Strengthening its 'Two-Wheel-Drive' Business Model, Developing an Ever-growing Investment Portfolio
HONG KONG, Mar 27, 2018 - (ACN Newswire) - Legend Holdings Corporation (3396.HK) is pleased to announce audited annual results for the Group for the year ended December 31, 2017. Legend Holdings recorded performance growth for the third consecutive year since its listing. The overall revenue of the Group was RMB316.3 billion, representing an increase of 3% over last year. Net profit attributable to equity holders of the Company amounted to RMB5,048 million, representing an increase of 4% over last year, and (basic) earnings per share amounted to RMB2.16.
"In 2017, in such a favorable context, Legend Holdings has made steady progress in business development in line with its strategic development, strengthening advantages of its 'two-wheel-drive' business model, the three major segments of the Group's strategic investments create an ever-growing investment portfolio, achieved a breakthrough development of pillar assets acquisition and overseas resources allocation, focused on the connection of the invested companies with the capital markets and external resource portfolio companies. Through diversified 'management + strategic service', meaning new deployment or positively optimization, it has further enhanced the portfolio value," stated Mr. Zhu Linan, President of Legend Holdings.
"Meanwhile, the Group has enhanced the highly professional personnel recruitment, strengthened the organizational structure such as the investment management system, laid a solid foundation of the Group's culture, further promoted the organization's morale and engagement in order to poise for the company's medium-to-long-term development. In 2018, the Group will continue reinforcing the synergy advantage of value creation and the two-wheel-drive businesses model, through clear strategy and stronger execution, to drive more strategic outcome in the future. We hope for a better return to shareholders with our more optimized investment portfolio and significant value growth."
--Continuous growth in 'two-wheel-drive' businesses
During the Review Period, Legend Holdings' strategic investment segment has gone on the track of sound progress and achieved a steady growth of results.
Revenue from the financial services segment increased by 130% year-on-year, with net profit attributable to equity holders of the Company increasing by 7%. Among which Zhengqi Financial optimize its asset allocation and implement the long-term strategy of investment-loan linkage, and achieved stable growth in the business scale and profits; Kaola Technology, an innovative financial service provider, increase in its profit margin through development and upgrading of risk control technology; JC Finance & Leasing has actively pursued market expansion in its finance leasing business, optimized its business mix, and achieved healthy development.
Revenue from the innovative consumption and services segment increased by 32% year-on-year, achieving a decrease in losses. During the Review Period, while the Group was developing and enhancing its business value, it grasped the market and national policy trend, and fully release the advantages of the 'two-wheel-drive' model, invest in Better Education Educational Group, a leading kindergarten group with direct operation networks of middle and high-end kindergartens in China, by purchasing controlling equity interests, and made strategic investment in Eastern Air Logistics Co., Ltd. ("EAL"), one of the first pilots for mixed ownership reform of state-owned enterprises, achieving a new deployment in education and aviation logistics segments.
Revenue from the agriculture and food segment increased by 52% year-on-year and the net profit attributable to equity holders of the Company increased by 231% year-on-year. The Group took the Joyvio Group as a platform, to focus on developing two supply chains of fresh fruits and animal protein. During the Review Period, Golden Wing Mau and KB Food further enhance the competitive advantage; the continuous optimization of Funglian Group's product mix led to a substantial increase in the overall operating efficiency and profit; Joyvio Agriculture acquired the controlling interests of Qingdao Starfish; Joyvio Group completed strategic investment in Nine Masters, and expanded the strategic layout in the integrated food materials supply chain.
In addition, in the Information Technology segment, the Group adhered to its 3-wave strategy, and revenue increased by 6% year-on-year. Facing the challenge, Legend Holdings will actively provide all-round support on this matter; revenue of the new material segment increased by 4% and net profit attributable to equity holders of the Company increased by 242%. During the Review Period, Lenovo Group further optimized its product mix and enhance its profitability and market influence.
