Steel cross-border "play" financial leasing
As banks generally tightened credit overcapacity in the industry, aggravated the iron and steel enterprises in financial straits, capital liquidity challenges. In response to the policy, the financial leasing is the iron and China Hot Dipped Galvanized Steel Sheet
enterprises to achieve integration of industry and finance, improve the liquidity of an important way.
Why a finance leasing company
Financial leasing as an important means of equipment financing, both to promote the development of equipment manufacturing industry, equipment import and export, corporate finance and other functions, is a typical area of industry and financial integration. In some advanced economies, financing leases are one of the main tools for financing enterprise equipment, second only to bank credit.
From a policy perspective, the State Council has issued "on accelerating the development of financial leasing industry guidance" and other relevant documents to support the development of finance leasing industry. At present, including Shanghai, Fujian, Xi'an, Tianjin and other places, including a number of financial leasing have introduced a number of favorable policies, covering refinancing concessions, lower capital threshold for subsidiaries and so on.
From the actual situation of iron and steel enterprises, but also the urgent need of financial capital support. On the other hand, some enterprises in the rapid development of iron and steel industry during the period of investment is too large, is currently facing a serious debt risk, but to develop diversified business needs Increase capital investment, many enterprises are facing insolvency, and even difficulties in funding strand breaks.
From the established iron and steel enterprises, the operation of financial leasing companies, financial leasing has played the following aspects of the role.
First, to meet the financing needs of iron and steel enterprises. The establishment of financial leasing companies, can effectively meet the financing needs of iron and steel enterprises to ease the dependence on bank credit. At the same time, external markets and external profits can be internalized, effectively reduce the overall financial costs of iron and steel enterprises, improve the profit attributable to parent company.
The second is the effective use of low-cost funds abroad. Financial leasing companies can leverage their leverage to raise low-cost funds in overseas financial markets (currently around 4% of the cost of foreign capital), to obtain the benefits of domestic and foreign spreads.
Third, the liquidity management of the service group. The leasing business of finance leasing companies can promote the sales of steel enterprises and reduce the balance of accounts receivable. Through the leasing companies "leasing" operation, but also revitalize the iron and steel enterprises of production equipment, plant and other fixed assets, improve non-cash asset liquidity, reduce liquidity risk.
Fourth, access to higher than the main industry's economic benefits. At present the steel industry is facing the status of overcapacity, some steel enterprises are facing serious losses, the urgent need to seek new profit growth point. Financial leasing industry, the average profit margin of 10% to 30%, much higher than the rate of return of the steel industry, and iron and steel industry fit degree, The value of state-owned assets and value-added capacity of great significance.
Fifth, to achieve an effective way of combining industry and finance. The Group will further improve the Group's financial sector functions, enhance the level of financial and financial cooperation, and better serve the Group's real estate industry, offsetting the cyclical risks of the entity industry in terms of profitability, and the Group's original financial industry The formation of complementary advantages.
The essence of the finance leasing business determines its substitutive role to the commercial bank loan. Therefore, the group can reduce the financing cost to the commercial bank directly, Through asset securitization re-enter the market, improve liquidity, and to achieve spreads.
Development of Financing Lease in Iron and Steel Enterprises
In recent years, with the improvement of domestic financial leasing-related laws and regulations, especially in a series of favorable policies, China's financial leasing industry has entered a rapid development track, has developed into the world's second largest leasing power after the United States . As of the end of June 2016, China's financial leasing companies (excluding single-project companies, subsidiaries and the acquisition of overseas companies) the total number of about 5708, 4508 more than the end of the previous year 1200. The balance of the national financial leasing contract was about RMB4,680 billion, an increase of RMB240 billion, or 28.0%, as compared with RMB444 billion at the end of 2015. In 2016, the country's financial leasing industry, despite some negative factors, the total business will continue to exceed 5 trillion yuan, which will make China more than the United States as the world's largest leasing country.
At present, according to incomplete statistics, the iron and steel enterprise group set up 14 financial leasing companies, namely Hegang, Bohai Steel, TISCO, Jinan Iron and Steel, Shan Steel, Xinxing Ductile Iron Pipes, Hangzhou Iron and Steel, , Valin, Shougang, Benxi Iron and Steel and Shanxi Jianbang.
It is noteworthy that, Valin, Shougang, Benxi Iron and Steel, Nanjing Iron and Steel, Shanxi Jianbang five iron and steel enterprise finance leasing company, its business name and parent company no direct contact. This is related to the positioning of the company, can pave the way for the development of market-oriented business. In the future, the iron and steel enterprises to set up financial leasing companies, can also take full account of the company brand influence, positioning and name and other issues.
