Another reduction! Li Ka-shing and his son once again bulk sell Postal Savings Bank of China H shares

On October 18, according to the disclosure from the Hong Kong Stock Exchange, Li Ka-shing accumulated a total of 101 million shares of Postal Savings Bank of China H shares on October 14 and 17, cashing out approximately HKD 475 million (approximately RMB 434 million) in just 4 trading days. This is the third time Li Ka-shing has sold a large batch of shares of the bank since its listing.

It is worth noting that in the second half of this year, as the price of Postal Savings Bank of China H shares continued to rise, Li Ka-shing increased the intensity of reducing his holdings in the bank. Based on the shareholding data disclosed in the bank's 2024 interim report, from July 1 to October 13, Li Ka-shing significantly reduced his holdings of Postal Savings Bank of China by approximately 178 million shares. Based on the estimated average transaction price within the period, he may cash out over HKD 800 million.

As of the close on October 18, Postal Savings Bank of China H shares closed at HKD 4.79 per share, up 1.48% on that day.

Accumulated reduction of approximately 278.6 million shares in the second half of the year

On October 18, the latest information disclosed by the Hong Kong Stock Exchange shows that Li Ka-shing and his son, Li Zeju, recently reduced their holdings of Postal Savings Bank of China H shares twice. They sold 78.517 million shares on October 14 and continued to sell approximately 22.801 million shares on October 17. In other words, in just 4 trading days, Li Ka-shing has reduced his holdings of Postal Savings Bank of China by 101 million shares.

The data shows that the average transaction prices on October 14 and 17 were HKD 4.63 per share and HKD 4.737 per share, respectively. Based on the average transaction prices, Li Ka-shing and his son cashed out approximately HKD 475 million (approximately RMB 434 million) in total.

After this round of reduction, the percentage of shares held by Li Ka-shing and his son in Postal Savings Bank of China further decreased. As of October 17, the former held 1.581 billion shares of Postal Savings Bank of China H shares, accounting for 7.96% of the total issued shares.

The reporters from Securities Times noted that Li Ka-shing's reduction mainly occurred in the second half of this year. As of the end of June this year, according to the 2024 interim report of Postal Savings Bank of China, Li Ka-shing and Li Zeju collectively held approximately 1.971 billion shares of Postal Savings Bank of China H shares through institutions such as the Li Ka-shing Foundation. By October 14, this had already decreased to 1.793 billion shares.

From July 1 to October 13, Li Ka-shing also reduced his holdings by approximately 178 million shares. If calculated based on the average transaction price of HKD 4.536 per share during the 70 trading days, Li Ka-shing and his son may have cashed out over HKD 800 million. In other words, the accumulated reduction of 278.6 million shares of Postal Savings Bank of China this year has allowed Li Ka-shing to obtain over HKD 1.2 billion in cash Since the beginning of this year, with the rapid rise in the stock prices of domestic listed banks, the A-share prices of several large state-owned banks have repeatedly hit historical highs. At the same time, the stock prices of large Chinese banks listed on the Hong Kong Stock Exchange have also been gradually rising. Taking Postal Savings Bank of China (PSBC) as an example, from 2024 to October 18th, the H-share price of PSBC has accumulated a 37.01% increase. On October 7th, along with the hot market in the A-share and Hong Kong stock markets, the H-share price of PSBC also hit a new high of HKD 5.39 per share in nearly two years, with an interval increase of approximately 50.7% from 2024 to October 7th.

The second largest shareholder of PSBC's H shares, Shanghai International Port (Group) Co., Ltd. (referred to as "SIPG"), has significantly increased its holdings twice in the first half of this year. SIPG increased its holdings by approximately 103.5 million shares of PSBC's H shares on January 31st and purchased another approximately 176 million H shares on March 8th. Based on the closing price of PSBC's H shares on the days of the two increases, the total cost of the two increases of approximately 280 million shares amounted to around HKD 1.05 billion, with this portion of the holdings having already realized over 20% in unrealized gains within the year.

Previously reduced holdings twice, responded to be used for charity

The 96-year-old Li Ka-shing has been the richest man in Hong Kong for many years. According to the Forbes Hong Kong Rich List released in February this year, Li Ka-shing still tops the list, but the stock price of his real estate development company, Cheung Kong Group, has fallen by one-third from last year, reducing Li Ka-shing's wealth to USD 36.2 billion.

It is worth noting that before this reduction in holdings of PSBC, Li Ka-shing had already reduced his holdings twice.

