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Edited Transcript of 3396.HK earnings conference call or presentation 26-Mar-20 6:30am GMT

Full Year 2019 Legend Holdings Corp Earnings Call

BEIJING Apr 3, 2020 (Thomson StreetEvents) -- Edited Transcript of Legend Holdings Corp earnings conference call or presentation Thursday, March 26, 2020 at 6:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Min Ning

Legend Holdings Corporation - Executive Chairman

* Peng Li

Legend Holdings Corporation - President & Executive Director

* Qiuyan Yang;Head of Finance

* Wang Wei;Board Secretary

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Conference Call Participants

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* Howard Kao

Morgan Stanley, Research Division - Research Associate

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Presentation

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Unidentified Company Representative, [1]

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Dear investors, my name is [Cheng Sun]. Good afternoon. It gives me great pleasure, on behalf of Legend Holdings, to welcome you to attend the 2019 annual results presentation. Due to the COVID-19, we have to take the webcast to communicate with you. Thank you very much for your long-term interest and support.

We expected to have more face-to-face offline communications with you. Before this presentation, please allow me to introduce to you the representatives of the management. Mr. Ning Min, Chairman of -- Chairman and Executive Director of Legend Holdings; Mr. Li Peng, Executive Director and CEO; Ms. Yang Qiuyan, Head of Finance; Mr. Wang Wei, Board Secretary.

Today, we have 2 sessions for this presentation. First, Chairman Ning Min will give us an opening remark, and then we will give the floor to CEO to elaborate on the business review and outlook. And then Ms. Yang Qiuyan will brief you on the financials. And second session, we have the Q&A session. And after online, we also have the Q&A online, and you can also communicate with us after the conference.

First, please welcome Mr. Ning.

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Min Ning, Legend Holdings Corporation - Executive Chairman [2]

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Dear investors and analysts, first, I'd like to thank you for your constant interest and support over the years in Legend Holdings. Due to COVID-19, it's a pity that we cannot communicate with you face-to-face offline. But we hope that through this webcast, we can continue to report our strategies, our businesses development and expectation to you. Thank you for the understating.

In 2019, we marked the 35th anniversary of Legend. So looking back, we see that the first 15 years, we dedicated ourselves to the IT business. And from 2001, we entered into the financial investments. And from 2009 and 2010, we entered the diverse investment and holdings models. So throughout the years, we made breakthroughs in our business models. And as you know that at the end of last year, Chairman, Liu Chuanzhi; and President, Zhu Linan announced their retirement. And they handed over the mission of Legend Holdings development to Mr. Li Peng and me. This marked a very significant leadership transition and will definitely bring new changes to the company.

So faced with the uncertainties, the 2 major issues is to ensure the healthy and sustainable development, and also to making innovations and create new values.

The Board has proposing requirements to the management to start from the strategy and the talent, but to be steadily progressive and to make better innovations. On strategy, Legend Holdings will continue to carry out the existing strategies and the specific works. And on other hand, we will face and survive from our lessons and experience, be a bit more open and sensitive to the changes, and to deepen our understanding of the logics and rules of the diverse investment holding model, and to make innovations in the new strategy formulation.

So for this, we established a strategy committee in the Board to be responsible for the mid to long-term strategy and major investment decisions. Mr. Liu Chuanzhi and Mr. Zhu Linan will also be members of this strategy committee and to play their part in it.

On the talent and human resources, we all have the new core leadership team. The Board will encourage the pioneering spirit required this team -- the young innovative team with international background to learn, grow and mature in a quick way.

The year 2020 is going to be the opening year for the new leadership, which is very important, but also doing a full stop for the current strategy, 2.1. And after the outbreak at the year beginning, the whole system of Legend responded quickly and fulfilled our corporate strategy. So this strategy supported the 2 hospitals in Wuhan with the IT devices and also the follow-up services. The Joyvio Group provided seafood and fruits and all the living goods. The Shanghai Neurology Center (sic) [Shanghai Neuromedical Center] provided the medical support as the first privately owned medical hospital. EAL carried a large amount of goods and materials to the infected area.

Legend Star International Capital, apart from themselves, but also see that many of their portfolio companies, especially in the medical area, also played their part on the frontier of the support. Inevitably, this outbreak kind of would generate high-pressure on our current businesses. The Board requires the management to carry out the deep evaluation and putting in the measures to tackle with it. But we believe that this outbreak would not change the long trends of China's industry and the consumption market. We are fully confident about that.