From the registration point of view, the iron and steel enterprise finance leasing company started late, in addition to the South International Leasing Company (established in 1989, approved by the Ministry of Commerce in 2005 reorganization), the other 13 are nearly 3 years incorporated, shareholders are mostly The subsidiaries and operations outside the Group are mainly internal members of the Group.
From the registered capital point of view, the iron and steel enterprises of the financial leasing companies registered capital of the amount ranging from the United States to register the majority, as shown in Table 2.
In terms of company type and shareholders, the finance leasing companies of 14 iron and steel enterprises are foreign-funded finance leasing companies.
From the registration point of view, the iron and steel enterprises of the leasing companies are mainly concentrated in Tianjin, Shanghai, Shenzhen. Among them, 6 in Tianjin, Shanghai 3, Shenzhen 2, the other three are mainly in Jinan, Hangzhou, Benxi and other places, see Figure 1.
According to public information, there are 13 companies such as China Aviation Leasing and CNOOC Leasing, which have served 15 steel companies. Among them, four iron and steel enterprises finance leasing services in the Group, namely, Xin Hua Leasing, TISCO (Tianjin) Finance Leasing Co., Ltd., Bohai Steel Group finance leasing company, Liaoning Heng billion financing leasing Limited.
● TISCO (Tianjin) Finance Leasing Co., Ltd.
TISCO (Tianjin) Finance Leasing Co., Ltd. was established in April, 2014 in Tianjin Dongjiang Bonded Port Area. It was funded by Taigang Import & Export (Hong Kong) Limited, a subsidiary established by TISCO in Hong Kong, China. $ 160 million. TISCO also set up a factoring company --- TISCO (Tianjin) Commercial Factoring Co., Ltd.
In terms of financing business, TISCO leased a total of RMB 4 billion in various types of borrowings, taking RMB, USD and Euro multi-currency mismatches, including domestic loans, cross-border direct loans, Borrowing, shareholder loans and other multi-channel financing model. Borrowing costs are lower than the Group's borrowing costs, effective for the Group to reduce the financing costs, broaden the financing channels.
Leasing business, for risk prevention and control considerations, TISCO leasing priority to meet the business needs of members of the internal group, timely expansion of the external market financing leasing business. Through actively explore leasing business, TISCO leasing business has reached nearly 50 billion.
● Shanghai Xin Hua Finance Leasing Co., Ltd.
Shanghai Xin Hua Finance Leasing Co., Ltd. was incorporated in Shanghai Free Trade Zone on December 1, 2014. It is a wholly-owned subsidiary of Valin Group (Hong Kong) International Trade Co., Ltd., which was established by Hunan Valin Iron & Steel Group Co., Ltd. Of the foreign-owned financial leasing companies, registered capital of 30 million US dollars. The company in April 2015 began operation, when the total assets of 610 million yuan, net assets rate of return of 10%.
Xinhua Leasing is currently positioned as "1 + X": 1 --- Group business, using "tax planning, internal insurance and other means of direct loans" for the Group to reduce capital costs and improve the capital structure; for the industry chain upstream and downstream enterprises (Medical, education, transportation, water), consumer finance (mobile phone, car rental), biomedicine, energy saving and environmental protection, rail transportation, and so on; , Other (new energy, new materials, equipment manufacturing, health industry, general aviation). In 2016, Xin Hua lease the use of group credit, to carry out silver rental business, the scale of 1.5 billion yuan, profits of more than 1000 million.
● Emerging China International Finance Leasing Co., Ltd.
Xinxinghua Finance Leasing Co., Ltd. was established in Tianjin Dongjiang Bonded Port Area in September 2014. It is a foreign-funded finance leasing company controlled by Xinxing Ductile Iron Pipes Co., Ltd. with registered capital of RMB 400 million. The Company is fully market-oriented, International business within the system and market-oriented business. At present, the company launched a financing leasing business, contract energy management business for Xinjian Pipe's Xinjiang company, launched energy saving and emission reduction projects for several emerging bases of cast pipe, and developed business based on the steel industry based on shareholder base.
● Hegang Finance Leasing Co., Ltd.
Hegang Steel Finance Leasing Co., Ltd. was established in February 2016 in Tianjin Dongjiang Bonded Port Area, which is jointly invested by Hegang Group Co., Ltd. and Hong Kong Investment Platform, Hegang International Holding Co., Ltd. with registered capital of RMB1.5 billion. As a subsidiary of Hegang Group, the Company is an important member of the Group in the financial sector. River Steel Group also set up a factoring company - River Steel Commercial Factoring Limited. At present, the company operating in less than three months of substantive time, the rapid completion of capital investment of 14.95 billion yuan, mainly in the financing of the leaseback business-based.
