中國信貸午餐會答問精要

本周中,中國信貸(8207)與數間外資行分析員進行午餐會.席間,分析員聚焦數個問題,以下是中國信貸管理層作出之回應:

Q: What loan category is Credit China focusing on?

A: The criteria for Credit China’starget group are:
a) single loan size: Rmb10-50m
b) interest rate: 3-6% permonth
c) borrowing period within three months

If a loan application does not meetthe above criteria, the company will refer it to other loan providers & charge the borrower a one-off referral fee of 3-8%. The company has a large pool of loan providers with close relationships,which is much more than sufficient to fuel the growth in referral services.

Q: What’s the current source of finance?

A: For 1Q11, the loan book was around Rmb623m, financed by equity of Rmb400m and a deposit arrangement of Rmb200m with Xinrong Assets, a major shareholder of Credit China. The interest rate on the deposit is 0.4% per annum.

Q: What’s the loan-book growth target and how will the growth be financed?

A: Credit China plans to increase its loan book to Rmb1bn and Rmb2bn
for 2011 & 2012, respectively. It will seek capital from the following
channels to fund the loan growth,
a) Rmb100m of bank borrowings through its finance-leasing vehicle,
b) A Rmb300m offshore Renminbi bond,
c) A potential loan-receivable securitisation scheme of Rmb400m, starting from4Q11, and
d) Xinrong Assets is willing to increase the deposit to Rmb500m by request fromthe company.

Q: What are the competitive landscape and entry barriers?

A: There are around 110 pawn loan providers in Shanghai. However, most of them focus on traditional pawn-loan services, ie, personal property pawn loans. The licence quota and capital requirements are the key entry barriers. Management has indicated that there was no additional licence for pawn loan providers granted by authority in Shanghai in 2010.

Q: How does Credit China control its credit risk?

A: The company’s risk-management procedure involves two levels of loan-approval committees. The committee consists of eight members, including the Chairman, two executive directors and members from the senior management team. Every member of the committee has the veto power to reject the application.

􀂃 Valuation
Credit China’s share price has increased by about 20% this week, closing on 26 May 2011 at its highest level of $1.93 since its IPO in November 2010. The stock is trading at PERs of 21.5x and 14.8x for 2011 and 2012,respectively, based on the Bloomberg consensus EPS forecasts.