Three months after the explosion of the mine, Haiyin Wealth Management Co., Ltd. (hereinafter referred to as "Haiyin Wealth") has successively launched asset debt repayment plans. On the basis of offsetting debts with office buildings, residential buildings, logistics parks, and Shanghai Guijiu Co., Ltd. (hereinafter referred to as "Shanghai Guijiu") liquor assets, the reporter learned that Haiyin Wealth will soon launch a debt offsetting plan for its big health sector assets, but investors still need to allocate 30% of the cash.
Most investors do not agree with Haiyin Wealth's debt repayment plan and question whether it is a "secondary harvest" for investors. Several investors told reporters, "We do not accept the current debt redemption plan, as asset pricing is significantly higher than market prices. We need to self liquidate and allocate cash. If we accept the debt redemption plan, even if the assets are easy to liquidate, it also means a 50% excess loss for creditors."
There are also investors who suspect that Haiyin Wealth has fabricated underlying assets. According to reports, "At least three wealth management products issued by Haiyin Wealth have contracts indicating investment in urban investment bonds, but the urban investment companies or their parent companies pointed to in the contracts have denied issuing products through Haiyin Wealth.".
There is a redemption issue with the product
The crisis manifested on December 13, 2023. At that time, a screenshot of a chat record circulating online showed that due to bank reasons and the fact that December belonged to the peak interest payment period for fixed income products, the time for clearing and receiving products was extended. Subsequently, Haiyin Wealth's NASDAQ listed entity, Haiyin Holdings (HYW), announced that there were redemption issues with certain asset-backed products previously distributed by the company. The asset managers of these products are unable to reach deferred redemption agreements with relevant clients. Although the company only serves as a distributor of these asset-backed products, the customer is now demanding repayment from the company.
Haiyin Holdings stated that the company has established a special investigation committee composed of senior management members to oversee internal investigations. The investigation is still in its preliminary stage, and other information regarding significant progress in the investigation will be promptly released by the company. Any failure to fully address these redemption issues may have a significant adverse impact on our reputation, customer relationships, business, financial condition, and prospects.
On December 17, 2023, Haiyin Wealth announced that "due to the recent economic downturn, the project has been delayed, causing inconvenience to investors. We deeply apologize! Currently, Haiyin Wealth has established a special team to actively coordinate with project stakeholders to plan disposal plans. According to the latest regulatory policies and industry guidance, Haiyin Wealth has voluntarily withdrawn and sorted out its existing business. The relevant plans will be provided to everyone by the end of the month.". But by the end of the month, investors were not waiting for a plan.
Haiyin Wealth attributes the project delay to "the impact of economic downturn". In the eyes of investors, it is "completely an excuse", and some investors question Haiyin Wealth's use of shell companies to fabricate underlying assets. An investor who purchased urban investment bonds as agreed in the contract provided a video of communicating with the staff of the risk resolution working group of the Haiyin system to the reporter. The staff said, "The bottom layer of financial management is used for urban investment bonds, but it has been made into fixed income products and belongs to non-standard projects."
The reporter reviewed multiple product contracts and learned that Haiyin Holdings had borrowed from the local financial exchange to sell its debt related products. The underlying assets of the products included real estate debt, trust income rights, urban investment debt, and trade receivables. Most of these institutions used for product filing are currently in an abnormal state, and many have been cancelled.
In addition, according to a survey conducted by NetEase Qingliu Studio, at least three wealth management products issued by Haiyin Wealth have contracts stating that they are invested in urban investment bonds. But the urban investment companies or their parent companies pointed to in these three wealth management product contracts have all denied issuing products through Haiyin Wealth. State owned enterprise staff have indicated that Haiyin Wealth may use the name of a state-owned enterprise to raise funds. For the above situation, the state-owned enterprise is already seeking assistance from the public security organs and propaganda departments.
Is the debt restructuring plan a "secondary harvest"?
The reporter learned that Haiyin Wealth is currently delaying or announcing the "active withdrawal" of non-standard fixed income and "quasi fixed income" businesses, with most of them having annualized returns of 7% -10% and an investment period of more than six months. These businesses are mostly invested in real estate projects or accounts receivable projects of multiple supply chain companies. In the eyes of industry insiders, this type of business model carries certain risks.
After experiencing the "bounce" of the plan released at the end of December last year, several investors recently told reporters that the financial advisors of Haiyin Wealth have recently provided them with a plan to offset their debts with office buildings, residential properties, logistics parks, and Shanghai Guijiu assets under the name of Haiyin Group companies. According to a meeting minutes obtained by the reporter on March 11th, in addition to the above-mentioned asset debt repayment plan, Haiyin Wealth will soon launch a debt repayment plan for its big health sector assets, but investors still need to allocate 30% of their cash.
