AAC, in a rather desperate move, has announced a "strategic cooperation agreement" with CITIC Bank. Where have we seen that before?

AAC (2018) announcement seems familiar
9 June 2017

AAC Technologies Holdings Inc (AAC, 2018) made an announcement today that gives us a sense of déjà vu:

The board of directors of the Company (the “Board”) is pleased to announce that, on 3 May 9 June 2017 (before trading hours), the Company entered into a strategic cooperation agreement (the “Agreement”) with China CITIC Bank Corporation Limited (Nanjing Branch)* (中信銀行股份有限公司南京分行) (“CITIC Bank”). To the best of directors of the Company’s knowledge, information and belief of the Board, CITIC Bank and its ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined in the Listing Rules).

Pursuant to the Agreement, in order to establish long-term, stable, mutually-beneficial and win-win strategic cooperation relationship, CITIC Bank, acting as the Company’s strategic cooperation commercial bank and the Company, being the strategic customer of CITIC Bank will carry out multilevel cooperation based on the financial needs of the Company, including but not limited, in relation to provision of financial package service and, one-stop and comprehensive financial services by CITIC Bank based on the financial needs of the Company and the financial resources of CITIC Bank and its group companies, including financing and credit, investment banking, account management, supply-chain finance, wealth management and asset management. The parties to the Agreement shall give priority to each other in selecting the financial services and customer under the same conditions.

In particular, CITIC Bank agrees to provide to the Group Company and/or its related parties with a comprehensive credit and financing limit of not less than RMB10 billion, subject to the compliance with the relevant laws, regulations, rules and internal credit approval guidelines andcontrol procedures of CITIC Bank. The term of the Agreement is two years from the date of the Agreement.

Ah yes, what you are looking at is an edited copy of the announcement by Fullshare Holdings Ltd (Fullshare, 0607) on 3-May-2017. Hardly inspiring. It's even the same branch of CITIC Bank (Nanjing), and the grant of the credit facility is subject to internal credit approvals, so it is not unconditional. According to AAC's 2016 annual report, it has a minimal amount of net gearing, so on the face of it, they don't need the money. This stunt looks ill-advised.

While on the subject of Fullshare, we must note that since a critical short-seller report was published on 25-Apr-2017, the share price in this bubble has held up remarkably well. When you look at the Webb-site CCASS Analysis System, you can see why. The net movements in CCASS since then show that the Southbound Shanghai Connect (ID A00003) and Shenzhen Connect (ID A00004) have acquired 4.96% of the company combined, and now hold 15.66% of the company. One or more mainlanders have piled in while the free world has piled out.

Meanwhile, on 2-May-2017, a 4.41% block moved from CCB International to UBS, on 23-May-2017 a 3.45% block moved from CCB International to China Industrial Securities, and the next day, a block of 5.06% moved from UBS to BNP Paribas. Such moves often indicate a change in the margin finance arrangements of a large or controlling shareholder.

© Webb-site.com, 2017

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