- Achieve Steady Increase in Net Profits, Gradually Realizes Corporate Value- Two-Wheel-Driving Model of Investment and Industry to Continuously Build a Company of Excellence
HONG KONG, Aug 28, 2015 - (ACN Newswire) - Legend Holdings Co., Ltd. announced the unaudited condensed consolidated interim results of the Group for the six months ended June 30, 2015 (the "Review Period").
1H 2015 Financial Summary Revenue RMB 142,1 billion YoY increase of 13% Net profit RMB 5.16 billion YoY increase of 101% Basic EPS RMB 2.00 YoY increase of 208%
Legend Holdings Corporation is a large Chinese investment group with distinctive features. Adopting the two-wheel-driving business model of "investment and industry", the Company operates two principal businesses, strategic investments and financial investments respectively. The strategic investments consist of operations in six sectors, respectively IT, financial services, modern services, agriculture and food, property and chemicals and energy materials; while the financial investment business consists of angel investments, venture capital and private equity investments throughout a company's life cycle.
Based on its clear understanding of China's development patterns, particularly, seeking for sustained and stable growth drivers has become a new challenge for Legend Holdings under the circumstances that China's economy has entered the "New Normal" while domestic and foreign economic trends witnessed a number of uncertainties. However, on one hand, the two-wheel-driving strategy solved the problem in a timely manner; on the other hand, it inspired active interaction and resource sharing among our business segments through optimizing investment portfolios of financial investments. The Group leveraged on its rich experience to have established a significant presence across a wide span of industries and gathered a wealth of portfolio companies, which allows it to gradually realize the value of its investment portfolio.
Mr. Zhu Linan, President of Legend Holdings, stated, "Legend Holdings is committed to cultivating industry-leading companies and enhancing the Company's long-term value through dynamic portfolio management. The overall profitability of the Group has been continuously improved during the first half of 2015. On one hand, relying on diversified deployment and a wealth of portfolio companies, corporate recourses, the value of the Group's investment portfolio has been gradually realized with increasing profits. On the other hand, depending on the profound insight on China's economy, the Group made the best of a favorable situation in the capital markets, and thereby profit contribution from financial investment increased significantly."
Strategic Investments
With its deep understanding of China's commercial and industrial environment, Legend Holdings has cultivated a batch of outstanding Chinese enterprises over last three decades, and developed the two-wheel-driving business model of "investment and industry". During the review period, the strategic investment business made RMB 3,374 million profit for Legend Holdings. Relying on the distinctive insight and experience in incubating successful businesses, Legend Holdings provided financial support, brand endorsement, management training and other value-added services to its portfolio companies.
For portfolio companies of the strategic investment business, profitable exit is not the top concern in terms of investment and management. Therefore, the Group is able to focus on the healthy growth of its portfolio companies in the best possible direction and from a long-term perspective. The Group provided sufficient capital support to portfolio companies in various forms, including equity investments, shareholders loans and bank guarantees, and powered the development of traditional industries with Internet-based technologies and innovative business models.
- Business review on the six major sectors of the strategic investment business
IT: During the Review Period, revenue was RMB 135.15 billion. In the second quarter of 2015, Lenovo outperformed the general PC market in terms of PC sales, with its market share growing to the record-breaking 20.6%; Lenovo remained the third largest manufacturer in the world in terms of enterprise level business and regained its status as the largest manufacturer in the x86 server market in China. In the second half of the year, Lenovo will take a series of actions to address the challenges in macro economy and markets both at home and abroad.
Financial Services: During the Review Period, revenue was RMB 422 million. Zhengqi Financial's loan and financial lease businesses were significantly increased, and gains from the investments in our associates also achieved growth. Meanwhile, the Company actively strengthened its deployment in the Internet finance sector, resulting in a rapid expansion of the P2P business of eloancn.com, an invested associate. Lakala, the other invested associate, whose corporate value continuously increased, is involved with sustainable construction in the Internet ecosystem.
Modern Services: During the review period, revenue was RMB596 million. The Group continued its deployment in the modern services and the "Internet+" sectors. The dental care service segment continued to expand its presence in the market across the country with a rapid growth in operating revenue as well as gross margin; the profit of CAR significantly increased while the rental business was in strong growth. Meanwhile, the Group will expand its regional presence in the cold-chain logistics business and explore new models for the further development of relevant businesses.
Agriculture and food: During the Review Period, revenue was RMB920 million. Encouraged by the great growth potential of the agriculture and food industry, the Group has been actively seeking opportunities in the relevant industries. In the first half year of 2015, a substantial increase in the sales of agricultural products including blueberries and kiwifruit was achieved; the Group made an additional strategic investment in Cloud Farm to create "a new agricultural eco-system".
Property: During the Review Period, revenue was RMB4,340 million. Benefiting from the contribution of high-margin sales in tier-one and tier-two cities, the gross margin of average sales price per unit has improved significantly as compared with the same period of 2014; the area of available-for-lease properties has increased significantly, which will also contribute stable profits and cash flow to the Group in the future.
Chemicals and energy materials: During the Review Period, revenue was RMB671 million. Benefiting from a steady growth in the electric bicycle markets in the first half of 2015, Phylion accomplished a sharp increase in sales and managed to maintain a high gross margin, and successfully introduced new strategic investors.