The Group's financial investment business recorded steady development, the net profit attributable to equity holders of the parent increased by 42%, the investment income and gains increased by 122%, the management of the three fund platforms has steadily expanded, and the total asset was approximately RMB 110 billion. During the Review Period, Legend Capital continued to reinforce its influence on its focusing segments, invested in 60 new projects and exited from 21 projects, 8 portfolio companies were successfully listed on domestic or overseas capital markets through initial public offerings, which increased the portfolio value.
Hony Capital maintained its leading position in state-owned enterprise reform and cross-border investments while achieving initial success in respect of its trial investment in real estate finance, replenishing its investment areas from two dimensions, completed investment or additional investment in 29 new projects and existed 21 projects. Besides, Hony Capital obtained the license for mutual fund business in January 2018, and new opportunities are expected to arise for the future development of its product mix and asset under management; Legend Star raised fund from third-party investors for the first time, in 2017, Legend Star invested in more than 50 onshore and offshore projects, and 63 portfolio companies portfolio companies completed follow-on financing, and continued to consolidate its leading position among domestic venture capital institutions.
--"Two-wheel-drive model" has achieved the new results
Mr. Zhu Linan, President of Legend Holdings, stated the Group will actively display the synergy between strategic investment and financial investments, achieve a flow of 'two-wheel-drive model' results. Based on the practical experience, Legend Holdings will elevate the synergic driving model of two-wheel-drive business to strategic height, on the premise of maintaining the independence of fund management, to fully release the advantages of the two major businesses, and promote business cooperation, enhance the value of the Group and investment return. In 2017, the synergy generation from the 'two-wheel-drive model' has been further enhanced, and a flow of new results have been achieved.
In June 2017, Legend Holdings and Legend Capital strategically jointly invested in EAL. Legend Holdings and Legend Capital now directly hold 20.1% and 4.9% equity interests of EAL, respectively. In July 2017, Legend Holdings, together with Hony Capital, made a strategic investment in Better Education, a leading medium-to-high-end kindergartens group with direct chain operation in China, the 51% share of Better Education was held by Legend Holdings directly and 29% by Hony Capital. The above transaction was a success that integrated the brand, fund, management and control of Legend Holdings, the project resources and investment analysis capacity of Legend Capital and Hony Capital. The 'two- wheel-drive' is one of the unique advantages of Legend Holdings, achieving win-win outcomes for both itself and its subsidiary fund company.
EAL is among the first pilots for mixed ownership reform of state-owned enterprises and the first one implementing the reform, EAL currently has presence in the fields including cross-border e-commerce, air logistics and air freight of premium fresh food, which highly tally with the innovative consumption and services that the Group focused on, and can generate strong synergistic
effects with other enterprises in which the Group made investment, providing a large room for development. Along with the increase in the demand for aviation logistics business, release the energy from the reform of management system and inject advantages of strategic investors, resulting in improvement in the result of EAL.
After over a decade's operation, Better Education has established a standardized operation model, developed an operation team with rich experience in management, ranks among the top tier in respect of the business scale in China, the current demand for pre-school education is strong and market supply is highly fragmented, the capacity for systematic and cross- boundary operation will be easier to acquire high-quality resources and be entitled to the first mover advantages.
--Assist the value growth of portfolio companies
With the needs for development of the portfolio companies and the value growth of the investment portfolio of Legend Holdings, the Group encourage and support its portfolio companies to secure necessary resources for corporate development through refinancing, spin-off, listing and other means.
During the Review Period, the Group has adopted a series of actions to reinforce the explicit promotion of the portfolio companies market value, and further enhance and optimize investment portfolio. In respect of agriculture and food segment, Joyvio Agriculture was built as the first listed platform for strategic industrial development, and will accelerate the expansion of its business relating to purchase, processing and distribution of high-end animal protein extracted from seafood through investments and mergers and acquisitions, it had a controlling stake, completed a material asset restructuring and obtained controlling interests in Qingdao Starfish, a leading seafood provider in China, in August 2017, further enhanced the Group?s control over the upstream resources of animal protein industry chain; Funglian Group was acquired by Hebei Hengshui Laobaigan Liquor Co., Ltd, a listed company the main board of the A-share stock market, the transaction has been completed and Joyvio Group has now become the second largest shareholder of Laobaigan.
