– Continuously Diversifies Business Portfolio; Actively Explores Cooperation Opportunities
– Further Reinforces its Leading Position in the Industry
HONG KONG — Differ Group Holding Company Limited (“DFH” or the “Group”) (stock code: 6878), a leading provider of short- to medium-term financing and financing-related solutions in the PRC, has announced its unaudited interim results for the six months ended 30 June 2017 (the “Period”).
Benefiting from the robust income growth of its asset management, finance lease and financial services businesses, the Group’s turnover increased by 14.4% to approximately RMB152.0 million, profit for the Period rose to approximately RMB80.0 million and basic earnings per share climbed to RMB1.74 cents.
The Group maintained a healthy financial position with a 26.4% gearing ratio. As at 30 June 2017, it had total cash and bank balances (including restricted bank deposits) of approximately RMB116.0 million.
Mr. Hong Mingxian, Chairman and Executive Director of DFH, said, “Amidst the transformation and upgrade process of the Chinese economy, the Group has implemented a diversified strategy so as to capture the opportunities in the industry, adjusted its development focus and concentrated on the businesses with greater profitability and higher sustainability, such as asset management and finance lease businesses, and strive to achieve sustainable growth with a flexible business model.”
Business Review
Asset Management Services
To capture the opportunities presented by abundant asset in Fujian Province, the Group has continued to expand the asset management business, and actively looking for quality asset which could potentially offer high-percentage returns. During the Period, the income from asset management services surged by 50.8% to approximately RMB51.9 million, mainly due to the fact that more obligors of non-performing loans settled the debts and the Group received dividend income from its equity investments. The increase also demonstrated that the Group has extended its disposal of distressed asset from immovable property to other asset class given the fact that no property was disposed during the period.
Finance Lease Services
Following the acquisition of Jiashi International Financial Limited and its subsidiaries (“Jiashi Group”) in late October 2015, the Group further developed its finance lease business. Apart from the finance lease business for machineries, distant marine fishing vessels and car leasing to individuals, the Group has started its finance lease business for properties in late 2016 and has commenced its finance lease business in Hong Kong in the first half of 2017. Income increased by 35.3% to approximately RMB30.8 million in relation to the finance lease business in Hong Kong.
Financial Services
The Group has mainly focused on financial services that charge customers based on a certain percentage of the amount of financing obtained as a result of consultation. During the Period, the income from financial services soared by 104.9% to RMB31.8 million assisted by the PRC government encouraging the banks to support the SMEs, which often have difficulty in obtaining bank loans. Thus in the first half of 2017, it has become easier for SMEs to obtain loans from PRC banks. This in turn has led to the increase of the amount and the successful rate of financing obtained from banks by the Group’s customers.
Express Loan Services
The Group has continued to expand the Hong Kong money lending business in 2017 and has also provided short-team financing to customers in the PRC. For the sake of stability, the Group took a more prudent approach and preferentially granted loans to customers with decent credit histories during the economic downturn, and lowered the interest rates accordingly. Moreover, in order to focus on the businesses with greater profitability and higher sustainability, the Group retained capital for further expanding its asset management business, and a certain amount of cash was used in redeeming the convertible bonds of US$30 million. During the Period, affected by the lower average interest rate charges and adjustment in business strategy and resource allocation, income from express loan services declined to approximately RMB34.4 million.
Guarantee Services
Since the overall macroeconomic environment has led to more prominent credit risks, the Group has continued to take a prudent approach towards vetting the applications of potential customers. As a result, the number of guarantee services decreased and income declined by 49.8% to approximately RMB3.0 million.
Outlook
Looking ahead, asset management business and finance lease business will continue to be the Group’s key growth drivers. Furthermore, the Group has actively expanded these businesses along with continued to explore cooperative opportunities with various state-owned / well-known companies. Apart from the formation of Xiamen Chuang Yi Commercial Factoring Company Limited with state-owned enterprises in late 2016, the Group has entered into a Joint Venture agreement with Tsingstone Capital Management (Hong Kong) Limited and two other independent third parties for establishing a JV company. The JV company will form and operate a USD-dominated fund (“Qing Feng Hui USD Fund”) with target fund-raising amount of USD50 million in aggregate. The investment target will be quality projects in the information technology sector. Leveraging on this opportunity and the first-hand resources it could offer, the Group intends to pave the way for developing to Fintech business. We believe that the close ties forged with these renowned companies can enable the Group to develop new businesses, broaden the customer base, bolster the competitiveness and expand the geographical coverage of its businesses, therefore generating sustainable growth momentum to further capture enormous opportunities in the market.
In the capital markets, the Group has issued corporate bonds of approximately HK$141.7 million during the Period. The funds raised can enhance the Group’s capital base and accelerate the development of its business. On the other hand, the Group has redeemed convertible bonds of US$30 million early in order to increase the flexibility of its business.
Mr. Hong concluded, “We will continue to actively grasp the opportunities presented by the rapidly-changing economic environment in the PRC, continue to facilitate the strong development of asset management and finance lease services in domestic and overseas. The Group will also explore cooperation plans with different renowned companies at the same time, in a bid to maintain sustainable growth momentum. We are optimistic about our overall business and financial prospects in the future, so we will further seek to develop new businesses and explore business opportunities in order to broaden our income stream, and maintain our leading position as the preferred choice of comprehensive short- to medium-term financing solutions by SMEs, thus maximising value for our shareholders.”