Under the background that the financial leasing companies will be supervised by China banking and insurance regulatory commission, listing companies are unsurprisingly moving faster in establishing financial leasing firms.
According to statistics, since 2018, there have been 12 listed companies stating that they will set up financial leasing companies. Another three listed companies announced investment in financial leasing firms in May.
It is noteworthy that relevant companies also saw rapid development in such business.
Sumec Corporation Limited (600710.SH) announced on May 29 that National Capital Financial Leasing (Tianjin) Co., Ltd. that the company set up together with several companies has been registered and obtained business license issued by China (Tianjin) Pilot Free Trade Zone. It is only about two months after the company announced it would join in investing in a financial leasing firm.
Economist Yang Haitian said to the reporter that financial leasing industry is supervised by the banking and insurance regulatory commission. This means that it confirmed the nature of a wide range of domestic and overseas-funded financial leasing enterprises. It is good to the whole industry as it may remove the risk in industry policy. “China’s financial leasing industry boasts huge development potential along with China’s continuous and stable development and improvement in supervision.”
3 listed companies set up financial leasing firms lately
There have been 12 listed companies announcing that they will set up financial leasing companies as of June 2 since this year. Another three listed companies announced investment in financial leasing firms in May, according to reporter from Securities Times.
Xi'an Shaangu Power Co., Ltd. (601369.SH) announced on evening of May 21 that it intended to establish Xi’an Changqing Power Financial Leasing Co., Ltd. (tentative name) with its own capitals worth 200 million yuan.
Xi'an Shaangu Power said that setting up financial leasing company meets the desirability of the state’s policy of guiding and improving enterprise’s industry integration strategy and accords with the company’s future development planning. Investment in this project will produce considerable economic effect and the risk is controllable. Therefore, it is feasible and of great significant and strategic significance. Setting up financial leasing company can further promote integration between industry and financial sector and strengthen enterprise competitiveness.
Shenzhen Worldunion Properties Consultancy Incorporated (002285.SZ) announced on May 18 that Worldunion Corporation and Shenzhen Worldunion Sharing Investment Co., Ltd. jointly invested 10 million US dollars to set up a financial leasing company. Shenzhen Worldunion Properties Consultancy Incorporated and Worldunion Corporation both invested 2.5 million US dollars and held 25 percent stake in the company, respectively. Shenzhen Worldunion Sharing Investment funded 5 million US dollars and held 50 percent stake.
On May 15, another listed company Zhuhai Port Co., Ltd. (000507.SZ) announced that it will jointly invest 300 million yuan with its related Party Zhuhai Port Hong Kong Co., Ltd. to establish Zhuhai Port Finance Leasing Co., Ltd.
According to the announcement, the company is now developing heavy-assets and capital-consumption business, including port and shipping, logistics supply chain, energy and environmental protection and port city construction. As these businesses have high demand for working capital, to set up finance leasing company will help revitalize the company’s inventory assets and optimize cash flow, thus accumulating project experience and improving risk control capabilities.
Finance leasing sees stricter supervision
In fact, since the beginning of last year, there were rumors that pawnshops, financial leasing, commercial factoring and other institutions would get supervised by banking supervision department. Until recently, it finally settled down.
According to statistics from the China Leasing Alliance and the Tianjin Binhai Financing Leasing Research Institute, as of the end of 2017, the total number of financial leasing companies (excluding single project companies, branches, SPV companies, and overseas acquisition companies) was approximately 9090, an increase of 27.4 percent from the 7136 at the end of last year.
Some industry insiders said that behind the seemingly booming industry hides a huge bubble crisis. Many registered companies are shell companies, and some companies are out of touch or excessively leveraged. In the context of preventing financial risks, the financial leasing industry is gradually being supervised, which lays the foundation for its healthy development in the future.
Pan Helin, postdoctoral of applied finance of the Chinese Academy of Fiscal Sciences, said that although the financial leasing, commercial factoring, and pawnshop supervisory responsibilities are formally placed under the China Banking and Banking Regulatory Commission. A dual-architecture model may still be adopted. The regulator may fall into local financial department, which is responsible for daily supervision and risk disposal. The move will undoubtedly produce positive financial effects.
The person said that the assignment of this supervisory duty is not a simple transfer of power and responsibility, but a step forwards to stricter financial supervision. The unification of power management is only the first step in the supervision upgrading. This is not only required by the current regulatory situation. It is also the only way to rectify the unhealthy financial market and promote the healthy development of the financial market.