In the new material segment, Chinese Academy of Sciences made strategic investment in Levima New Materials. The investment gave Levima New Materials the access to the profound technologies and innovation resources of Chinese Academy of Sciences; considering adjustments to investment portfolio, optimization of assets allocation and further promotion of strategic focus, the Group transferred all its equity interests in Phylion Battery to a third party strategic investor, achieving a better return.
--With stronger execution to achieve strategic goals
In 2018, Legend Holdings will take effective strategies to promote the continuous optimization of its strategic investment portfolio and to realize its strategic targets with stronger execution for more fruitful achievements. Firstly, the Company will continue to build pillar businesses; the Company will more actively participate in the management and control of Lenovo Group to improve its profitability and value. For the financial services segment, the strategic acquisition of a controlling stake in Banque Internationale a Luxembourg S.A. by the Company is steadily going through regulatory review. As a pillar asset, the investment will improve the overall value and financial stability of the Company in the future. For the innovative consumption and service segment, the Company will develop platform enterprises in healthcare, education and other consumption areas by virtue of flexible shareholdings and market-oriented resources.
The strategic presence in agriculture and food business has taken shape, which will boost the leading position of Joyvio Group in the sales and distribution of medium-and high-end fruits + high-end animal protein products. Secondly, it will further optimize the stock assets. and fully release the advantages of the 'two-wheel-drive' model and promote the implementation of projects. Thirdly, the Company will further strengthen its investment management, enhance the value and improve the corporate governance mechanism and system of the portfolio companies. It will actively plan and push forward the separate listing of the portfolio companies or lay a solid foundation for such listing. Currently, the application of Lakala Payment, a subsidiary of the Company, for listing on the ChiNext board through initial public offering is under regulatory review.
The fund platforms of Legend Holdings' financial investments will deepen their presence in cutting- edge technology and new lifestyle areas on the basis of consolidating their current leading status, the content of the Group's financial investment will be further expanded. The Group will enhance the income stability and risk resistance of its financial investments through more diversified investments in special frontier funds, fixed-income products and innovative derivatives.
Mr. Liu Chuanzhi, Founder and Chairman of Legend Holdings, is satisfied with the performance resulted from the strategy implementation by the management in 2017, and stated, "To China, 2017 was an extraordinary year. Deepening the supply-side structural reform, the government promote entrepreneurship, and create a more fair, legal business environment, meanwhile, the country is more concern about high quality development, large consumption groups, strong private capital, maturing innovation-driven foundation etc, providing a large room for the future economic development of China. In this era, Legend Holdings will continue grasping opportunities such as the turning from real economy to the virtual economy, consumption upgrading and technological breakthrough, strengthen the mechanism, fully released the advantages of the 'two-wheel-drive' model, adhered to value creation, and solidly advance its strategy to achieve the established goal. Meanwhile the Group needs to pursue long-term development, and strategic layout. Legend Holdings is an enterprise with glorious tradition, we are walking on an innovative path, in that past we continuously exploring, concluding, among the adversity, I believe that in the coming future, more and more achievement can be made."
About Legend Holdings Corporation Limited
Legend Holdings Corporation is a leading investment group in China. The company purchased and built "Strategic Investment + Financial Investment" two-wheel business synergy drive's innovative business model. Strategic investment business is distributed in with five industries of IT, Financial
Services, Innovation consumption and Services, Agriculture and Food and New materials. The
financial investment business mainly includes Angel Investment, Venture investment and Private equity investment which cover all stages of business growth. In the past 30 years, under the leadership of the founder and Chairman Mr. LIU Chuanzhi and President Mr. ZHU Linan.
The company seize the important theme of China's economic development, flexible investment methods and rich management experience to build and continue to train a group of influential and outstanding companies to promote synergies between businesses. And continue to optimize their portfolios to achieve sustained growth in corporate value. The company's strategic investment focuses on three major areas of financial services, innovative consumption and services, and agriculture and food also continue to pay attention to overseas investment in assets.
Sectors: Daily Finance, Daily News
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