2003: Starting with Foreign Trade

Chapter 943 "That man is back!"

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As a financial consumer in China's A-shares market, I have survived since entering the market during both the 2007-2008 bull market and the 2014-2015 bull market.

They all have their own set of survival rules. Whether they can make money or not is another matter, but they have plenty of experience.

Especially after last year's almost year-long decline, the number of new stock investors left in the A-share market is now extremely small.

Zhongtai Securities Yongcheng Beicang Hengshan Road branch is a seat that veteran stock investors will remember vividly. During two bull markets, this seat made a lot of profits and was able to choose to exit at the right time.

After ByteDance's engine grew, it was mostly operated by institutional investors, while the Hengshan Road branch was almost completely shut down, more like a private seat for Tan Jincheng, with a certain symbolic significance.

"New investors may not know that Mr. Tan is also very skilled in the stock market. It is said that he was criticized by the Beicang District government for not doing his job properly and for the stocks he bought not rising much. Then he was proven wrong in various ways."

"If you look closely, you might notice that when Mr. Tan was in a very tight financial situation in the early stages, much of the funds he needed were obtained through stock trading."

"The stock market genius who was delayed, everyone remember to carefully analyze this company and this industry sector."

"There's no indication yet that this was President Tan's doing, is there? By the way, why hasn't this company issued an announcement yet?"

"No, haven't you noticed that this operation is against the rules? According to normal procedures, an announcement should be made after buying 5% of the shares, so why hasn't an announcement been made yet?"

After Friday's market close, Inco Medical ended its less-than-perfect week with a 3.42% increase, fluctuating within five points throughout the day, closing at 17.58 yuan.

Since this unusual activity involved large-scale block trades and the relatively inconspicuous nature of Inco Medical, it did not cause significant fluctuations in the secondary market. However, things may change next week.

The reappearance of Zhongtai Securities' Beicang branch has sparked much speculation in the market.

Since his investment career began in 2007, Tan Jincheng has indeed earned the title of "stock god" based on his performance in the secondary market at several stages.

Take Midea Group, which he bought for 12.63 billion yuan during the 2015 stock market crash, for example. Four years later, it is now worth 20.8 billion yuan. Moutai, which he bought for 5 million yuan, is now worth as much as 22.68 billion yuan.

In the A-share market alone, almost all stocks purchased between 2015 and 2018 outperformed the market, with some, like Kweichow Moutai, even experiencing explosive growth against the market trend.

As is well known, A-shares typically perform poorly in the latter half of April each year due to the impact of annual reports and first-quarter financial reports, especially given the unfavorable economic situation.

The same thing happened this year. Everyone was looking forward to a rebound in May, but then this happened on the other side of the Pacific, giving investors a rude awakening on the first trading day.

At this moment, the entrance of someone resembling Tan Jincheng seemed particularly special.

At 7:30 p.m., Inco Medical finally arrived, and investors who had been waiting for several hours eagerly clicked on the announcement.

"Holy crap, it really is President Tan."

According to Inco Medical's announcement, the company that purchased 20 million shares through the block trading platform between May 6 and 10 was an investment institution named "Jinyoukang Investment Co., Ltd.", which was established in January of this year and is registered in Meishan Free Trade Zone.

According to information from Qichacha, this investment company, which was established just five months ago, is wholly owned by Tan Jincheng, chairman of Weilai Group.

Along with Inco Medical's announcement, there was also an apology letter from the investment company and its actual controller, Tan Jincheng.

The apology letter stated that due to poor communication with the traders, and with multiple accounts involved in the trading, the actual controller, Mr. Tan Jincheng, did not notice the changes in shareholdings in other accounts and conducted multiple transactions in the block trading market on May 10.

This caused Jinyoukang's shareholding ratio, which was originally below 5%, to rise rapidly from 4.95% to 10.2%, constituting a second takeover bid. For this, we sincerely apologize to Inco Medical and all investors.

Meanwhile, the public apology letter also stated that Tan Jincheng himself and Jinyoukang Company are willing to unconditionally accept all rectification and penalty plans from the regulatory authorities.

"Holy crap, it really is Boss Tan, and he really did violate information disclosure regulations. What's going on here?"

