SMM News: a round of short-lived hype, accidentally holding "red" a "fairy stock".
Rare earths, an A-share company, rose by the limit on May 21, as Chinese rare earths jumped 108 per cent in a single trading day in Hong Kong, where there is no limit and is trading under the "T-0" trading system.
In fact, since the beginning of May, in the overall decline in the market, the A-share rare earth permanent magnet plate has risen by an average of 14%.
Industry insiders told Prism that rare earths were popular because of expectations of rising prices, in part because Yunnan Tengchong Customs recently closed the import channel for Myanmar rare earths, resulting in tighter supply and demand for medium and heavy rare earths.
The market remains cautious about the future, with private equity investors warning that while rare earth prices are expected to continue to rise, the actual duration of import restrictions and the impact on imports are uncertain. The relationship between supply and demand of rare earths has not changed fundamentally in the short term, and the rise in share prices this round is more due to emotional catharsis and capital speculation.
On May 22, the market did not continue, A-share rare earth companies have closed slightly lower.
After a day in the capital markets, "leader brother" China's rare earths gradually revealed their prototype, falling 27 per cent the next day.
"Prism" verified all kinds of authoritative information and found that the rare earth company with the Chinese prefix is only a private enterprise with a continuous loss and a market value of about 1 billion yuan, and its founder Jiang Quanlong and the wealth story behind his family. More unpredictable than the steep K-line, which doubled in the day.
Before the surge, the founder family of Chinese rare earths had already sent assets to the other side of the ocean through trust.
Rare earths, which contain 17 chemical elements, are used in petrochemical industry, electronic information, glass ceramics and new materials.
According to the US Geological Survey (USGS), by the end of 2017, there were about 120 million tons of rare earth reserves in the world. China's rare earth reserves reached 44 million tons, accounting for 37 percent of the world's total reserves, ranking first in the world.
In the 1980s, the mining of rare earths in China sprang up. Jiang Quanlong and his Chinese rare earths made their fortune at this time.
According to Jiang Quanlong's previous interviews with the media, the mysterious tycoon and his rare earth kingdom have a history of fairy tale family wealth: Jiang Quanlong dropped out of primary school and worked in a refractory factory in Yixing, Jiangsu Province, before the reform and opening up. In 1984, with 3000 yuan of start-up capital, he set up Yixing County Magnesia Refractory Factory, from then on began the road of entrepreneurship. In 1987, Jiang Quanlong, who smelled the smell of policy, developed rare earths in the upper reaches of the industry and founded Yixing County rare Earth Separation Plant. The company listed in Hong Kong in 1999 and changed its name the following year to a resounding name, rare earths in China.
After listing, Jiang Quanlong quickly joined the ranks of the rich, ranking 39th on the Forbes China Rich list with a fortune of 1.14 billion yuan in 2001. However, behind this glamorous and inspirational entrepreneurial story, there is a history of savage growth of China's rare earth industry.
China's position in the global rare earth industry is not due to reserves, but because China has the world's largest smelting separation capacity, and rare earth smelting is not cutting-edge technology, so illegal mining and family workshops all over the country. It has supported China's rare earth production capacity for a long time.
This situation directly leads to two results: first, overcapacity, public information shows that from 1990 to 2005, China's rare earth exports increased nearly tenfold, but the price fell by 50%; Secondly, wanton rare earth mining and smelting, resulting in environmental pollution.
2011 was a turning point in the domestic rare earth industry, when the state began to comb the rare earth industry, but the collection and storage is expected to give rise to the speculation of the rare earth market. The prices of rare earths soared that year, with the highest increases of 849%, 1611% and 894% for typical varieties of praseodymium neodymium oxide, dysprosium oxide and terbium oxide, respectively. at the same time, the peak price makes the existing private excavation and theft of "black rare earth" industry chain stronger.
Soon, rare earth prices fell back in revenge, hitting record lows in 2012 and 2015.
By the end of 2016, the results of the supply-side reform of rare earths were beginning to show, and the policy of cracking down on "black rare earths" was intensified, and with the efficient implementation of "anti-triad" and environmental protection supervision, the output of "black rare earths" was brought under control.
Actual production of rare earth mines in China fell from 138800 tons to 128500 tons between 2014 and 2016, according to the China rare Earth Association. China's global share of rare earth production also fell sharply from 85 per cent in 2014 to 62 per cent in 2018.