- Staying on the right track of development, further enhancing value in portfolio companies
During the period of its listing, the management of Legend Holdings expressed that, the Group would focus on the deployment of sectors with huge potential, such as financial services, modern consumption, agriculture and food industry, etc. In the first half of the year, portfolio companies achieved stable development in their performance. During the Review Period, the Group continued to help its portfolio companies in analyzing industry trends and development rules, formulating the right strategic and deployment plans, and equipping them with effective management and internal control techniques so that they could stay on the right track of development, enhance their operating efficiency, and achieve the optimal results. Zhengqi Financial, Lakala and Bybo, the three portfolio companies, have realized corporate value significantly.
Lakala, one of our portfolio companies and a financial services provider that occupies a leading market position in China's offline payment sector, obtained strategic investment of RMB1.45 billion in this June, driving its valuation up to RMB10.45 billion from RMB3 billion; the period-end balance of the lease receivables from the leasing business of Zhengqi Financial, a financial services provider for SMEs, increased by 85% to RMB1,537 million as compared with RMB830 million as at the end of 2014. Additionally, Legend Holdings provided sufficient capital support to portfolio companies in various forms, including equity investments, shareholders loans and bank guarantees, achieving value growth together with those companies. Bybo, as one of the best known dental care service chains in China, newly opened 8 hospitals and 12 clinics during the Review Period. As of 30 June, 2015, Bybo owned 17 hospitals and 78 clinics.
- Continuing with new investments and substantiating the "Internet+" investment theme
Legend Holdings closely follows opportunities arising from the transformation of conventional industries driven by technical innovations and the increasing popularity of the Internet. In addition to the investment in eloancn.com, which provides P2P loan service to agricultural industry, farm villages and peasants and small and micro enterprises, the Group was constantly building up new portfolios in such sectors as modern services, agriculture and food, so as to expand the presence in the relevant industries. These new portfolio companies, which are actively changing the conventional industries with emerging Internet and mobile Internet technologies in their respective fields, have rapid growth potential.
Century Wenkang - Century Wenkang has successfully built up one of the biggest Internet-based one-stop medical service platforms in China, providing patients with full-spectrum medical and health-care services over the Internet.
Social Touch - Social Touch is a provider of the latest enterprise mobile marketing solutions, which helps its corporate customers to establish connections with consumers in a new environment and manage these connections in an effective way.
Cloud Farm - Cloud Farm is China's first Internet-based agriculture-related service provider which integrates agriculture-oriented e-commerce, customization and trading of agricultural products, rural logistics, agricultural technology services and rural finance.
Financial Investment
- Understanding China's economy and markets leads to the rapid growth of investment income
In the first half of 2015, the stock markets of Mainland China and Hong Kong have witnessed strong growth, which was followed by drastic fluctuations. The majority of funds in which the Group has invested, including Legend Capital and Hony Capital, chose to exit quite a number of their investments in the right time of the first half with considerable returns, by way of the understanding of China's economy and market. Meanwhile, the investees of the funds and minority equity investments which were expanding quickly as they entered a period of rapid development with growing competitiveness and market shares, resulting in a greater appreciation to their inherent value. During the Review Period, the financial investments segment contributed a profit of RMB2, 151 million to the Group.
Looking forward, Mr. Liu Chuanzhi, Founder and Chairman of Legend Holdings, stated, "Legend Holdings entered international capital markets in the first half of the year, indicating a solid step forward in our aim of becoming a "century-old company". Although currently the domestic and foreign economic situation is complicated and changeable while the market will involve a number of uncertainties in the second half of the year, China's economy is still suggesting huge development potential. The Company has always been positive about "Consumption Upgrade" and the "Internet+", and has focused on the deployment of sectors with great potential including the financial services industry, the modern services industry, and the future agriculture and food industry.
"Meanwhile, the Company's unique two-wheel-driving business model of "investment and industry" is not only capable of allocating assets in a more rational way, but also minimizes risks of fluctuation. In the future, the Company will adhere to the two-wheel-driving business model, implement active and systematic deployment as well as dynamic management in businesses which have gained sustained attention from the Group with robust growth momentum, inspire active interaction and resource sharing between our business segments, and constantly optimize our investment portfolios. We believe that as an investment group with long-term value target, Legend Holdings will continuously cultivate outstanding companies in China, and create sustained values for our shareholders."
This month, Legend Holdings was added to the Hang Seng Composite LargeCap & MidCap Index ("HSLMI") under the Hang Seng Composite Index ("HSCI") Series, and the Company became one of the eligible stocks of the Shanghai-Hong Kong Stock Connect, all of which will undoubtedly promote liquidity in the Company's shares and lead to a wider shareholder base, and thus push forward the effective realization of its corporate value. Mr. Liu Chuanzhi, Founder and Chairman of Legend Holdings, expressed his opinions during the Company's listing period in June: Legend Holdings valued the long run, and aimed at the future.
With respect to future deployments, in addition to its investment in the Internet-based medical and healthcare industry, Internet-based agriculture and corporate mobile social networking, Legend Holdings will continue to promote the investment theme of "Internet+", closely follow opportunities arising from the transformation of conventional industries driven by technical innovation, and increase penetration of the Internet, further deepen its deployment, constantly develop innovate investment portfolio in areas including modern services, agriculture and food industry, cultivate more outstanding enterprises, and thus realize its investment value.
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