Event
The company plans to transfer its 31.4% stake in Shanghai to Tianjin Ruiting, with a transaction consideration of 255 million yuan. The company transferred the credit assets held by World Union small loan to Zhuoqun Chuangzhan, with a transaction consideration of 806 million yuan.
Core viewpoints
Focus on advantageous business, return to the origin of service, and carry out new housing business light. The World Federation Bank plans to transfer its 31.4% stake in Shanghai to Tianjin Ruiting (the controlling shareholder is 58.com), with a transaction consideration of 255 million yuan. Shanghai's main winning business is to build a new home co-sale platform, connecting second-hand brokers, service developers and home buyers. On the one hand, this transaction is expected to bring 51 million yuan of investment income to the company, which will significantly increase the company's net profit. On the other hand, the company has clearly established a dual-core collaborative business system of "big deal + big asset management" in the second half of 2020. The big trading business will further focus on the company's advantages, return to the origin of services, provide developers with in-depth services, and cooperate with major intermediary platforms. This transaction reflects the company's open mind, insists on giving full play to its strong service ability in the new housing channel business, and realizes the deep cooperation with the intermediary platform in the business.
Take the initiative to divest the assets of small loans and focus on the development of the main business. The wholly-owned subsidiary of the company, World Union small loan, plans to transfer its credit assets to Zhuoqun Chuangzhan, with a net book amount of 800 million yuan and a total transfer price of 810 million yuan. The credit assets to be transferred this time are the claims held by the World Union small loan to the borrower. This transaction is a buyout transaction, the World Union small loan will transfer the credit assets and all the rights, interests and risks attached to them to Zhuoqun Chuang Chuang.
The transfer price will be paid by installments. 30% of the transfer price will be paid by March 31, 2021, and the remaining 70% will be paid by September 30, 2023.
The fair price of this transaction will help to improve the company's cash flow, reduce the debt ratio, and increase the liquidity of assets, reflecting the company's determination to further focus on the main business.
Maintain the buy rating. Taking into account the improvement in asset management and operations, as well as the return on investment from asset disposal, we have raised the company's EPS to 0.06 EPS in 2020-2022 (the original forecast was 0.05 pound 0.06 yuan).
Risk hint: the decline of trading services is higher than expected; the development of property management is lower than expected.