中国汇融(01290) - 2021 - 中期财报

Company Information The report provides fundamental corporate governance and operational information, including board members, committees, company secretary, registered office, principal place of business, auditor, and principal bankers - The report provides basic corporate governance and operational information, including the board of directors, committee members, company secretary, registered office, principal place of business, auditor, and principal bankers[5][6][7] Financial Highlights The company's financial performance in the first half of 2021 showed a significant increase in profit attributable to owners despite a slight revenue decline, while total assets and net assets grew modestly Summary of Operating Results (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 134,754 | 138,174 | -2% | | Operating Expenses | 14,509 | 22,832 | -36% | | Profit Attributable to Owners of the Company | 14,776 | 893 | 1,555% | | Basic Earnings Per Share (RMB yuan) | 0.014 | 0.001 | 1,300% | Summary of Financial Position | Indicator | As of June 30, 2021 (RMB thousands) | As of December 31, 2020 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 2,712,986 | 2,532,555 | 7% | | Loans to Customers | 1,888,767 | 1,814,211 | 4% | | Bank Balances and Cash | 417,597 | 434,080 | -4% | | Net Assets | 1,948,514 | 1,941,898 | 0% | Management Discussion and Analysis Business Review and Development During the reporting period, the company's business operations showed a strong recovery, with significant growth in the Inclusive Finance segment, continuous innovation in Technology Finance, and a shift towards self-operated business in Insurance Agency, alongside new ventures in art, distressed asset, and equity investments - The company's overall operating strategy focuses on comprehensive marketing and robust risk control, showing business recovery amidst an improving macroeconomic environment, and actively expanding into new areas such as art, distressed asset, and equity investments[12] Inclusive Finance Business Segment The Inclusive Finance Business Segment, a core business, provides mortgage and non-mortgage loans to SMEs and individuals through platforms like Wuzhong Pawn, Dongshan Microcredit, and Huifang Rongtong, achieving significant growth in real estate mortgage loans and Dongshan Microcredit business due to improved pandemic conditions and tighter credit policies Wuzhong Pawn Loan Granting Status (For the six months ended June 30) | Item | 2021 (RMB millions) | 2020 (RMB millions) | | :--- | :--- | :--- | | New Mortgage Loans | | | | Real Estate Mortgage Loan Amount | 396 | 149 | | Personal Property Mortgage Loan Amount | 33 | 25 | | Number of Real Estate Mortgage Loans | 447 | 169 | | Number of Personal Property Mortgage Loans | 1,478 | 1,747 | | New Non-Mortgage Loans | | | | Total Amount | 328 | 401 | | Total Number of Loans | 23 | 39 | Huifang Rongtong Re-lending Fund New Loan Status (For the six months ended June 30) | Item | 2021 (RMB millions) | 2020 (RMB millions) | | :--- | :--- | :--- | | Total Amount of New Loans Granted | 1,151 | 1,243 | | Total Number of New Loans Granted | 220 | 182 | | Period-end Balance | 60 | 103 | Dongshan Microcredit New Loan Status (For the six months ended June 30) | Item | 2021 (RMB millions) | 2020 (RMB millions) | | :--- | :--- | :--- | | Total Amount of New Loans Granted | 185 | 126 | | Total Number of New Loans Granted | 89 | 59 | | Period-end Balance | 362 | 375 | Technology Finance Business Segment The Technology Finance Business Segment, a strategic emerging business, focuses on commercial factoring, supply chain management, and Hong Kong money lending, with commercial factoring new business volume decreasing year-on-year due to reliance on bank financing, and Hong Kong loan balance at RMB 22 million Commercial Factoring Business Operations (For the six months ended June 30) | Item | 2021 (RMB millions) | 2020 (RMB millions) | | :--- | :--- | :--- | | Total Number of New Accounts Receivable Factoring Businesses | 5 | 8 | | Total Amount of New Accounts Receivable Factoring Businesses | 27 | 86 | - Hong Kong operations continued to hold a money lender's license, with an outstanding loan balance of RMB 22 million as of June 30, 2021[29] Insurance Agency Business Segment The Insurance Agency Business Segment, under Huifang Anda, expands into co-insurance, government and state-owned platforms, and foreign enterprises, covering property, credit guarantee, liability, and personal insurance - The Insurance Agency Business Segment, guided by principles of 'credibility, responsibility, professionalism, and compliance,' actively integrates government and insurance company resources to act as an agent for various insurance businesses[31] Financial Review In the first half of 2021, the company's operating revenue slightly decreased by 2% to RMB 135 million, while profit attributable to equity holders surged by 1,555% to RMB 14.78 million, with the Inclusive Finance segment being the