On May 11, 2023, according to the Hong Kong Stock Exchange disclosure, the Li Ka-shing Foundation reduced its holdings of 22.49 million shares of PSBC's H shares at an average price of HKD 5.43 per share, totaling approximately HKD 122 million. After this reduction, the Li Ka-shing Foundation held approximately 1.98 billion shares of PSBC's H shares, accounting for 9.97% of the issued H shares.

At that time, in response to the reduction by the Li Ka-shing Foundation, PSBC stated that the foundation has always maintained a good relationship with PSBC, and the foundation has no objections to the bank's operations and development. The foundation was established to promote charitable projects, and all investment income is used for charitable purposes. The reduction of PSBC shares by the foundation was part of its routine financial arrangements.

Since the second half of 2022, the Li Ka-shing Foundation has cumulatively reduced its holdings of PSBC by approximately 83.189 million shares of PSBC's H shares through on-exchange transactions. In response to the first reduction, the Li Ka-shing Foundation stated to Hong Kong media at that time: "The foundation was established to promote charitable projects, and all buying and selling activities are to support related goals, with all investment income allocated to charitable purposes."

Public information shows that in September 2016 when PSBC's H shares were listed, Li Ka-shing and his son Victor Li bought 2.267 billion shares of the bank's H shares through their respective foundations. The Li Ka-shing Foundation stated at the time, "Li Ka-shing views it as a long-term investment, he has absolute confidence in PSBC, and believes it is suitable for financial investment."

Li Ka-shing Foundation was established in 1980, mainly focusing on supporting education and medical projects. Li Ka-shing has invested over HKD 30 billion in promoting education, healthcare, poverty alleviation, with 80% of the funds allocated in Mainland China and Hong Kong.

## Postal Savings Bank of China to Adjust Agency Fee Rates

In terms of business, there is recent good news from Postal Savings Bank of China. Recently, the bank announced a plan to adjust its savings agency fee rates, which is expected to save approximately HKD 15.058 billion in comprehensive agency fees. The magnitude of this adjustment also significantly exceeds market expectations.

Specifically, Postal Savings Bank of China recently announced the adjustment plan for its savings agency fee rates, with different degrees of adjustments in tiered rates for various savings deposits such as demand deposits, notice deposits, and deposits ranging from three months to three years. Based on the 2023 agency savings deposits as a reference, this will reduce the bank's comprehensive agency fee rate from 1.24% to 1.08%, and the savings agency fee will decrease from HKD 115.623 billion to HKD 100.565 billion.

In a previous announcement, Postal Savings Bank of China stated that in recent years, the net interest margin and net interest spread of the banking industry have continued to narrow. Against the backdrop of passive adjustments triggered by the pricing of RMB deposit savings agency fees, considering the current and future interest rate environment and trends, after active negotiations between Postal Savings Bank of China and China Post Group, and from the perspective of the interests of all shareholders, it is proposed to further reduce the tiered rates of agency savings deposits.

It is worth mentioning that Postal Savings Bank of China will also modify the passive adjustment mechanism. The announcement shows that the original rule was triggered when the average net interest spread of the four major state-owned banks fluctuated by more than 24% compared to the average net interest spread of the previous 10 years at the time of the last adjustment. This time, the reference period will be changed from 10 years to 5 years, which will also help Postal Savings Bank of China to react more promptly and effectively to changes in the interest rate environment.

Regarding the reduction of savings agency fees this time, industry analysts generally believe that the reduction exceeds market expectations and will significantly alleviate the bank's profit pressure.

The analyst team of Changjiang Securities led by Ma Xiangyun believes that the unexpected reduction of agency fees by Postal Savings Bank of China will help initiate valuation repair, saving agency fee expenses by 15.1 billion yuan, equivalent to increasing the pre-tax profit by 9 percentage points, which will significantly alleviate profit pressure. The team believes that this adjustment will be retroactive to the rates starting from July 1, directly boosting short-term performance.

The analyst team of CITIC Securities led by Ma Kunpeng believes that in the short term, the new plan for agency fee rates of Postal Savings Bank of China is conducive to guiding the optimization of deposit structure and alleviating the downward pressure on interest margins. In the long run, a differentiated adjustment plan can effectively guide branches to enhance customer stickiness and promote the transformation of wealth management. The adjustment of agency fee rates will help Postal Savings Bank of China better achieve the goal of "stabilizing net interest income, increasing non-interest income, and reducing costs," achieving good revenue quality and stable profit release.

Author: Xie Zhongxiang, Source: Securities Times, Original Title: "Breaking News! Li Ka-shing, Reducing Holdings!"