Translated by Coral Zhong and Vanessa Chen
According to statistics, since 2018, there have been 12 listed companies stating that they will set up financial leasing companies. Another three listed companies announced investment in financial leasing firms in May.
It is noteworthy that relevant companies also saw rapid development in such business.
Sumec Corporation Limited (600710.SH) announced on May 29 that National Capital Financial Leasing (Tianjin) Co., Ltd. that the company set up together with several companies has been registered and obtained business license issued by China (Tianjin) Pilot Free Trade Zone. It is only about two months after the company announced it would join in investing in a financial leasing firm.
Economist Yang Haitian said to the reporter that financial leasing industry is supervised by the banking and insurance regulatory commission. This means that it confirmed the nature of a wide range of domestic and overseas-funded financial leasing enterprises. It is good to the whole industry as it may remove the risk in industry policy. “China’s financial leasing industry boasts huge development potential along with China’s continuous and stable development and improvement in supervision.”
3 listed companies set up financial leasing firms lately
There have been 12 listed companies announcing that they will set up financial leasing companies as of June 2 since this year. Another three listed companies announced investment in financial leasing firms in May, according to reporter from Securities Times.
Xi'an Shaangu Power Co., Ltd. (601369.SH) announced on evening of May 21 that it intended to establish Xi’an Changqing Power Financial Leasing Co., Ltd. (tentative name) with its own capitals worth 200 million yuan.
Xi'an Shaangu Power said that setting up financial leasing company meets the desirability of the state’s policy of guiding and improving enterprise’s industry integration strategy and accords with the company’s future development planning. Investment in this project will produce considerable economic effect and the risk is controllable. Therefore, it is feasible and of great significant and strategic significance. Setting up financial leasing company can further promote integration between industry and financial sector and strengthen enterprise competitiveness.
Shenzhen Worldunion Properties Consultancy Incorporated (002285.SZ) announced on May 18 that Worldunion Corporation and Shenzhen Worldunion Sharing Investment Co., Ltd. jointly invested 10 million US dollars to set up a financial leasing company. Shenzhen Worldunion Properties Consultancy Incorporated and Worldunion Corporation both invested 2.5 million US dollars and held 25 percent stake in the company, respectively. Shenzhen Worldunion Sharing Investment funded 5 million US dollars and held 50 percent stake.
On May 15, another listed company Zhuhai Port Co., Ltd. (000507.SZ) announced that it will jointly invest 300 million yuan with its related Party Zhuhai Port Hong Kong Co., Ltd. to establish Zhuhai Port Finance Leasing Co., Ltd.
According to the announcement, the company is now developing heavy-assets and capital-consumption business, including port and shipping, logistics supply chain, energy and environmental protection and port city construction. As these businesses have high demand for working capital, to set up finance leasing company will help revitalize the company’s inventory assets and optimize cash flow, thus accumulating project experience and improving risk control capabilities.
Finance leasing sees stricter supervision
In fact, since the beginning of last year, there were rumors that pawnshops, financial leasing, commercial factoring and other institutions would get supervised by banking supervision department. Until recently, it finally settled down.
According to statistics from the China Leasing Alliance and the Tianjin Binhai Financing Leasing Research Institute, as of the end of 2017, the total number of financial leasing companies (excluding single project companies, branches, SPV companies, and overseas acquisition companies) was approximately 9090, an increase of 27.4 percent from the 7136 at the end of last year.
Some industry insiders said that behind the seemingly booming industry hides a huge bubble crisis. Many registered companies are shell companies, and some companies are out of touch or excessively leveraged. In the context of preventing financial risks, the financial leasing industry is gradually being supervised, which lays the foundation for its healthy development in the future.
Pan Helin, postdoctoral of applied finance of the Chinese Academy of Fiscal Sciences, said that although the financial leasing, commercial factoring, and pawnshop supervisory responsibilities are formally placed under the China Banking and Banking Regulatory Commission. A dual-architecture model may still be adopted. The regulator may fall into local financial department, which is responsible for daily supervision and risk disposal. The move will undoubtedly produce positive financial effects.
The person said that the assignment of this supervisory duty is not a simple transfer of power and responsibility, but a step forwards to stricter financial supervision. The unification of power management is only the first step in the supervision upgrading. This is not only required by the current regulatory situation. It is also the only way to rectify the unhealthy financial market and promote the healthy development of the financial market.
Translated by Coral Zhong and Vanessa Chen
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