"Good heavens, judging from this apology letter, it seems Mr. Tan bought all this today himself? He spent nearly two hundred million in one day? Is this how rich people play?"

"No, I don't quite understand this operation. Although it makes sense, it is indeed a violation of information disclosure regulations. Now we'll see how the regulatory authorities handle it, since this is a celebrity."

"To be fair, Boss Tan is quite bold. He took the responsibility himself instead of shifting the blame to the traders like other institutions do. That's quite good."

Before the market closed today, the stock interaction area of ​​Inco Medical was quiet, with only one or two retail investors who were trapped occasionally coming to complain. However, the activity level has now risen to the top three in terms of popularity, and this popularity is still rising.

Some retail investors who were trapped in their positions hoped to get out of their predicament, some criticized the violation of information disclosure regulations, and some joked that Boss Tan did not shirk responsibility; of course, most of them were just onlookers enjoying the show.

However, some people noticed something fishy about this. They were all seasoned investors, and no matter how sincere the apology letter was or how humble the attitude was, they wouldn't be foolish enough to think that such a violation was unintentional.

This is a stock market genius who's been jokingly called a businessman whose talents have been wasted by being an entrepreneur; how could he not understand these rules?

It's unclear what Mr. Tan's intention was in doing this. Today, the fundamentals of Inco Medical, which have been exposed in large quantities, have been repeatedly analyzed by various institutions and ordinary investors, and the conclusions are almost all similar.

The track is unremarkable, the fundamentals are unremarkable, and the performance is not outstanding. If the stock code starts with 6 or 0, there is still a possibility of being acquired through a backdoor listing. But it starts with 3. What is Mr. Tan's intention in taking a liking to such a company?
"This is very much in line with Mr. Tan's operating habits, but we can't guess his intentions for the time being. However, everyone can analyze the personal medical supplies industry."

The capital circle is also paying attention to this matter. Compared with retail investors, they know Tan Jincheng better. Once he sets his sights on a company, this man is always quick, accurate and ruthless, and he doesn't care about the impact at all.

This time, he is willing to risk penalties for violating information disclosure rules in order to acquire more shares in a very short period of time. It is clear that he wants more than just 10%.

Moreover, from a purely investment perspective, a listed company with a market value of only over 30 billion yuan is not worthy of Boss Tan personally using his long-sealed seat, and is not even worthy of Cheng Linfeng's intervention.

Then some fund managers can make the decisions.

However, with the simultaneous release of the announcement and the apology letter, what everyone is most concerned about now is the attitude of the regulatory authorities. The influence of such violations by celebrities is still very large. Right now, the entire market is watching this matter, and it has even become a trending topic on Weibo.

For Inco Medical and Liu Fangyi, this was the first time they had experienced such a huge amount of traffic and popularity. The speed at which posts in the stock interaction area were refreshed was something they never dared to imagine before.

"Is this the celebrity effect? ​​It's not necessarily a bad thing for us."

Sitting in front of his computer, Liu Fangyi refreshed the stock comment section, joking with his assistant. Regardless of whether the acquisition was ultimately successful or not, they had certainly profited from this wave of hype.

Back when they went public, they didn't create such a sensation. Tan Jincheng's unconventional approach has directly brought Inco Medical to an unprecedented level.

Liu Fangyi knew, of course, that Tan Jincheng would acquire some shares in the secondary market first. This was a routine operation before cooperating with a listed company, but he did not expect it to be in this way.

In their only encounter, his impression of Tan Jincheng was straightforward and humble. He had heard about Tan's style during the acquisition process and experienced it firsthand today.

Quick, accurate, ruthless.

Meanwhile, regarding the specific reasons for the violation and the rectification measures mentioned in the apology letter, Tan Jincheng's legal team has rushed to Shenzhen, where the Shenzhen Stock Exchange is located, to negotiate a settlement and participate in the hearing process.

No matter what reason is given, a violation is a violation, and appropriate public relations efforts are still necessary. The correct attitude must be maintained.

The company immediately suspended trading and issued a supplementary equity change report. Jinyoukang also proactively submitted a self-inspection report to the China Securities Regulatory Commission (CSRC) in an effort to receive a lighter penalty.

"Don't worry about it. I'm the actual controller, so if anyone's going to be punished, it'll be me. There's no point in shifting the blame onto you. I might as well just take responsibility honestly."

