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Introduction: Bai Rui Trust's performance continued to be under pressure, with revenue and net profit falling by double digits

Text/Daily Financial Report Cheng Yi

Jinke Real Estate, a real estate company with a value of hundreds of billions of yuan in the past, is now in bankruptcy and reorganization. The first creditors' meeting was held a few days ago. Its creditors are mainly financial institutions such as securities companies, trusts, banks, and investment institutions. In the list of creditors whose claims have been confirmed, in addition to Shenwan Hongyuan Securities, the largest claim is reported by Bai Rui Trust. Bai Rui Trust Baoying 817 Collective Trust Plan reported a claim of 1.454 billion yuan.

In recent years, the performance of Bai Rui Trust has continued to decline. According to the statistics of the Daily Financial Report, the company's revenue dropped from 1.534 billion yuan in 2021 to 824 million yuan in 2023; the net profit dropped from 837 million yuan in 2021 to 322 million yuan in 2023.

In the first half of this year, Bai Rui Trust's performance continued to decline. The company achieved revenue of 303 million yuan, a year-on-year decrease of 14.65%; and achieved net profit of 144 million yuan, a year-on-year decrease of 13.25%.

Jinke's claims are gradually confirmed, Bairui declares claims of 1.454 billion

On July 25, the Fifth Intermediate People's Court of Chongqing held the first creditors' meeting for the bankruptcy and reorganization of Jinke Real Estate Group Co., Ltd.

The administrator has initially reviewed and confirmed 6,093 claims from 3,882 companies, with a total confirmed amount of 35.278 billion yuan, a subordinated amount of 272 million yuan, and an unconfirmed amount of 983 million yuan. At the same time, there are 904 claims from 648 companies that have been deferred, with a corresponding declared amount of 43.529 billion yuan. The main reasons for the deferred confirmation include, but are not limited to, pending litigation and arbitration, complicated facts, and evidence materials to be supplemented.

The administrator did not confirm the claims of 263 companies and 424 claims, with a total amount of 5.475 billion yuan. The main reasons for not confirming the claims include but are not limited to ineligibility of the claimant, incorrect claim object, insufficient evidence, repeated claims, and expiration of the statute of limitations.

According to the existing information, Jinke Holdings' creditors are mainly financial institutions such as securities companies, trusts, banks, and investment institutions.

Among the creditors whose claims have been confirmed, SWM Jinke Kunming Aegean Asset-backed Plan reported the most claims, totaling 3.311 billion yuan. In addition, SWM Securities Asset Management Co., Ltd. (on behalf of SWM-Jinke Accounts Receivable (Phase I) Asset-backed Special Plan) also reported two claims, totaling 2.5 billion yuan.

Following closely behind is another trust company, Bairui Trust. Bairui Trust’s Baoying 817 Collective Trust Plan declared a claim of 1.454 billion yuan. The products launched by Bairui Trust in cooperation with Jinke Real Estate are not limited to this, but also include Bairui Baoying 854 Collective Fund Trust Plan (hereinafter referred to as “Bairui Baoying 854”).

It is reported that Bai Rui Bao Ying No. 854 product was issued in two phases, on April 30, 2021 and May 20, 2021, with a total outstanding scale of 1.427 billion yuan. The principal of the trust product is planned to be used for renewable debt investment in Jinke Real Estate. In 2022, Jinke Real Estate has triggered the accelerated maturity clause, and Bai Rui Trust sent an accelerated maturity notice to Jinke Real Estate, announcing that the debt will expire on September 20, 2022, and requiring Jinke Real Estate to repay all the money in advance.

Real estate trust risks exposed, Bairui's performance both declined

But the "mine" that Bai Rui Trust has stepped on is not limited to Jinke Real Estate. For example, the funds raised by Bai Rui Baoying No. 823/824 collective fund trust plan were invested in BlueFocus Development. However, on July 1, 2021, BlueFocus Development issued an announcement stating that due to a contract dispute, BlueFocus Development's controlling shareholder BlueFocus Investment Holding Group Co., Ltd. held 235 million unrestricted tradable shares of BlueFocus Development, which were frozen by the court, accounting for 7.75% of the company's total share capital. The freezing started on July 1, 2021 and expired on June 30, 2024. The applicant for the freezing was Bai Rui Trust.