primary profit driver and Technology Finance turning profitable Overall Financial Data (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Operating Revenue | 134,754 | 138,174 | | Net Operating Income | 68,816 | 29,324 | | Administrative Expenses | 31,395 | 28,776 | | Income Tax Expense | 12,083 | 7,488 | | Profit Attributable to Equity Holders | 14,776 | 893 | | Basic Earnings Per Share (RMB yuan) | 0.014 | 0.001 | Pre-tax Profit/(Loss) by Business Segment (For the six months ended June 30) | Business Segment | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Inclusive Finance Business Segment | 46,303 | 26,625 | | Technology Finance Business Segment | 1,632 | (616) | | Insurance Agency Business Segment | (1,323) | (1,498) | | Headquarters and Others | (11,465) | (12,705) | Credit Risk As of June 30, 2021, the company's total gross book value of loans to customers was RMB 2.545 billion, with impairment provisions totaling RMB 656 million, a provision coverage ratio of approximately 25.79%, and a significant decrease in new litigation-involved loan balances, indicating strengthened risk control Credit Risk Exposure of Loans to Customers (As of June 30, 2021) | Expected Credit Loss Stage | Gross Book Value (RMB thousands) | Loss Allowance (RMB thousands) | Carrying Value (RMB thousands) | | :--- | :--- | :--- | :--- | | Stage 1 (12-month ECL) | 1,388,873 | (30,391) | 1,358,482 | | Stage 2 (Lifetime ECL) | 30,811 | (6,742) | 24,069 | | Stage 3 (Lifetime ECL) | 1,125,477 | (619,261) | 506,216 | | Total | 2,545,161 | (656,394) | 1,888,767 | - As of June 30, 2021, the Group's total impairment provisions increased by RMB 52.72 million from the end of last year, reaching RMB 656 million[48] New Litigation-Involved Loans (For the six months ended June 30) | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | New Litigation-Involved Mortgage Loan Balance | 13,080 | 38,494 | | New Litigation-Involved Non-Mortgage Loan Balance | 0 | 21,591 | Borrowings As of June 30, 2021, the Group's total borrowings increased to RMB 675 million from RMB 510 million at the end of 2020, with non-current bank borrowings primarily for headquarters building construction, and a capital gearing ratio (net debt/equity) of 34.66% Borrowing Structure | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Non-current | | | | Bank Borrowings | 95,380 | 50,380 | | Current | | | | Bank Borrowings | 568,380 | 436,489 | | Microcredit Company Borrowings | 3,000 | 23,500 | | Other Company Borrowings | 8,500 | — | | Total | 675,260 | 510,369 | - The Group's capital gearing ratio is 34.66%, with a policy to maintain a low capital gearing ratio[55] Capital Expenditure For the six months ended June 30, 2021, the company's capital expenditure significantly increased to RMB 18.23 million, primarily for property, plant and equipment, intangible assets, and construction in progress, compared to RMB 2.34 million in the prior period - Capital expenditure during the reporting period was RMB 18.23 million, a significant year-on-year increase from RMB 2.34 million in the prior period[57] Foreign Exchange Exposure During the reporting period, the Group recorded a net exchange loss of RMB 2.75 million, compared to a net exchange gain of RMB 11.36 million in the prior period, but does not face significant foreign exchange risk or engage in hedging due to primary transactions being in RMB - For the six months ended June 30, 2021, the Group recorded a net exchange loss of RMB 2.751 million, compared to a net exchange gain of RMB 11.357 million in the prior period[58] Pledged Assets As of June 30, 2021, the Group had assets valued at RMB 462 million pledged or mortgaged for bank borrowings, including land use rights, structured deposits, and time deposits - To obtain bank borrowings, the Group pledged land use rights valued at RMB 34.2 million, and pledged structured deposits valued at RMB 140 million and time deposits valued at RMB 287 million[59] Significant Investments, Acquisitions and Disposals To achieve diversified development, the Group established three new companies during the reporting period, focusing on art investment, distressed asset investment, and equity investment, to explore new growth opportunities - Established Nanjing Yiling with a registered capital of RMB 55 million and a 55% stake, to expand into the art finance market[63] - Established Suzhou Cibei with a registered capital of RMB 50 million and a committed capital contribution of RMB 45 million, to venture into distressed asset investment and disposal[64] - Established Huifang Rongcui with a registered capital of RMB 100 million and a committed capital contribution of RMB 90 million, to conduct direct equity investments and FOF investments, seizing opportunities in new energy, intelligent manufacturing, and healthcare industries[65] Contingent Liabilities, Contractual Commitments, Cash Utilization Analysis As of the end of the reporting period, the Group had no significant contingent liabilities, with total