Most of the interviewed investors do not approve of Haiyin Wealth's asset debt repayment plan and believe that it is a "second harvest" for investors. Investor Liu Yi (pseudonym) told reporters, "Among the debt repayment plans for these office buildings and residential properties that we have learned about, Haiyin Wealth has falsely marked asset prices, which are on average twice the market price. However, the assets of Shanghai Guijiu and their large health sector do not have great demand for us. We do not operate wineries or health institutions, and these types of assets are difficult to monetize."
"What's even more infuriating is that the plan of Haiyin Wealth's assets to offset debt is clearly harvesting investors. They propose to combine debt and cash into bonds, and the higher the cash ratio, the lower the selling price of office buildings and residential properties. The key issue is that they offer investors twice the market price, deceiving them to pay 50% cash and then lowering it to the market price. Does this mean that I spend money to buy a house, and the debt is eliminated due to the inflated price? Isn't this a proper way to harvest investors?" Liu Yi said angrily.
A current employee of the Haiyin Wealth Branch also expressed concerns to reporters, "Some of our colleagues have also purchased this product and are currently unable to withdraw upon expiration. We are also concerned about potential issues, but we do not know what to do or when we can withdraw. We are also looking at the asset to debt repayment plan and hope that everyone can withdraw in an orderly manner."
The reporter contacted relevant personnel from Haiyin Wealth through multiple channels, attempting to understand the real reasons for the delay of Haiyin Wealth's products and the original intention and purpose of issuing a debt offset plan. However, as of the time of publication, Haiyin Wealth has not responded to this. During a recent visit to the Haiyin Financial Center at No. 8 Yincheng Middle Road, the security guard at the entrance told the reporter, "Haiyin is no longer working at No. 8 Yincheng Middle Road.". The front desk staff of the center said, "There are still a small number of people working here. This is not a reception point, the reception point is in Fengxian, and the main people are all in Fengxian, not here.".
Delayed redemption endangers two listed companies
The overdue crisis of Haiyin Wealth products has also affected two affiliated listed companies: Haiyin Holdings and Shanghai Guijiu. According to data, in March 2021, Haiyin Wealth became the second third-party wealth management company to go public in the United States through its Cayman Islands registered company, Hywin Holdings Ltd (Haiyin Holdings, not Shanghai based "Haiyin Holdings Group Co., Ltd."), which went public on NASDAQ. Haiyin Holdings claims in its prospectus that it is "the largest provider of fixed income real estate products in China.". Shanghai Guijiu has a close relationship with Haiyin Holdings. Han Xiao, the actual controller of Shanghai Guijiu, is the son of Han Hongwei, the actual controller and chairman of Haiyin Holdings.
According to the prospectus, Haiyin Wealth mainly has three business segments: wealth management, asset management, and insurance brokerage. Among them, wealth management is the main source of income, while private equity product trading scale and revenue account for the largest proportion in its wealth management business. Haiyin Wealth's private equity products include real estate products, private equity and venture capital funds, and three others, with real estate products being the core of its private equity products. As the risks in the real estate industry gradually increase, Haiyin Wealth is also gradually reducing its dependence on real estate products.
According to recorded data, according to internal statistics of Haiyin Wealth, its stock size may reach 63 billion yuan. According to data submitted by Haiyin Holdings to the US Securities and Exchange Commission in October 2023, as of the end of June 2023, Haiyin Wealth has 185 wealth management centers, 1749 wealth managers, and 46627 active customers in 91 cities across the country. According to the 2023 fiscal year annual report, the revenue of Haiyin Holdings from July 1, 2022 to June 30, 2023 was RMB 2.092 billion, a year-on-year increase of 7.71%; The net profit was 120 million yuan, a year-on-year decrease of 49.01%.
With the disclosure of overdue news of Haiyin Wealth products, the stock price of Haiyin Holdings plummeted significantly. On December 13, 2023, the stock price of Haiyin Holdings fell by 51.30% during the trading session. As of the close of the day, the stock price of Haiyin Holdings was $3.3, a decrease of 42.61%. As of the close on December 15, 2023, it closed at $2.37, a decrease of 14.55% from the previous day. At present, the stock price of Haiyin Holdings is hovering at a historical low of around $1.
The stock price of Shanghai Guijiu, a domestic affiliated company of Haiyin Wealth (securities abbreviation: Rock Shares, securities code: 600696), has also continued to plummet. It fell by 3.55% on December 13, 2023, hit the limit on December 14, fell by 4.86% on December 15, and hit the limit again on December 18. As of the close of March 14, 2024, the stock price of Shanghai Guijiu was at 13.19 yuan per share, a decrease of 1.71% on the same day.
On the evening of February 21, Shanghai Guijiu replied to the regulatory work letter from the Shanghai Stock Exchange, stating that according to the announcement disclosed by its affiliated party, Haiyin Wealth, on December 14, 2023, there were redemption issues with some of the products distributed by Haiyin Wealth. Shanghai Guijiu also mentioned in its response that there is uncertainty in future support for the company as the related party Han Hongwei's controlled enterprise faces redemption issues with its financial products.
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