In the past, the real estate and trust industries were closely linked and mutually beneficial. Trusts provided a large-scale financing source for real estate, and real estate trusts, also known as trust companies, contributed the main income. However, in recent years, affected by many factors such as the domestic and foreign economic situation and the decline in real estate investment, the real estate market has entered a period of deep adjustment, and many real estate companies have fallen into a liquidity crisis, including the above-mentioned Jinke Real Estate and Blueray Development.

Therefore, all trust companies are actively reducing their real estate trust businesses. According to the 2023 industry data released by the Trust Industry Association, the scale of trust funds invested in the real estate sector has been reduced to less than 1 trillion yuan for the first time since 2018.

However, trust companies still face many difficulties in dealing with risky projects, such as the failure to effectively deal with underlying assets or collateral and the delay in the project, and whether the funds are actually used in the project. Now Jinke Real Estate is expected to restore its financial health through the reorganization process, which also provides some confidence and hope for financial institutions such as Bairui Trust.

As a subsidiary of the listed company Power Investment and Financing, Bai Rui Trust's previous operating performance was relatively stable. However, judging from its performance in the past two years, Bai Rui Trust is also under some transformation pressure.

Recently, China Power Investment Corporation issued a voluntary information disclosure announcement on the 2024 semi-annual financial statements of Bai Rui Trust, showing that in the first half of the year, Bai Rui Trust achieved revenue of 303 million yuan, a year-on-year decrease of 14.65%; and achieved net profit of 144 million yuan, a year-on-year decrease of 13.25%.

In the first half of 2024, Bai Rui Trust's net income from fees and commissions was 358 million yuan, up 3.77% year-on-year. During this period, its investment income also changed significantly, from 88.0743 million yuan in the first half of 2023 to 72.9482 million yuan in the same period of 2024, a change of 17.05%.

Investment income continues to decline, how to reverse the performance decline

Bairui Trust was founded on April 15, 1986. It was formerly known as Zhengzhou Trust and Investment Company. It was renamed Bairui Trust after re-registration in 2002. Since 2010, it has undergone several capital increases and share expansions. By the end of 2019, the company's registered capital had increased to 4 billion yuan.

In terms of equity structure, State Power Investment Corporation Capital Holding Co., Ltd. (hereinafter referred to as "State Power Capital") is the largest shareholder of Bai Rui Trust, holding 50.24%; the second largest shareholder is the foreign-funded enterprise JPMorgan Chase, holding 19.99%; the third largest shareholder is the Zhengzhou Municipal Finance Bureau, holding 15.65%. The remaining shares are held by the district and county finance bureaus and state-owned enterprises under the jurisdiction of Zhengzhou City.

Looking back, Guodian Capital is a wholly-owned subsidiary of State Power Investment Group Industrial and Financial Holding Co., Ltd. (hereinafter referred to as "State Power Investment Group Industrial and Financial Holding"), and State Power Investment Group Industrial and Financial Holding is a listed company controlled by State Power Investment Group Co., Ltd. (hereinafter referred to as "State Power Investment").

"Daily Financial Report" noted that since 2021, Bai Rui Trust's net profit has continued to decline. In 2021, Bai Rui Trust achieved revenue of 1.534 billion yuan, a year-on-year decrease of 20.10%; net profit of 837 million yuan, a year-on-year decrease of 25.43%. In the revenue structure, Bai Rui Trust's fair value change income decreased from 202 million yuan in 2020 to 685,900 yuan in 2021, a year-on-year decrease of 99.66%; investment income was 163 million yuan, a year-on-year decrease of 45.17%.

In 2023, Bai Rui Trust achieved revenue of 842 million yuan, a year-on-year decrease of 21.5%; net profit of 322 million yuan, a year-on-year decrease of 46.68%. During this period, the company's fair value change income dropped from -149 million yuan in 2022 to -162 million yuan in 2023, and the loss increased by 8.72% year-on-year.

In the future, how will Bai Rui Trust deal with risky projects and what innovations will it make in its business structure? Daily Financial Report will continue to pay attention.