While maintaining the healthy operation of the company, we will continue to review on the strategies and the business in 2020 and design the future path and goals. In the past decade, we -- the diverse investment wasn't really easy for us. Gradually, we formed the industry focus of strategic investment and building some of the pillar assets. We saw the competitive, excellent companies and investment platforms from it. But how to help them or tackle with the risks and realize the way-forward development and how to dynamically adjust the portfolio to keep abreast with the time and how should improve the portfolio value and gain the market's recognition, we are still faced with great challenges. But in every crisis, there is an opportunity.

We see that this COVID-19 has changed the user habits. For example, it extended scope of the application scenarios for international services, like online education, health care and offices online, the intelligence and the transformation of manufacturing, like international things, the AI, big data center. And we have Internet of Everything that brings us to the cloud computing and age computation, and then also very demanding scenarios for the 5G commercial application. So following these new changes will help us to enrich our strategic formulation and our -- broaden our horizon.

For the past 35 years, we have been serving the country with successful business across different industries. Be it the national flagship Lenovo group or the VC or the CEO training and investment, they all promoted the development of China's high-tech industries.

We are also building world-class companies and are trying to be more internationalized. And we still have a long way to go before that, but we will continue with the new strategies and to march forward towards our vision. Thank you again for your support. And I hope that we can have more face-to-face communication.

Next, I'd like to give the floor to Mr. Li Peng, our CEO, to elaborate on the business review and outlook.

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Peng Li, Legend Holdings Corporation - President & Executive Director [3]

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Thank you, Mr. Ning. Dear investors, it gives me good pleasure to have this opportunity to report to you the 2019 business review and execution of summary.

In 2019, our total revenue increased by 8% Y-o-Y to CNY 389.2 billion. Net profit attributable to equity holders of the company down by 17% Y-o-Y to CNY 3.607 billion. As you can see that the strategic investment contributed around CNY 4,095 million, while financial investment contributed only CNY 906 million, but it was up by 68% Y-o-Y. Specifically, IT, finance, agriculture and food contributed to a larger sum of net profits. But for innovative consumption and services, we saw the loss.

For the breakdown of different segments. First, IT. Revenue grew by 8% Y-o-Y to CNY 357 billion, and we saw that the new record high net profit to the company, CNY 1.6 billion and they have demonstrated a strong execution in our operation, especially the PCSD. In quarter -- in the fourth quarter, PCSD set a record high for their PTI of the PCSD.

Second, on finance. Revenue grew by 27% Y-o-Y to CNY 8.8 billion, mainly due to the consolidation of BIL's revenue since 2019. But net profit attributable to the equity holders of the company decreased by 19% Y-o-Y to CNY 2.076 billion, mainly because of the strategic downsizing of the businesses in this segment and also the fair value change of the portfolio companies.

Our innovative consumption and services revenue, down to CNY 905 million, mainly because of the deconsolidation of Bybo Dental as their associate. The loss stood at CNY 295 million. Excluding this investment gain of the equity investment of Bybo the revenue on the operational basis would have remained flat compared to 2018.

Agriculture and food. Revenue increased by 21% Y-o-Y to CNY 15.6 billion or CNY 15.7 billion mainly because of the revenue growth of the Joy Wing Mau and also the consolidation of revenue from Australis seafood. On net profit, we saw increase of 10% to CNY 230 million.

Advanced manufacturing and professional services. Revenue was down slightly by 6% in Y-o-Y, but the net profit contribution increased by 82% to CNY 476 million, mainly because of the strong growth of Levima Advanced Materials.

So on financial investments, where net profit contributed to Legend Holdings increased by 68% to CNY 9.6 million. And we saw a very considerable contribution from Legend Star and Legend Capital, a very nice cashback but there were also some of the impairments or the downsize of the fair value of some of the portfolio companies they invested.

At the same time, we see that last year in execution, we achieved some of the breakthroughs, especially the main force of companies like Lenovo, Banque Internationale à Luxembourg and Joyvio Group and the Lakala and Levima Advanced Materials because the priority of Legend Holdings distribution and pre licensing, so we will continue to allocate more resources and to press ahead with this mission and help them to march towards the mid- to long-term vision and targets.

