[Caihua News]Everbright Yongnen (03699-HK)A special shareholders' meeting will be held in late November to resolve 3 issues with the parent companyChina Everbrightconnected transactions. Liu Jia, chairman of Everbright Yongnian, stressed in an interview that the transaction would help increase the Group's rental income.
The first connected transaction was to rent out some ground stores in Chengdu Everbright Financial Center, a subsidiary of the groupEverbright BankThe annual rent income is over 2 million yuan (RMB. Same below). Part of the area of the commercial building was vacated due to the relocation of a major bank tenant. Everbright Bank's move in will support the commercial building's rent, which is beneficial to shareholders. Moreover, the move of Everbright Bank also brought a positive image to the Everbright Financial Center commercial building.
The second connected transaction is a loan services framework agreement. He expects Everbright Bank to grant the Group a credit line of more than 300 million yuan, so that the Group has sufficient capital to carry out future investment activities. The Group continues to seek investment opportunities in the UK and the southwestern regions of China such as Yunnan and Sichuan.
The third connected transaction is a deposit service framework agreement, which allows the Group to make deposits at Everbright Bank and provide more options; it can also obtain information on Everbright Bank's wealth management products more quickly, such as structured deposits with better interest. The announcement made it clear that the relevant deposit interest rate will not be lower than the interest rate to be paid by an independent third party.
He stressed that the relevant transactions were all decided on a commercial basis, which is beneficial to the group, not just the majority shareholders; he expects minority shareholders to support it. This is related to Everbright Yongnian's vital interests. In December 2019, the Group first proposed a related transaction, but it was rejected by the Extraordinary General Meeting of Shareholders. He analyzed that this was the first time, due to lack of experience, lack of communication with minority shareholders, the other party did not know the details, and the job was not in place; however, the voter turnout of minority shareholders was also quite low. As a result of the last veto, Everbright has reduced rent revenue by more than 2 million yuan since this year, causing losses to the Group. We expect minority shareholders to vote wisely this time.
The Group went public for nearly 3 years and initially planned to use over HK$90 million to acquire British properties, but nothing has happened. He said that there are many factors of market instability under the epidemic, and investment and acquisition activities are being more cautious. The UK property market is still on a downward trend. In 2019, the Group learned about the investment property market in the UK. The return rate before the pandemic was 4.5%, but it has now risen to 5.5%, reflecting the decline in property prices; the Group will not take action until the environment stabilizes and the timing is right, and the promise to go public remains unchanged.
Similarly, in the southwestern part of the mainland, the Group is also studying 3 or 4 projects related to property investment, but no decisions have been made yet. The group announcement stated that under the epidemic, many properties have been sold due to debt repayment in the southwest region, increasing investment opportunities.
On July 2, 2020, the Group sold three residential properties of Du Fu Garden in Chengdu, at a total cost of about RMB 27.268 million. Liu Jia said that it mainly involves residential goods, and the relevant sales amount is expected to be recorded in 2020; the group is still mainly based on rental income, which is complemented by sales revenue.
In the first half of the year, the Group's property rental income fell 7% year on year to 18.6 million yuan under the epidemic. He said that 80% of Yoshida's properties have already been filled by new customers, including from the pharmaceutical industry and international evaluation companies. However, the rent renewal remained at the level of 3 years ago. As for the property management and investment business, not much has changed.
Liu Jia laughed that the group has not made any major investments, which is a kind of “blessing”! Under the pandemic, Everbright has maintained financial stability, has no debt, no leverage, and holds nearly 200 million yuan in cash.