter of 'Star Daily' that for most of the companies and major shareholders who 'increase their shareholdings with self-raised funds', they have the opportunity to apply for 'special loans for share buybacks' and 'special loans for share increasements', but it is necessary to evaluate whether there is a need and necessity for applying for a loan based on the company's own development.

In the view of this investment banking professional, after the listed company's controlling shareholder repurchases stocks, they cannot sell them, even if the stock price rises, they cannot make a profit, but loans have deadlines, borrowed money must be repaid eventually; although the actual controller of the listed company can sell the stocks they have acquired, with lower interest rates for special loan funds, it is still difficult to guarantee that they can make money by selling stocks after the lock-up period expires.

Zhang Cuixia, Chief Investment Advisor of Jufeng Investment, stated in an interview with the reporter of 'Star Daily' that the central bank's establishment of special re-lending tools essentially promotes the transformation of savings into investment, enhances financial support for the real economy, supports the development of listed companies, and constitutes a long-term bullish for the capital markets.

From the perspective of listed companies, Zhang Cuixia stated that for shareholding loan business, some companies, such as those with stable market cap, active trading in the secondary stock market, good liquidity, or listed companies included in the CSI 300, CSI 500, CSI 1000 indexes, can prioritize applying for special loans; For certain listed companies and their shareholders with excessively high external pledge ratios, and companies restricted in shareholding due to the impact of new rules on reduction of holdings, caution is advised.

Banks bear the risk of lending

On September 24th, at a press conference held by the State Council Information Office, Pan Gongsheng, Governor of the People's Bank of China, also stated in response to journalists' questions that the interest rate for the loans issued by commercial banks to customers is around 2.25%, which can be increased by 0.5 percentage points. The 2.25% interest rate is currently very low. "The initial amount is 300 billion yuan, if this tool is used well, another 300 billion yuan can be added, and even a third 300 billion yuan can be obtained, it's all possible," Pan Gongsheng said.

"Science and Technology Innovation Board Daily" reporters noted that since the central bank proposed the establishment of special re-loans for stock repurchase and shareholding, banks have responded promptly.

According to market reports, a certain bank has issued a notice on the promotion of the business of stock repurchase and shareholding special loans. The notice mentions that the related services are divided into two categories: "Stock Repurchase Special Loan" and "Shareholding Special Loan," targeted at listed companies, shareholders with more than 5% stake (including but not limited to company's controlling shareholders, actual controllers, and concerted actors) and senior company directors and supervisors. The loan terms generally do not exceed 3 years.

On October 8th, reporters from "Science and Technology Innovation Board Daily" interviewed several banks, including state-owned and city commercial banks. Although they all stated that they have not yet issued specific notices and documents, several banks have responded early and actively initiated actions.

"We can handle "Stock Repurchase Special Loans" and "Shareholding Special Loans," there are no specific implementation rules yet, but we can first discuss the business with clients." A branch manager of a state-owned commercial bank told reporters from "Science and Technology Innovation Board Daily."

"Banks have not yet launched specific products related to this business, for special loans, early communication is possible, you can learn from the operation mode of M&A loans and conduct trial operations." A city commercial bank's manager stated.

In addition, a spokesperson from the city commercial bank's publicity department introduced, "The bank is also studying the feasibility of relevant policies, with no specific measures and plans yet. The final decision depends on the bank's internal decision-making."

Researcher Huang Dazhi from the Xingtu Financial Research Institute stated in an interview with the 'Star Market Daily' reporter that banks are actively responding, mainly due to the continued 'asset shortage' situation they are facing. Providing loans to listed companies and major shareholders, supporting share buybacks and shareholding can provide banks with good deployment of funds, serving the real economy. At the same time, this special loan, supported by the central bank's policies, has low funding costs, with a loan interest rate of only 1.75%.

It is important to note that compared to ordinary corporate loans, the secondary market equity risks where listed companies are located are relatively large, placing relatively high demands on the risk control capabilities of banks and financial institutions.

"For commercial banks, 'special loan for share buybacks' and 'special loan for shareholding' are risk-bearing businesses, requiring strict examination and evaluation of the listed companies as loan applicants," Huang Dazhi added.