In the past year, following out their strategic goals, they had a very strong execution and achieved satisfactory progress. For example, Lenovo, as I have introduced to you, the 3S strategy accelerated, entirely changed the transformation and set the record high for the PTI and also their market share and continues to lead to the entire IT industry.

For BIL, this was an acquisition of BIL made -- of Legend Holdings made in years of 2018 and in 2019, we made very good results for retail, corporate and wealth management. And they all registered good growth.

Total AUM increased by 10.3% Y-o-Y to EUR 43.5 billion. Core business in PTI (sic) [PBT] increased by 20% and core CET1 increased to 12.47%. So against the backgrounds of their -- the environment of Europe, this is really a remarkable achievement. And then they had the new 5-year strategic plan, Together 2025, in which Chinese business becomes the key strategy. And that is also one of our major idea for developing this bank as a means to add its value. And this progress was moving forward quite successfully and smoothly.

And we acquired a wealth management company in Hong Kong. And also had a synergy at its embryo stage in China -- Chinese Hong Kong and also Switzerland.

Joyvio Group acquired the Australis Seafoods, a salmon company in Chile. The core philosophy is the global resources to supply China's consumption. So by this acquisition, it improved its control over the upstream scarce resources. And also on the downstream, it expanded distribution channels in the domestic market. So everything is moving on smoothly.

For the fruit supply chain platform, Joy Wing Mau, it's a really important part of it. Joy Wing Mau is the leading company in this area. And in the past year, it further consolidated its leading position in the market. The brand Joyvio is a well-known brand in Chinese market and Joyvio Agriculture has filed for this IPO in domestic Asian market. For the whole group, the revenue grew by 21% Y-o-Y, and the net profit attributable to equity holders of Legend Holdings increased by 12%.

Levima is a greenfield investment made by Legend Holdings in fine chemicals. In 2019, the profit stood at about CNY 523 million, up by 147%, the best since its full operation. And it carried out important M&A. So on the upper stream, it acquired a methyl alcohol company, buying 17.5% equity interest to ensure its stability of its raw material supply and also the hedge for the oil prices fluctuation. And on the downstream side, they acquired water-reducer producer -- of water reducing agent producer, Jiangsu Chaoli, by 51.01% of its equity interest. So now we see an infant stage of the entire supply chain industry line -- industrial chain of deployment.

As I said, this is the greenfield investment. We selected the excellent team members and relied on the support of our own China Academy of Sciences. So we commercialized those technology results of the lab and also created a new industry -- the company in this fine chemical. Now Levima Advanced Group is also promoting for this A-share listing. We are also helping them with that.

And the fifth one is Lakala, one of the successful example for the two-wheel drive business model synergy between Legend Holdings and Legend Capital. We acquired this company from Legend Capital in April 25, 2019. Lakala successfully got listed in A-share market, becoming the first third-party payment company in A-share market.

In 2019, its net profit attributable to the shareholders increased by 34% to CNY 806 million. Its market cap also increased rapidly, meaning that we also realized a quick value-added goal for the shares we held in it.

So building pillar asset is our top priority. And as we see that during the past few years, we made it. And these pillar assets have shown our goods results and have very good potential in the future. We see the initial results of building these leading companies in their niche markets or their specific sectors.

For financial investments, we have separate highlights. First, the cashback -- the inflow of the resources. Legend Capital, Legend Star and Hony Capital, as well as our direct investment, we realized over CNY 5 billion of the resources back. So against the market trend last year, we believe that it was a really remarkable achievement Legend Capital and Legend Star with their constant good track record in fundraising and the project exits realized and the gains. So they also made very sound progress.

Legend Capital saw a CNY 4.2 billion of newly raised funds. And Legend Star also delivered the first closing of the RMB and the USD funds. And for Financial Investments, this is a very important section in the synergy, to drive and constantly contributing cash backs and values to the entire group. And we hope that these fund management platforms can contribute more in the future.

Apart from these business developments in Legend Holdings, we are reinforcing the synergy between different segments and other businesses, and it promoted to the strategic height, and especially for the synergy between the pillar assets and other portfolio companies and also among others. For example, last year, BIL joined hands with the Capital -- Legend Capital and they established the fund of funds of BIL PE with targeted clients of BIL's high-end customers to help them to direct their money to invest in the 3 VC funds of Legend Capital. This has enabled those excellent premium customers to enjoy the growth of the Chinese market, but also at the same time, expanded the funding channels of Legend Capital.