While cleaning up backward production capacity, the Ministry of Industry and Information Technology has put forward the "1-5" national large rare earth group plan since 2012 to promote the merger and reorganization of Northern Baotou Steel, China Minmetals, Chinalco, Ganzhou rare Earth, Guangdong rare Earth, and Xiamen Tungsten Industry, respectively. Set up a large rare earth enterprise group.
In 2016, the market dominated by six state-owned rare earth groups initially took shape, and after the production capacity of compliance was basically concentrated in the six major groups, the price of rare earths gradually rose in 2016 and returned to a healthy range.
It is not surprising that the share prices of Minmetals rare earths, northern rare earths and Xiamen tungsten have soared in the six state-owned rare earth groups that the country has focused on building. However, it is not surprising that the share prices of Minmetals rare earths, northern rare earths and Xiamen tungsten have skyrocketed. China's rare earths, which have been in the position of "fairy stocks" for four years, but whose share prices can double in a day, may not even be eligible for hot spots.
According to the financial report, China's rare earths have lost money for seven consecutive fiscal years since 2012, with a total loss of nearly 1.3 billion yuan and a market value of only 1 billion. More importantly, the revenue of its rare earths business has plummeted since 2011. It fell 66 per cent from 1.43 billion that year to 490 million in 2018.
The decline in China's rare earths performance is not just due to fluctuations in rare earth prices, which sold 4400 tons of rare earth oxides in 2013 and then declined gradually, with sales of just 1600 tons in 2018, up from 36 per cent five years ago, according to financial data.
It is clear that the rare earth company, which was born "recklessly" but with a famous name, has become the target of "de-production capacity".
China's rare earths peaked at HK $3.50 a share in October 2010 and then struggled all the way down before falling below HK $1 in 2013, joining the ranks of "fairy stocks", closing at HK $0.37 a share the day before the rally.
China's rare earths are not Jiang Quanlong's only industry. The Chiang family also has assets such as Xinwei Group and Pan Asia Environmental Protection (0556.HK), the same as the dismal Chinese rare earths. These companies also failed to dress up the Chiang family's rich identity more glamorous, on the contrary, tax evasion, arrears, accident, Jiang Quanlong fell into fancy litigation.
According to enterprise investigations, many of Jiang Quanlong's companies are suspected of tax evasion, among which Jiangsu Fukai magnesium Development Co., Ltd. was punished by the State Taxation Bureau of Yixing City of Jiangsu Province in 2016 for failing to file tax returns and submit tax materials within the prescribed time limit.
New Willie Refractory Co., Ltd., established in 1999, is a major shareholder of Licheng Holdings Limited registered in the British Virgin Islands. The main members of the company include Jiang Quanlong and his spouse Qian Yuanying. The company was punished by the Wuxi State Taxation Bureau in 2015 for tax evasion. In 2009, 2010 and 2012, New Willie Refractories evaded a total of 1 million yuan through illegal VAT deductions, according to the penalty decision.
The same is true of New Willie rare Earth Co., Ltd., which was founded in 1993. Its major shareholders are still overseas registered Licheng Holdings, with Jiang Quanlong as vice chairman and Qian Yuanying as general manager. According to the Inland Revenue Department, between 2010 and 2012, New Willie Holdings achieved tax evasion by falsifying costs on the books, with a tax evasion amount of as much as 3 million yuan.
Pan Asia Environmental Protection was established in 2006, specializing in the sale of environmental protection equipment, listed in Hong Kong in 2008, as another holding platform for the Chiang family. Pan Asia's performance was equally ugly, losing a total of 170 million yuan in 2017 and 2018, almost as much as the company made a profit from 2011 to 2016, with a market capitalization of just 694 million yuan.
Apart from the dismal performance, the Pan-Asian Environmental Protection Department company is even more involved in many lawsuits, among which Wuxi Pan-Asia Environmental Protection Technology Co., Ltd. is involved in as many as 65 litigation documents, including arrears of payments to suppliers, financial loan disputes, and so on. At the same time, Wuxi Fanya was also punished by the tax authorities for evading taxes by falsely issuing value-added tax invoices.
Among the many litigation in Wuxi Fanya, a case involving real estate development is particularly strange.
Judging documents show that in 2007, Fanya and Shanghai Bicheng Real Estate Co., Ltd. in Lianyungang City cooperation in the development of real estate projects, Fanya to provide land use rights, must be the company to provide funds. After the Bicheng company injected the capital, Fanya was unable to transfer the land use right to the project company.
