With a valuation approaching 200 billion, the "gold content" of China UnionPay quietly increases

On September 27, a listing announcement from the Shanghai United Property Rights Exchange unveiled the financial details of China UnionPay.

In the announcement, China Telecom (601728.SH) intends to divest its 0.02% stake in China UnionPay.

The target introduction provides abundant information: China UnionPay, which rarely discloses its performance, had a revenue and net profit of 47.237 billion yuan and 14.34 billion yuan respectively in 2023. Based on the selling floor price of 0.36 billion yuan, China UnionPay's market value has already exceeded 170 billion yuan.

China Telecom's "clearance" may still be based on the need to focus on its core business.

Since the implementation of the "Regulations on Preventing and Resolving Financial Risks and Accountability (Trial)" in May this year, which is seen as the "gold retreat order," the China Telecom Party Committee has stated in its inspection and rectification report that it is "promoting the optimization, integration, and clearance of financial equity."

Subsequently, it concentrated on listing the financial equity under the "clearance" banner, including a 41.18% stake in Zhongan Xiaodai, 100% of Tangerine Insurance Agency, 100% of Tianyi Rongdan, and 0.51% of Hankou Bank.

Different from the institutions such as Xiaodai and insurance agencies in which China Telecom invested through "Yi Pay" after 2021, China Telecom has invested in China UnionPay for 12 years and has "harvested richly."

The floor price of this equity is 0.36 billion yuan, while China Telecom had previously invested approximately 0.02 billion yuan, resulting in a price difference of up to 0.34 billion yuan.

In actual transactions, this amount may be even higher, coupled with annual dividends, China Telecom expects substantial returns.

The continuous increase in the valuation of the transaction is the development trend of China UnionPay in recent years.

In 2011, CITIC Trust once sold 23 million shares of China UnionPay for 311 million yuan, with China UnionPay valued at about 39.6 billion yuan at that time.

Over the following years, Buffett's investment, Cangzhou Rural Credit Cooperative, and other minority shareholders have also sold equity, pushing China UnionPay's valuation to over 70 billion yuan.

With few performance disclosures in recent years, China UnionPay has become increasingly mysterious in the eyes of the market.

If the floor price of 0.36 billion yuan in this announcement is used for estimation, China UnionPay's overall valuation should be over 170 billion yuan.

Compared to 13 years ago, China UnionPay's registered capital has nearly tripled, and its overall valuation has more than quadrupled.

However, there is also UnionPay Business Payment Co., Ltd. ("UnionPay Business") under China UnionPay, which has faced a cold reception in the public market.

The Wuhu Century Entrepreneurship Investment Center has listed UnionPay Business's 0.12% equity three times from 2023 to this year, with the price dropping from an initial 2.8 million yuan to 1.9 million yuan.

While the equity was auctioned at a 30% discount, the path to listing was not smooth.

Starting in 2020, UnionPay Business initiated an IPO plan, signing a Sci-Tech Innovation Board listing counseling agreement with China International Capital Corporation in August of that year, and "cut off" its joint loan business to pave the way for listing.

After nearly four years, UnionPay Business's IPO plan is still progressing, with the latest development being the completion of the eleventh phase of listing counseling in September 2023.

Despite the obstacles faced by its subsidiaries in entering the capital market, China UnionPay's overall development in the near future remains relatively smooth, and the leadership team is about to complete the handover.

There are reports that Guo Dayong, former member of the Party Committee and Deputy Governor of the Jiangsu Branch of the People's Bank of China, has recently taken up the position of Deputy Secretary of the China UnionPay Party Committee. In the future, he may succeed Cai Jianbo, who is approaching retirement age, as the President At the beginning of the year, Dong Junfeng, the former Party Secretary, Chairman, and President of China UnionPay, has also been appointed as the Party Secretary of China UnionPay, and may succeed the soon-to-retire Shao Fujun as Chairman.

According to the official website, as of the end of 2022, China UnionPay has a total of 36 branches and 50 overseas branches, with its network extending to 181 countries and regions globally, and over 2500 member institutions at home and abroad.

China UnionPay stated that in the future, it will continuously optimize its acceptance network at home and abroad, promote the implementation of mobile payment convenience projects, advance the internationalization process, and enhance the international competitiveness of the Chinese bank card industry