Second example goes to Joyvio Group and EAL on the logistics, like the airline of China, Australia or China and Chile to improve the seafood survival rate and also the efficiency of the airfreight efficient lines.

Last year, we saw the uncertainties of the entire economic environment. We regard the safety and the stability of the company now as the key of all the work. So on the office -- Head Office level, we strengthened our funding capabilities and innovative new funding methods and the channels. So by the end of the reporting period, we had together CNY 62.3 billion of the cash reserves with untouched credit line standing at CNY 89.2 billion, which is sufficient enough to support the business development. At the same time, we also helped the portfolio companies to improve their funding abilities. For example, with the spinoff and the listing and also issued innovative financial products to find more funding support. So this is an important part of our work to ensure the financial stability and health.

Next, on our ideas on the future development. 2020 is the last year for the Strategy 2.0. We need to draw a satisfactory full stop for this and to consolidate the fundamentals. At the same time, we need to compose a prelude to the new strategy. We have to consider both changes from the external and internal environment. This is also dynamic work.

So several points to share with you. First, to accelerate the building of the pillar assets, these core assets. The Lenovo group is already our pillar and continuously making contributions. BIL now has already supported the entire group fund, the assets and net profits. As I mentioned, the Joyvio Group also has laid out its major business. And Levima Advanced Materials has entered into the fine chemical industry. They can successfully get listed on A-share market. It would be good for it to realize more value and realize advantages.

So in the following years, apart from the IT, we're going to develop our investment and resources in finance, agriculture and in the fine chemicals.

Second, to further focus on our major businesses and accelerate the inflow of resources. So in this new year, we are going to focus more on the main businesses. As you see, these segments will still be our -- the key targets where the resources will be allocated. But for specific portfolio companies, some of them we will exit in order to collect more resources and to provide with the buffering zone and to -- enough reserves for the future new businesses.

The third one is to reinforce the two-wheel drive business model and the business synergy. So these financial investment platforms have accumulated in-depth industry insight and projects, which makes it possible for us to source the new deals and the projects. For example, the CAR, the Lakala and EAL are all very excellent examples for these two-wheel drive business model. So we should further strengthen our efforts in this area.

And second, on TMT, AI, health care and advanced manufacturing, these financial investment platforms have very years of experience in it, in which the strategic investment could extend its businesses. And also importantly, these portfolio companies have constructed extensive commercial networks in common, which gives us the opportunity to play to its unique advantages and for the value-added services. This is also unique advantage among China's private enterprises. So we established the internal mechanism to commercialize this advantage and to provide more cooperation opportunity for them.

And we will also build up the excellent talent pool. So at the end of 2019, we've completed successfully the leadership transition. And Mr. Ning and me have formed a new leadership. But we also have other new members joining us. They are joining the senior management. So we are doing our work to further reform the talent pool building in the introduction, cultivation and assessment appraisal -- performance appraisal of our employees to form a professional and excellent team to -- that enforce the core competitiveness of the company. And for companies like us, it's never too much to emphasize the importance of human resources and the talent.

Last but not least, we see the structure of business of Legend Holdings organization. So you see the two-wheel drive between strategic and financial investments. And on strategic investment, we have finance, consumption, agriculture, information technology and manufacturing. And on financial investments, we have angel investment, VC, then PE and other direct investments. This is basically the business structure, the mix of Legend Holdings.

So basically, for my introduction, and we can also talk about this later.

Now I'd like to give the floor to the Ms. Yang Qiuyan, the Head of Finance of our Legend Holdings.

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Qiuyan Yang;Head of Finance, [4]

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Thank you. Distinguished investors and the analysts, good afternoon. Now please allow me to report to you the financials of Legend holdings.

First, the revenue. During the reporting period, the consolidated revenue increased by 8% Y-o-Y to CNY 389.2 billion, mainly due to the growth of IT, the financial services and agriculture and food segments. Net profit attributable to equity holders of the company stood at CNY 3.607 billion, down by 17%. For the 5 segments and the financial strategic investments and 5 financial stones, 4 of them outperformed last year, but 1 was weaker than last year.

