financial highlights
six months ended 30 june, 2015:
revenue of the group was rmb142.1 billion, representing a year-on-year increase of 13%.
net profit was rmb 5,116 million, representing a year-on-year increase of 101%
net profit attributable to equity holders of the company was rmb 4,015 million, representing a year-on-year increase of 209%
basic earnings per share were rmb2.00, representing a year-on-year increase of 208%.
(27 august, 2015 – hong kong) legend holdings corporation (“legend holdings” or the “company”; together with its subsidiaries, the “group”; stock code: 3396.hk) is pleased to announce the unaudited condensed consolidated interim results of the group for the six months ended june 30, 2015 (the “review period”).
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 investment business consists 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.
legend holdings has identified and been cultivating a number of outstanding companies with great influence based on its clear understanding of china’s development patterns, flexible investment techniques and extensive management expertise. legend holdings has 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. meanwhile, the group constantly provides value-added services to the portfolio companies and optimizes the resource allocation and asset portfolio to achieve sustainable value growth.
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, 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 the favorable situation of capital market, and thereby profit contribution from financial investment increased significantly.”
strategic investments
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 provides 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 provides 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, the 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, the revenue was rmb 422 million. zhengqi financial’s loan and financial lease businesses were in significant increase, 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, the invested associate. lakala, the other invested associate, whose corporation value was continuously raised, was in the sustainable construction of internet ecosystem.
agriculture and food：during the review period, the 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, the 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, the 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 of portfolio companies
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.
zhengqi financial (occupying leading position in the financial services for smes in anhui province):
–during the review period, zhengqi financial’s operating income increased by 21% to rmb422 million.
–as of june 30, 2015, the period-end balance of the extended loans increased by 9% to rmb4,535 million as compared with rmb4,173 million as at the end of 2014.
–as at 30 june, 2015, the period-end balance of the lease receivables from the leasing business increased by 85% to rmb1,537 million as compared with rmb830 million as at the end of 2014.
lakala (financial services provider which occupies leading market position in china’s offline payment)：
–lakala managed to make profit in the first half year in 2015.
–during the review period, lakala contributed a profit of rmb437 million to the group (a profit of rmb283 million to the group for the same period of 2014)
–lakala received an injection of rmb1.45 billion from certain strategic investors in june, 2015, driving its post-money valuation up to rmb10.45 billion from rmb 3 billion
bybo (one of the best known dental care service chains in china)
–during the review period, bybo newly opened 8 hospitals and 12 clinics.
–as at 30 june, 2015, bybo owned 17 hospitals and 78 clinics.
–bybo has built up significant presence and gained remarkable brand awareness in areas such as beijing, guangzhou, shanghai, shenzhen, zhuhai and hainan.
continue with new investments, deepened the investment theme of “internet+”
legend holdings closely follows opportunities arising from the transformation of conventional industries driven by technical innovations and increasing penetration of the internet. in addition to our investment in eloancn.com, which provides p2p loan service to “sannong” (agriculture, farmer and rural area) and small and micro enterprises, during the review period, the group was constantly building up new portfolios in sectors including modern services, agriculture and food, etc., with investment in century wenkang, social touch, cloud farm and so on, and further deepened its deployment in 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 (insight into the trends of economy and market led to significant growth in investment gain)
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 we have invested, including legend capital which focuses on risk investment, hony capital which focuses on private equity investment, and legend star which focuses on seed stage investments in the tmt and healthcare industries, chose to exit quite a number of their investments in the right time of the first half with considerable returns, by way of our understanding of china’s economy and market. meanwhile, funds and minority equity investments of the company which were expanding quickly as they entered a period of rapid development with growing competitiveness and market shares, resulted in a greater appreciation to their inherent value. during the review period, the financial investments segment contributed a profit of rmb2,151 million to legend holdings.
looking forward, mr. liu chuanzhi, founder and chairman of legend holdings, stated, “legend holdings has entered international capital market in the first half year, indicating a solid step forward to 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 still is indicating a huge development potential. the company has always been positive about “consumption upgrade” and the “internet+”, and has focused on the deployment in sectors with great potential including financial services industry, modern services industry, and agriculture and food industry in advance. meanwhile, the company’s unique two-wheel-driving business model of “investment and industry” not only is 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.”