Challenges and Countermeasures
Difficult one: by the steel industry, financing difficulties.
Since 2009, the steel industry has been in difficult times, steel demand, prices fell year by year, economic efficiency has been in the low-profit or industry-wide losses, the banks strictly control the scale of the impact of iron and steel enterprises, many iron and steel enterprises are facing the bank does not grant New loans, loan difficulties, interest rates and lending and other issues, iron and steel enterprises from traditional bank financing channels to obtain funding is reduced.
Especially in recent years, the state has stepped up the steel industry to eliminate backward and eliminate excess capacity, so that the financial leasing company's parent steel industry and the upstream and downstream industry itself, In the disadvantaged position, the weakening of the mother's financial leasing company's development is constrained.
With the national monetary policy, the gradual implementation of industrial policy in place and the deepening of financial reform, excess capacity, serious pollution of the steel industry will be further restricted financing, Renewed loan pressure surge, capital stock showed a significant downward trend. This pressure will eventually be transmitted to the financial leasing companies, resulting in the establishment of iron and steel enterprises, finance and leasing companies appear difficult financing, financing of your phenomenon.
Difficult two: by "battalion change" policy influence, profit is reduced.
May 1, 2016 began to implement the "business change", the provisions of the financial leasing in the leaseback business and direct rental business for different tax rates. (Non-deductible) rate of 6% in accordance with the loan service; non-leaseback financial leasing services and operating leasing services are still in the scope of leasing services, applicable to the scope of financial services, the "financial leaseback service" into the scope of financial services, 17% of the value-added tax rate. According to the scale of 5.0 billion business to carry out the business of leasing back and leasing business, "business change", the financial leasing business profits will be reduced by about 30 million yuan.
In addition, the "business change", the financial leasing leaseback business is classified as a loan service, the lessee can not be deductible input tax, before the steel industry from financing the impact of channel business will not be able to continue.
Difficult three: the probability of leasing assets increased risk.
The financing costs of the financing leasing companies in the steel industry tend to be high, which will inevitably lead to customers with higher returns. However, high-income means high risk, with the downside of China's economic situation, the probability of the risk of leasing assets will inevitably increase.
Difficult four: the lack of professionals.
Because most of the steel industry financial leasing company employees pay the reference to the implementation of the steel industry, and the rental industry, the average wage level there is a big gap, resulting in hiring, difficult to keep people. The financial industry wage is the iron and steel industry, 3 times to 4 times, resulting in the same work of the iron and steel enterprises in the financial leasing company employees income is too low. Therefore, the financial leasing companies in the steel industry not only can not attract the backbone of the financial sector, the original financial staff in the enterprise are outflow, so that the iron and steel enterprise financing team is difficult to stabilize.
Many financial leasing company manager reflects the current iron and steel enterprise financing company to develop, expand, the most intractable problem is how to develop and stabilize the team: according to the iron and steel industry wage standard recruitment of talent, not only can not develop, the original team is difficult to get Consolidation; paid according to the financial industry wage standard, financial leasing companies unbearable in the metallurgical industry is also difficult to implement.
First, strengthen business innovation. Although the implementation of the "battalion change" policy has some impact on the leasing company's innovative means, the leasing companies can still carry out asset-side and liability-side activities through "negotiable instruments", "joint leasing", "factoring" and "asset securitization" Business innovation, improve profitability.
The second is to strengthen risk management. Risk management is the financial leasing industry, the conduct of the party, the steel industry, finance and leasing companies is even more so. For example, through the use of steel parent company on the advantages of the upstream and downstream industry chain, both to improve the benefits and reduce risk; information technology can be used to leasing the process of system risk management; by strengthening the risk management training and so on, can enhance Risk management capability.
The third is to strengthen the proportion of direct rent. "Battalion change" policy on the impact of direct rent is not leasing companies should change the past to rent-based business model, increase the proportion of direct rent business, and thus improve profitability.
Fourth, the choice of absorption and counter-cyclical industries and enterprises of steel investment cooperation. Most of the finance and leasing companies in the steel industry have a single equity structure and less registered capital, which leads to the implementation of the credit of the banks according to the steel industry, which is not conducive to the leasing business. In order to solve this problem, the finance and leasing companies in the steel industry may adjust some equity structure to choose the investment cooperation with the counter-cyclical industry enterprises, so that the banks can not reduce the credit quota of the group as a whole, cost. At the same time, this can also be a better business expansion to the partners in the field of industry, risk diversification.