Three reasons. First, for Legend -- for Lenovo Group, the net profit attributable to equity holders of the company have increased dramatically, as its PCSD outperformed the entire market, with a record high of its quarterly shipment and revenue. Its product and mix is also moving towards this high growth and high premium. And second, on our financial services, the net profit decreased mainly because of the downsizing business and also the fair value change of these portfolio companies. The third reason, as Mr. Li Peng mentioned, that in consumption, we saw a net profit decline mainly because of last year, we introduced Taikang Life Insurance as both a strategic and controlling shareholder. And in last year, we had an investment gain. But excluding this factor on the operational level, we remained basically flat compared to the corresponding period of last year.

The consolidated assets increased by 12% to CNY 624.1 billion, mainly from IT, financial services, agriculture and food for the asset growth. The equity interest attributed to the company increased by 5% to CNY 60.5 billion, mainly because of the net profit growth of the company and also the dividend of this period of the parent company. The liability-to-asset ratio and liability-to-equity ratio remained basically flat, standing at 85% and 82%, respectively, maintaining a healthy capital structure.

During the reporting period, the asset allocation mainly focused on IT, financial services and the financial investments segments. Agriculture and food, due to its acquisition of Australis Seafoods, the salmon company, saw an increase of its total assets. Cash and cash equivalents stood at CNY 62.3 billion, up by CNY 2.3 billion. So we have adequate cash reserves.

The general interest-bearing liabilities increased to CNY 137.9 billion, mainly 3 reasons, due to the borrowings of the agriculture and food and for its M&A. And on financials of BIL, due to the -- it's -- on nature and the issuance of the MTN. So it increased the leverage ratio.

So on currencies, at the end of the reporting period, the liabilities denominated in USD increased a bit mainly because of the overseas acquisition.

From the maturity, we carried out the active management, the general average and the maturity of the liability standard was pretty low, particularly downwards of the liabilities with less than 1-year maturity, while those between 2 to 5 years and over 5 years had higher proportion. The net liabilities of the head office increased to RMB 36.2 billion, mainly because we leveraged the resources of the head office to support the strategic investment portfolio companies.

In the end, the Board has suggested to pay a dividend of CNY 0.33 per share for the year ended December 31, 2019, and this plan will be proposed to the Annual General Meeting of 2019 with a total dividend amount of CNY 778 million.

Thank you for the introduction. Now we come to the Q&A session.

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Questions and Answers

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Unidentified Company Representative, [1]

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We have received the questions. Now If you have any more questions, you can leave it on the bullet.

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Howard Kao, Morgan Stanley, Research Division - Research Associate [2]

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Howard with Morgan Stanley. And I got 2 questions. First, can you specifically explain the weakened performance of 2019?

The second, what is the reason for the leadership transition? Will Mr. Liu continue to participate in the company's management? What is the new leadership's plan and outlook for the company?

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Unidentified Company Representative, [3]

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I've got 2 questions. But first, I'd like to give the floor to Mr. Li Peng on the business performance.

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Peng Li, Legend Holdings Corporation - President & Executive Director [4]

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The decline of the performance in 2019, mainly because of 3 reasons. First, strategic investment. We had less of the investment gains from the capital operations. For example, in 2018, we introduced Tiakang Life Insurance with Bybo Dental, contributing CNY 1.8 billion in 2018. And last year, we only had a one-off gain from Lakala's IPO, standing at CNY 263 million. Excluding these one-off gains, actually, we see a steady growth of the strategic investments segment. And for net profit of the equity holders of the company, an increase of 14% y-o-y. Excluding those one-off gains, it will be CNY 3.84 billion. That is the first reason.

Second, our financial services segment, we strategically downsized the capital-based businesses and controlled its growth, mainly considering these economic changes and also the potential -- risk potentials. And for them -- most of them provide financial services to small and medium-sized enterprises. So we have to take into consideration the risks. And with this control, they would definitely generate impact on its revenues and net profit.

And thirdly, on financial investments segment, several funds that actually did quite well last year, with profit and contribution at CNY 906 million. But as I also mentioned that there were impairment to the fair value changes of the portfolio companies. So mainly -- we worked the single projects that caused, like CNY 1 billion of the impairment to the value. So excluding these reasons, we actually saw the even higher growth of the financial investments.

So in summary, first reason, the one-off gains in the strategic investments. Second, on the compressed revenue and net profit of the financial services industry. And third one is the fair value changes of the portfolio companies and financial investments.