capital commitments of RMB 180 million primarily for the China Huirong headquarters building construction and capital injections into new subsidiaries, and net cash outflow from operating activities of RMB 107 million mainly due to increased loans to customers Capital Commitments (As of June 30, 2021) | Item | Unaudited (RMB thousands) | | :--- | :--- | | China Huirong Headquarters Building | 44,534 | | Huifang Rongcui | 90,000 | | Suzhou Cibei | 34,870 | | Nanjing Yiling | 10,250 | | Total | 179,654 | Cash Flow Summary (For the six months ended June 30) | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Net Cash (Outflow)/Inflow from Operating Activities | (107,104) | 425,679 | | Net Cash Outflow from Investing Activities | (28,360) | (2,336) | | Net Cash Inflow/(Outflow) from Financing Activities | 122,664 | (523,010) | | Net Decrease in Cash and Cash Equivalents | (12,800) | (99,667) | Human Resources and Employee Benefits As of June 30, 2021, the Group had 138 full-time employees, a decrease of 2 from the beginning of the year, reflecting ongoing human resource optimization, with total staff costs and benefits amounting to RMB 17.75 million, an increase of RMB 0.835 million year-on-year - As of June 30, 2021, the Group had 138 full-time employees, a decrease from 140 at the end of 2020[75] - For the six months ended June 30, 2021, staff costs and benefits amounted to RMB 17,753 thousand, an increase of RMB 835 thousand year-on-year[75] Future Plans for Significant Investments Beyond disclosed capital commitments, the Group currently has no other significant investment or capital asset acquisition plans but will continue to seek new business development opportunities - The Group will continue to seek new business development opportunities, but currently has no other significant investment plans beyond the disclosed capital commitments[76] Events After Reporting Period Subsequent to the reporting period, Huida Factoring completed a capital increase, introducing Suzhou Wuzhong Urban Construction Investment Development Co., Ltd. as a new shareholder, reducing the company's stake to 52.94%, and the Group injected RMB 9 million into the newly established Huifang Rongcui for equity investment - On July 2, 2021, Huida Factoring completed a capital increase, introducing a new state-owned shareholder, reducing the Company's shareholding from 60.00% to 52.94%[78] - On July 26, 2021, the Group injected RMB 9.0 million into Huifang Rongcui to commence equity investment business[79] Future Outlook The company will continue to deepen the development of its business segments, with Inclusive Finance focusing on small, diversified loans and national brand expansion, Technology Finance leveraging state-owned participation for financing, Insurance Agency exploring new co-insurance models, and headquarters advancing refined management, aiming for headquarters building completion, and fostering new investment businesses - Inclusive Finance: Adhere to the principles of small, diversified, and short-term loans, promoting national brand expansion for pawn businesses Technology Finance: Centered on commercial factoring within supply chain scenarios, leveraging state-owned participation advantages to secure bank financing Insurance Agency: Explore new co-insurance cooperation models and increase the proportion of self-operated business Headquarters and Others: Advance the construction of the headquarters building and cultivate emerging businesses such as art, distressed asset, and equity investments[81][82] Other Information Directors' and Chief Executive's Interests in Shares and Share Options This section details the interests of the company's directors and chief executive in the shares, underlying shares, and debentures of the company and its associated corporations as of June 30, 2021, including directly held ordinary shares and interests through share option schemes - Disclosed the number of ordinary shares and share options held by several directors, including Mr. Wu Min and Mr. Zhang Changsong[86] Major Shareholders' Shareholding Status As of June 30, 2021, the report lists major shareholders holding 5% or more interest in the company, including Xiaolai Investment Limited (23.90%), Baoxiang Investment Limited (7.77%), Miracle Capital Limited (6.57%), and their ultimate beneficial owners Major Shareholders' Shareholding Percentage (As of June 30, 2021) | Shareholder Name/Ultimate Controller | Shareholding Percentage | | :--- | :--- | | Xiaolai Investment Limited (Zhu Tianxiao) | 23.90% | | Xilai Investment Limited (Zhu Tianxiao) | 5.98% | | Baoxiang Investment Limited (Zhang Xiangrong) | 7.77% | | Miracle Capital Limited (Ge Jian) | 6.57% | | Nanfang Dayang Investment Limited (Chen Yannan) | 5.98% | Share Option Scheme The company adopted a 10-year share option scheme in 2014, with 50 million options granted as of June 30, 2021, of which 26.25 million remain unexercised, representing approximately 2.41% of issued share capital, with an exercise price