On December 16, Yibin City Commercial Bank adjusted its Hong Kong stock IPO documents, changing one of the overall coordinators from ICBC International Financing to ICBC International Securities.

The announcement did not disclose the specific reasons for the change of overall coordinator. At the beginning of the filing, the joint sponsors for Yibin City Commercial Bank's IPO were ICBC International and Jianyin International, with the overall coordinators being Jianyin International Finance and ICBC International Financing.

This is already the third attempt by Yibin City Commercial Bank to go public in Hong Kong over the course of two years.

Previously, Yibin City Commercial Bank, which had the support of various local financial entities such as Wuliangye Group and the Yibin Municipal Finance Bureau, had filed for the Hong Kong Stock Exchange in June 2023 and March 2024, but both ended due to material invalidation.

The two failed attempts did not diminish the bank's determination to enter the Capital Markets.

As early as 2021, the bank's Director Xue Feng and President Yang Xingwang had made it clear with the "trillion yuan listed bank" plan, setting two major goals for 2025: to exceed total assets of one hundred billion yuan and successfully list.

As of the end of June 2024, the progress towards the "trillion yuan listed bank" is over half. Yibin City Commercial Bank's total assets have increased to 100.193 billion yuan, but the dream of an IPO has failed twice.

In November, Yibin City Commercial Bank is preparing to make its third attempt to list on the Hong Kong Stock Exchange.

If this IPO is successful, the bank will become the third listed bank in Sichuan Province after Bank Of Chengdu (601838.SH) and LUZHOU BANK (1938.HK); it will also become the third listed 'Baijiu system bank' with a major shareholder background of Baijiu-related enterprises after BANK OF GUIZHOU (6199.HK) and LUZHOU BANK.

Stalled Business

In the past two years, Yibin City Commercial Bank has shown performance that leads the industry.

From 2021 to 2023, the bank's annual revenue compound growth rate reached 15.7%, and the net profit annual compound growth rate reached 20.63%, outperforming most A-share listed peers.

However, in the first half of 2024, the year-on-year growth rates of revenue and net profit have fallen back to 0.19% and 2.87%, showing a significant drop compared to the previous "rapid growth".

Analyzing the profit sources, the bank mainly relies on net interest income from corporate business; 7% of the operating revenue comes from corporate business, while 7% comes from interest income.

By the end of the first half of 2024, Yibin City Commercial Bank's interest margin narrowed by 0.43 percentage points year-on-year to 1.86%, and net interest income declined by 4.05%.

Even though the net income and financial investment revenue increased significantly by 129.19% and 115.33% respectively during the same period, the overall revenue growth of the bank, which mainly relies on interest, was only 0.19%.

In fact, for Yibin, which is known as the "Liquor Capital" with Wuliangye Yibin as a representative, public business is indeed a good entry point for deepening operations in the region.

In terms of specific strategy, Yibin City Commercial Bank mainly follows the "1+N" supply chain model, where "1" refers to key customers and "N" denotes key customers’ upstream and downstream partners. This model allows leading customers to act as business anchors, identifying more Industry Chain enterprises and expanding services through their endorsement.

In cooperation with Wuliangye, the "1+N" model has been greatly demonstrated.

At its establishment, the leading Baijiu producer Wuliangye was the largest shareholder of Yibin City Commercial Bank; subsequently, Wuliangye participated in multiple rounds of capital increase, still holding a 19.99% share to maintain its position as the largest shareholder.

Yibin City Commercial Bank has stated that Wuliangye's resource network has provided strong and long-term support; it has also established Wuliangye and Jiu Sheng Lu branches to serve the Baijiu Industry Chain, creating products that facilitate financing for Baijiu enterprises with wine cellars and original liquor as collateral.

The prospectus disclosed more details about the cooperation.

As of the end of the first half of the year, Wuliangye's deposits with Yibin City Commercial Bank totaled 12.909 billion yuan, accounting for 30% of the bank's public deposits, with an additional 0.188 billion yuan in undisbursed bank acceptance bills.