The fact that the court finally found it was that Pan Asia had a self-developed property in the vicinity of the cooperative project, which was built without a license, in order to be able to sell smoothly. Fanya misappropriated the land use right number of the project, which was supposed to be developed in cooperation with Bisheng Company, to its own project.
Because of these complex litigation, Wuxi Pan Asia Environmental Protection in 2017 two properties were auctioned by the judiciary, while in September 2018 and February 15, 2019, has been twice enforced by the court. Jiang Quanlong, the "millionaire", was also taken by the Yixing City people's Court in September 2018 to limit consumption.
Despite the continuous loss of the listed companies held by Jiang Quanlong, Jiang Quanlong has also become an "old Lai", but the quality of life of the Chiang family does not seem to have been affected.
According to public information, in 2017, a Singapore entertainment venue took Jiang Quanlong to court in the High Court of Hong Kong because he owed HK $128 million in gambling debts at the casino between August and October 2014. Of this amount, HK $108 million was delayed and was sued in court.
In September 2018, someone uploaded a bill that eight people ate 400000 yuan at the "Xijiao No. 5" Hotel in Shanghai. The average person spent 50, 000 yuan to see netizens. Later, it was exposed by the media that the person who uploaded the bill was Jiang Xin, the son of Jiang Quanlong. The bill was paid by tuhao from the Middle East.
It is not known how wide Jiang Xin's circle of friends is, but he is a member of HAC's top sports car club.
According to public information, the top sports car club of HAC is established by Beijing Hengxiang Yongrui Trading Co., Ltd., which is the exclusive agent of luxury brand Koenigsegg in mainland China. Enterprise investigation shows that the major shareholder of Hengxiang Yongrui is Fu Songyang, son of Fu Weidong, former chairman of Tangshan Ruifeng Iron and Steel Group. In addition, Yin Xidi, son of Yin Mingshan, founder of Chongqing Lifan, and Li Qilin, executive director of Li Ning Group and nephew of Li Ning, Are passed as members of the HAC Club.
Prism also found that in addition to Jiang Quanlong, Qian Yuanying and his wife, Jiang Xin, who was born in 1985, and Jiang Lei, the eldest son born in 1983, the Jiang family also found that by consulting the financial reports of rare earths in China and pan-Asia environmental protection, the Chiang family, in addition to Jiang Quanlong and Qian Yuanying, were born in 1983. Their assets are held in the form of overseas registered companies.
Among them, the major shareholders of Chinese rare earths are YY Holdings Limited, Pan Asia Environmental Protection major shareholders and Praise Fortune Limited, both of which are fully owned by the Chiang family. Based on the closing price on May 22, they hold a total market value of HK $770 million for the two listed companies.
Prism mentioned in its earlier article "Central" hunting for "New Game of mainland tycoons" that more and more mainland tycoons are choosing to set up offshore family trusts. The rich set up reasons for fear that their children and grandchildren would be divided into family assets as a result of wayward divorce, hoping to transfer assets to designated beneficiaries through family trusts; For the sake of tax planning, it is necessary to reduce the taxes that may arise from asset appreciation or inheritance through trust, and to isolate the assets and debts of family businesses from the private wealth of the family.
China rare Earth Financial report shows that all the shares held by, YY Holdings Limited in the listed company are held by YYT (PTC) Limited, the trustee of YY Trust, and the beneficiary is the wholly owned company owned by Jiang Quanlong and Qian Yuanying and his son. Qian Yuanying is the founder of YY Trust. The trust scheme dates back to at least 2008.
Jiang Quanlong has faded out of the line.
In September 2017, Jiang Quanlong resigned as chairman of China's rare earth board of directors and remained an executive director. Qian Yuanying was transferred from vice chairman and chief executive of the board of directors to chairman of the board of directors, and the actual controller of the company was also Qian Yuanying. Pan-Asian environmental control is his son Jiang Lei and Jiang Xin, Jiang Xin owns 60.07 per cent of Pan Asia's major shareholder Praise Fortune Limited.
Because the Chiang family mostly owns offshore platforms, the information about its assets is incomplete, just like the oolong surge in China's rare earth share prices, how much wealth floated to the other side of the ocean with the family trust plan, leaving a question mark.