Over the weekend, while awaiting feedback from the legal team and penalties from regulatory authorities, Tan Jincheng treated the entire team to a meal. Regardless of the outcome of the penalties, the team's trading activities had to be stopped.

In other words, the trading team's mission is now complete.

In fact, the entire acquisition team encountered a bug during this operation, because until May 9th, which was Thursday, the percentage of shares acquired through the block trading platform remained below 5%.

The real explosion of acquisitions occurred on Friday.

In terms of timing, there is no direct evidence of a second violation in this information disclosure, and with the timely apology and public relations efforts, the punishment should be relatively lenient.

Most importantly, all of these acquisitions were conducted through block trade agreements, resulting in minimal impact on the secondary market, as evidenced by Inco Medical's performance this week.

Apart from Monday when Inco Medical was affected by the overall market environment and nearly hit the daily limit down, the total fluctuation of Inco Medical in the secondary market from Tuesday to Thursday did not exceed 6%, and the total trading volume over the three days was less than 8000 million yuan.

Over the course of five trading days in a week, Inco Medical's overall price fluctuation was 11.53%, with a trading volume of 1.63 million yuan. The extremely low trading volume and minimal fluctuations are sufficient to prove that there was no suspicion of stock price manipulation in this acquisition.

Moreover, prior to this, the first equity change rights statement, which involved the 5% shareholding disclosure stage, had already been sent out after 5:30 pm on Friday. This time, the second equity change rights statement was reissued.

A professional team and professional methods have taken all possible remedial measures, providing the regulatory authorities with a satisfactory solution.

"It's different, but anyway, thank you for the treat, boss; come on, let's all toast the boss."

The person in charge of this acquisition was Cheng Linfeng's subordinate, a trusted confidant. When Cheng Linfeng assigned him this task, he wasn't worried about being pushed to take the blame. However, Cheng Linfeng knew his ulterior motives and told him to keep his mind at ease. In the capital market, operations involving large sums of money and significant acquisition terms are rarely free from insider trading or illegal transactions. Often, those in charge are essentially walking a tightrope.

One wrong move and you could be pushed out to be the scapegoat. You may earn a lot of money, but the pressure is just as great.

"That's more like it. Now you can all have a good vacation, and we won't bring this up again."

Tan Jincheng smiled. He disdained to make his subordinates take the blame. This matter wasn't that serious to him; it was just a violation of the rules.

Having acquired a 10.2% stake, Inco Medical has effectively become its second-largest shareholder. However, everything will be finalized only after the regulatory authorities issue their penalty decision.

According to Section 197 of the Securities Act, the shares purchased on Friday may be subject to restrictions on voting rights or be required to be sold within a specified period. In other words, the currently confirmed shareholding percentage is 4.95% of the shares purchased on Thursday.

The legal team rushed to Shenzhen to avoid either of these penalties, as they would be detrimental to him, especially the latter, which would also put downward pressure on Inco Medical's stock price.

As for fines or anything like that, he doesn't care.

Also based on Article 197, Jin Youkang may face a fine of between 30 and 3 million yuan, while Tan Jincheng, as the person directly responsible, may face a fine of between 300 and 30 yuan.

The penalty is negligible compared to the benefits gained, which is why the penalty mechanism in the A-share market is often criticized as a mere slap on the wrist.

On Sunday, May 12, at 10:5 AM, the regulatory agency finally issued its penalty decision.

Only two days had passed since the news broke that Tan Jincheng had stirred up the A-share market, and it happened over the weekend, which is considered very fast.

According to the penalty decision of the China Securities Regulatory Commission (CSRC), Jinyoukang Investment Co., Ltd. was fined 300 million yuan, and its directly responsible person, Tan Jincheng, was fined 30 yuan. In addition, the relevant accounts that violated the regulations were subject to self-regulatory measures, restricting their trading rights. Jinyoukang's holding accounts are prohibited from further increasing their holdings of Yingke Medical's shares for the next three months.

In addition, the regulatory authorities also publicly notified Jinyoukang of its actions, ordering it to eliminate any potential consequences, including the possibility of shareholder lawsuits and accountability from the listed company.