In terms of Supply Chain Finance, from 2021 to 2023, Yibin City Commercial Bank's loans to Wuliangye's upstream and downstream partner companies accounted for 2.1%, 1.2%, and 2.9% of the total loans, respectively.

In the first half of 2024, loans provided to Wuliangye partner companies amounted to 2.562 billion yuan, accounting for 4.7% of total loans; the balance of bank acceptance bills was 3.773 billion yuan, accounting for 50.0% of the balance.

However, continuously relying on business from specific industries often makes it difficult to avoid the volatility risks brought by industry cycles.

During the current deep adjustment period in the Baijiu Industry, Yibin City Commercial Bank also pointed out in its prospectus that the value of its collateral, such as wine cellars and raw liquor, may fluctuate or decline due to uncontrollable factors.

Focusing on strengthening the retail "shortcomings".

Even with the support of the "big tree" represented by Wuliangye, during the deep adjustment process of the industry, Yibin City Commercial Bank is still actively seeking development opportunities beyond Supply Chain Finance.

On one hand, actively serving small and micro enterprises to enhance earnings.

From the perspective of the capital trend of corporate deposits and loans, Yibin City Commercial Bank mainly absorbs deposits from large clients and grants loans to small and micro clients.

By the end of the first half of the year, 70% of public deposits were contributed by large clients with deposits over 100 million, while 70% of loans flowed to small and micro enterprises.

The bank also frankly stated in its prospectus that small and micro enterprises and individual businesses may be more susceptible to the impact of the macro economy, and due to their limited operational history, they often find it difficult to gather the necessary data for credit risk assessment.

For example, by the end of the first half of the year, the balance of "Stable Guarantee Loans" issued during the pandemic by the bank was rated as non-performing, with the corresponding expected credit loss provision being 0.87 million yuan.

On the other hand, proactive retail transformation is being promoted to address shortcomings.

The prospectus revealed that the bank has established an ecosystem connecting personal, corporate, and financial services through the concept of a "Large Retail Bank" to provide Personal Services to local residents.

Taking the mobile payment platform "Qian Hua Hua" as an example.

Reportedly, the "Qian Hua Hua" developed by Yibin City Commercial Bank can be used for payments on campus, in company cafeterias, Hospitals, property management, and vegetable markets, attracting demand deposits, expanding the customer base, and enhancing customer loyalty.

Under the "Large Retail" concept, Yibin City Commercial Bank can understand individual business needs based on the information provided by "Qian Hua Hua", and subsequently recommend loan services that match those needs.

In the first half of the year, the revenue share of retail customers at the bank has increased by 5.8 percentage points to 21.8% compared to 2023.

Yibin City Commercial Bank stated that with the continuous increase in Yibin's population, the customer base is expanding, leading to increased demand for savings accounts, personal loans, and mortgage services, which will contribute to the growth of the company's retail banking business portfolio.

The changes in non-interest income also provide more space for future imagination.

In the first half of the year, the net income from fees at Yibin City Commercial Bank and financial investment income increased by 129.19% and 115.33%, respectively.

In terms of overall structure, the proportion of fees has increased from 2% in 2021 to 3.4% in the first half of the year, indicating limited overall scale but a fast growth rate.

The proportion of trade activities and financial investment income has increased by 1.5 percentage points and 6.4 percentage points to 12.06% and 6.47%, respectively.

Among them, the increase in trade activity income is likely due to the return of the 'bond bull' market in 2023.

The prospectus reveals that in 2023, Yibin City Commercial Bank's valuation of bond-based asset plans has increased, driving up trade activity income.

Considering all aspects of the Business, Yibin City Commercial Bank stated that the company's competitive advantage still lies in its deep integration with the local economy of Yibin.

In the previous Business model, the bank focused more on core enterprises, absorbing small and micro enterprises from upstream and downstream to form a financial product Supply Chain.

Looking to the future, the transforming Yibin City Commercial Bank may still need to consider whether the successful "1+N" model on Wuliangye Yibin can be replicated in other Industries, as well as whether retail transformation and revenue Business after disengagement from core enterprises can "carry the weight."