IPO purchase proposal:
Hanhua Financial Holdings Co., Ltd. is China's leading provider of comprehensive credit guarantee and financing solutions for small and medium-sized enterprises in China. The company is the only private vice president entity of the two most influential institutions in the industry, the China guarantee Association and the China Joint Association of Microfinance institutions. Has participated in a number of national conferences to develop national standards for China's credit guarantee industry. The company has established an excellent market reputation by focusing on the financing needs of Chinese small and medium-sized enterprises and providing financing solutions to Chinese small and medium-sized enterprises.
In terms of industry, the total bandwidth balance of Chinese financial institutions increased from 32 trillion yuan on December 31, 2008 to 76.6 trillion yuan on December 31, 2013, with a compound growth rate of 19.1%. Despite overall monetary policy tightening since 2011, lending to all Chinese financial institutions grew by 14.3 per cent year-on-year at the end of 2011, 2012 and 2013, respectively. As the most dynamic economic cells, Chinese small and medium-sized enterprises are one of the fastest growing economic sectors in China, but their financing needs are ignored by traditional financial institutions, and domestic financial service companies for small and micro enterprises are obviously insufficient. Financially, the total net handling fees and interest income of the company in 2011, 2012 and 2013 were RMB 870.3 million, RMB 1143.3 million and RMB 1576.7 million respectively, representing a compound annual growth rate of 34.6%. In the same period, the company's profits were 476.2 million yuan, 517.8 million yuan and 356.7 million yuan respectively. As at 31 December 2011, 2012 and 2013, the company's net assets were RMB2004.5 million, RMB2508.0 million and RMB5458.4 million respectively. The guarantee balance increased from RMB 14.2 billion on December 31, 2011 to RMB 21.3 billion on December 31, 2013, and the loan balance for small and medium-sized enterprises increased from RMB 1.7 billion on December 31, 2012 to RMB 4.8 billion on December 31, 2013.
The leverage ratios of the net asset value of financing guarantees were 4.8 times, 4.7 times and 5.7 times respectively on 31 December 2011, 2012 and 2013. The paid-in capital leverage ratio of small and micro loans remained stable, at 2.2 times, 2.2 times and 1.5 times respectively over the same period. The decrease in 2013 was due to a significant increase in paid-up capital in the company's SME lending business.
According to the 2013 profit of 356.7 million yuan, excluding the over-allotment, the PE ranges from 15.8 to 20.9, excluding the over-allotment. Although the price-to-earnings ratio of the renewed offering is lower than that of the IPO plan in March, it is still higher than that of the same industry. Taking into account the impact of financial reform deleveraging on companies, caution is recommended.