In any case, on Friday, due to the failure to stop the increase in holdings, there is a possibility that some losses may occur in the nearly 4000 million yuan of transactions traded on the secondary market that day due to misjudgment of the information disclosed in the block trade information.

However, transactions made before Friday are not included in the plan, and the amount of transactions made in these few trading days will not be counted.

In reality, strictly speaking, apart from the violation of information disclosure, this bug-like increase in shareholding is unlikely to have a significant impact on the secondary market. According to the rules of block trading, although the declaration time is the same as the opening time of A-shares, the transaction is completed after the market closes.

More than 5% of the trading was completed after the market closed on Friday, so it had almost no impact. If there was any impact, it was positive.

Without a doubt, regardless of how the A-share market performs after Monday's opening, given that the newly appointed second-largest shareholder cannot manipulate the market, Inco Medical will definitely see a decent increase. As for how much it will rise, that depends on how deep its trapped investors are.

It's important to know that this was personally handled by Mr. Tan, a legendary figure in the A-share market. Any company he personally invests in is invariably successful.

"Although it's a bit unethical to do this, it's not wrong in terms of making reasonable use of the rules. Besides, our goal is not to harm shareholders, but to get what we want as quickly as possible."

The penalty decision was issued, and Tan Jincheng and the acquisition team breathed a sigh of relief. The public relations effect was good. Although the regulatory authorities imposed the highest penalties on Jinyoukang and Tan Jincheng himself, they did not require them to sell their shares within a specified period or lock up their voting rights.

After the penalty decision was issued, Inco Medical publicly stated that it would waive civil liability against Jinyoukang and welcomed Tan Jincheng's attention to Inco Medical. This statement is quite interesting.

In reality, public relations with regulatory agencies is not as easy as one might imagine. First of all, Tan Jincheng is too famous. His casual admission of responsibility for his operational error has left the regulatory agencies unsure of what to do.

This is why Jinyoukang and he himself were given the highest punishment. To be honest, there are countless violations of information disclosure in the A-share market every year, and many of them only receive a public reprimand.

According to incomplete statistics from Wind data compiled by CBN, there are multiple violations in the A-share market every year, and the average proportion of violations involving information disclosure is over 35%, exceeding 45% in 2018.

In addition, Inco Medical's attitude also influenced this penalty decision. It bought more than 10% of the shares in five trading days, which, in the context of the Vanke incident in 2015, is somewhat like a hostile takeover.

If Inco Medical shows obvious resistance to Tan Jincheng's takeover, it is indeed possible that the shares purchased on Friday will be required to be sold within a certain period. However, if Inco Medical does not resist Tan Jincheng's takeover and even welcomes it, then the matter will be easier to handle.

"A fine is nothing to Mr. Tan. This maximum penalty serves as a warning to the capital market. However, you should be more cautious in your subsequent operations."

This is the original message that the relevant person in charge conveyed to Tan Jincheng.

"I'll leave the rest to you to communicate with General Manager Liu."

Jinyoukang has been restricted from trading, but Tan Jincheng himself is not. The upcoming private placement is the key to becoming the largest shareholder, and Tan Jincheng plans to hand this matter over to Cheng Linfeng.

He didn't have much time to pay too much attention to this matter.

“Okay, we will continue to communicate with Shenzhen Capital Group and try to acquire their shares first, or at least get them to give up their preemptive rights.”

According to the shareholder list of Inco Medical after the changes, Liu Fangyi and related companies hold a total of 41.57% of the shares, Jinyoukang holds 10.02%, Shenzhen Venture Capital holds 7.23%, and no other single shareholder holds more than 2%.

The top three shareholders hold 58.82% of the shares. Tan Jincheng wants to take control of Inco Medical through methods such as negotiated transfer and additional share issuance. The opinions of Liu Fangyi and Shenzhen Capital Group are very important.

The simplest way is to persuade these two to give up their preemptive rights and issue more than 7000 million new shares in one go. Combined with their existing 2000 million shares, Tan Jincheng's total share capital would exceed Liu Fangyi's existing share capital, making him the largest shareholder.

With the total share capital increasing to 2.66 million shares, Tan Jincheng's shareholding ratio will reach 33.83%, while Liu Fangyi's shareholding ratio will be diluted to 30.63%, and Shenzhen Capital Group's shareholding ratio will be diluted to about 6.27%.