of HKD 0.62 per share and expiring by September 12, 2021 - As of June 30, 2021, 26,249,000 share options remained unexercised under the share option scheme[101][115] - The exercise price for granted share options is HKD 0.62 per share, exercisable before September 12, 2021[113] Corporate Governance Practices During the reporting period, the company consistently complied with the Corporate Governance Code, with the only deviation being the combined roles of Chairman and Chief Executive Officer held by Mr. Wu Min, a structure the Board deems effective for strategy execution - The company deviated from the Corporate Governance Code's requirement for separate roles of Chairman and Chief Executive Officer, with Mr. Wu Min holding both positions[126] Dividends The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2021 - The Board does not recommend the payment of an interim dividend for 2021[131] Interim Financial Information Review Report on Interim Financial Information PricewaterhouseCoopers, the company's auditor, reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements 2410, finding no matters that would lead them to believe the interim financial information was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 - The auditor, PricewaterhouseCoopers, issued an unqualified review report on the interim financial information[135] Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2021, the company recorded operating revenue of RMB 135 million, profit for the period of RMB 23.06 million, with RMB 14.78 million attributable to owners of the company, and basic earnings per share of RMB 0.014 Key Items from Interim Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Operating Revenue | 134,754 | 138,174 | | Net Operating Income | 68,816 | 29,324 | | Profit Before Income Tax | 35,147 | 12,270 | | Profit for the Period | 23,064 | 4,782 | | Profit Attributable to Owners of the Company | 14,776 | 893 | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2021, the company's total assets were RMB 2.713 billion, total liabilities RMB 764 million, and total equity RMB 1.949 billion, with net loans to customers, a core asset, at RMB 1.889 billion Key Items from Interim Condensed Consolidated Statement of Financial Position | Item | As of June 30, 2021 (RMB thousands) | As of December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Assets | | | | Loans to Customers | 1,888,767 | 1,814,211 | | Total Assets | 2,712,986 | 2,532,555 | | Equity and Liabilities | | | | Total Liabilities | 764,472 | 590,657 | | Total Equity | 1,948,514 | 1,941,898 | | Total Equity and Liabilities | 2,712,986 | 2,532,555 | Interim Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2021, operating activities resulted in a net cash outflow of RMB 107 million, primarily due to increased loans to customers; investing activities had a net outflow of RMB 28.36 million; and financing activities generated a net inflow of RMB 123 million, with cash and cash equivalents at period-end totaling RMB 90.88 million Summary of Interim Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Net Cash (Outflow)/Inflow from Operating Activities | (107,104) | 425,679 | | Net Cash Outflow from Investing Activities | (28,360) | (2,336) | | Net Cash Inflow/(Outflow) from Financing Activities | 122,664 | (523,010) | | Cash and Cash Equivalents at Period-end | 90,883 | 81,098 | Notes to Interim Condensed Consolidated Financial Information The financial notes detail the basis of financial statement preparation, significant accounting policies, financial risk management, segment information, and specifics of each statement item, including credit risk exposure, fair value hierarchy of financial instruments, detailed performance of business segments, loan portfolio details and provisions, borrowing structure, and related party transactions - Notes provide detailed disclosure of the Group's three main operating segments: Inclusive Finance Business Segment, Technology Finance Business Segment, and Insurance Agency Business Segment, along with their respective revenue, profit, asset, and liability information[198][199][200] - Note 28 details the classification of loans to customers (mortgage/non-mortgage), aging analysis, overdue status, and changes in expected credit loss provisions, which are central to understanding the company's asset quality[264][274][277] - Notes 34 and 37 disclose the company's borrowing details and significant related party transactions, including guarantees from related parties, which are crucial for assessing the company's financing capabilities and potential risks[313][323] Definitions This section provides clear definitions for specific terms used throughout the report, such as 'the Company,' 'the Group,' 'the Board,' 'Listing Rules,' and abbreviations for various subsidiaries - This section provides clear definitions for specific terms used in the report, such as 'the Company,' 'the Group,' 'the Board,' 'Listing Rules,' and abbreviations for various subsidiaries[331]