70 million shares, calculated at 90% of the average share price over the current 20 trading days, would cost approximately 12.23 billion. Adding the 320 million spent this week, the total investment in a medical device company is 15.43 billion, which is not expensive.

However, for a company with a funding gap of approximately 5 million yuan and a market capitalization of just over 30 billion yuan, a one-time share issuance plan exceeding 12 billion yuan is clearly too large.

Furthermore, this only benefits Inco Medical, not Liu Fangyi himself, who is also currently short of money.

Therefore, the most feasible solution is to seek the transfer of some shares from the first and third largest shareholders while issuing new shares, thereby reducing the scale of the issuance. New share issuances are mostly at a discount, but negotiated transfers can be at a premium.

A win-win situation is essential for a perfect acquisition plan and makes it easier to obtain regulatory approval. In the case of Tan Jincheng's takeover of Inco Medical, the legal team actually disclosed this to the Shenzhen Stock Exchange.

The Shenzhen Stock Exchange clearly understands that this popular entrepreneur would not do such a violation just for a few shares. It should be noted that Tan Jincheng and ByteDance have always been relatively law-abiding in the A-share market and have a very good reputation.

Whether from the perspective of celebrity influence, industrial capital, or even Inco Medical itself, the Shenzhen Stock Exchange supports Tan Jincheng's takeover of Inco Medical, which is a good thing.

The fact that Jin Youkang was subject to a three-month trading restriction period, while Tan Jincheng himself was not subject to any trading restrictions, is a very subtle way of handling things.

The typical time for a listed company's private placement, from acceptance to completion, is about three to five months. If a small-scale, rapid private placement is adopted, it can be completed in as little as one month.

On May 13, Inco Medical received a lot of attention at the start of the trading day. After opening higher, Inco Medical experienced a flat trend for half an hour before starting to rise rapidly at 10:5.

Within half an hour, Inco Medical's stock price, which had experienced two waves of upward movement, reached 19.34 yuan, a 10.01% increase, hitting the daily limit. The trading volume in less than an hour exceeded 1.2 million yuan, which is three times the trading volume of the entire day last Friday.

"Boss Tan's influence is still so strong. I regret it. I was a little hesitant this morning. I should have rushed in earlier."

Although the overall performance of the Shanghai and Shenzhen stock markets was mediocre today, it did not affect the performance of Inco Medical at all. In fact, Inco Medical's performance boosted related concept stocks, including Lanfan.

Medical device companies engaged in personal healthcare services all saw varying degrees of increase today.

"That man is back!"

This is the most popular post with likes in the Inco Medical stock interaction area after the market closed on the 13th. The closing price of 19.34 yuan exceeded the closing price on April 30 by 2.33%, recovering all the losses in May.

On the 14th, Inco Medical continued to rank among the top performers in the sector with a 4.07% increase. With all its moving averages now recovered, Inco Medical's stock performance looks much better.

In just two trading days, Tan Jincheng brought an additional 5 million yuan to Inco Medical's market value, bringing it close to 40 billion yuan, demonstrating his significant influence.

"Looking at it this way, it's not a loss at all."

The capital market has always been driven by profit. Tan Jincheng’s unparalleled influence brought huge benefits to Yingke. The shareholders, busy counting their money, no longer questioned his violation of information disclosure regulations.

Liu Fangyi, who was already somewhat tempted, abandoned his last bit of resistance to Tan Jincheng's takeover. In addition, Cheng Linfeng also sent a message that Shenzhen Capital Group supported the private placement plan and would give up its priority rights.

However, they refused to sell their shares.

Shenzhen Capital Group, which is well-funded and has a strong background, chose to wait and see, given the uncertainty surrounding Tan Jincheng's specific intentions.

"Alright, if you won't transfer it, then don't. Just give up your priority right. Let's discuss the private placement plan with President Liu."

Acquiring 1400 million shares would be ideal, as it would save a lot of trouble, but failing to acquire them wouldn't have a significant impact. It mainly depends on Shenzhen Capital Group's attitude.

PS: Before August 24, 2020, the growth rate of the ChiNext board was 10%.

(End of this chapter)