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Unidentified Company Representative, [5]

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Now I'd like to talk about the leadership transition. Last year-end, Mr. Liu & Mr. Chu announced their formal retirement. This transition is a long made plan -- premade plan for years. Mr. Liu is still the Honorary Chairman of Legend Holdings and also a Senior Counsel consultant as well as a member of the strategy committee of the Board. Mr. Zhu continues to be the Director of the Board and also a member of the strategy committee. Both of them will still make their contributions at the strategic formulation and the Board meetings. They're going to play an important part. And now we have new leadership and new senior management, bringing about new designs for the future path. So 2020, it is an important year, marking an opening year for the new leadership and also a full stop to the Strategy 2.0 for Legend Holdings.

In -- among all uncertainties and new environment, the new leadership will start from 2 aspects. First, to ensure Legend Holdings, together with the portfolio companies, to stay healthy, stable and sustainable to ensure the healthy cash flows. And second is to formulate the new Strategy 3.0. But actually this year, we already started to revisit the previous strategy, especially some of the previous businesses. And next, we will come up with a new strategy. Among all the big changes, the CEO change and also the uncertainties of the macro economy. And Mr. Li has just mentioned our initial ideas on it. So in the coming few months, we will continue to step up this work. And we believe that will bring new ideas to you later.

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Unidentified Company Representative, [6]

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Next coming from Allen with Goldman Sachs. Could you please elaborate on the impact of COVID-19 on corporate business and the recovery of the company?

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Unidentified Company Representative, [7]

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At 2020, the year beginning, we saw the -- suffered the outbreak of the COVID-19, which is already the pandemic globally, generating impacts on the economy, politics and everyone, everybody, every family around the world, and not only just in China. So after this outbreak for Legend Holdings, first, we must ensure that Legend Holdings and the portfolio companies can make a scientific epidemic prevention. Despite -- only a few of the individuals in Wuhan got infected. But at present, the others are obviously staying healthy our employees. And we actually carried out a lot of measures to ensure that. And our portfolio companies are also fulfilling their corporate social responsibilities to support the prevention work.

Second, Legend Holdings has multiple layers of segment industries like finance and agriculture and food and consumption, logistics and education. So definitely, there will be impacts on their business growth in the short term. So we have strengthened our management and post investment management to help them discover the problems and seek the solutions. Today we see the containment of the disease in China, besides some of the portfolio companies and the business have to resume their work at present. The portfolio companies, most of them, are staying in a healthy manner. We will continue to help them to ensure a healthy cash flow and to survive this disease.

And third, this disease have brought us challenges, but also we see the new opportunities. We will continue to help our companies to capture the opportunities for the upgrading and the restructuring to make them fully prepared for the development after this disease.

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Unidentified Company Representative, [8]

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Next, from Ms. Chau Li Pina of CICC. First, we see that the decrease of the profit of the financial services. Could you please elaborate on it? And second, could you explain why the financial investments segment was outperformed by the market, in line with the market growth in 2012, secondary market?

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Unidentified Company Representative, [9]

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On financial services, the profit declined maybe from several aspects. We have many portfolio companies along different business lines. So they have delivered different results and performance. For example, BIL, Lakala and including Hankou Bank.

In 2019 they actually delivered quite tangible fruits, fulfilling their operational goals. And some other businesses, as I mentioned, the -- we -- for the capital-based businesses, we actually actively controlled the growth rapid -- the growth in consideration of the policy changes and also the potential risks. So as a whole, this is the first reason for the profit decline. So some of the businesses saw a decrease of its revenue and profits after the active control.

Second, some of the portfolio companies didn't perform well, leading to the impairment of their values. But this will be also jeopardizing the profits of the entire segment. But generally speaking, this segment remains healthy. And for the business layout, we see that it's a healthy and reasonable. And in coming phase, we will dynamically adjust our ideas and thinkings and strengthen our management over the businesses based upon the macro economy. And last year, we also made to Korean Hyundai Insurance, property insurance. This is also the new progress we made last year.

For financial investments, it is true, as you mentioned, that the result was actually weaker than the market's. General performance increased with the net profit contribution, standing at only CNY 906 million. But if we exclude the downgrade of the fair value of some portfolio companies, we actually see a large growth of their financial investment. As I mentioned before, WeWork impaired like CNY 1.0 billion of the value of the entire portfolio. But if we do not consider WeWork, we still had remarkable improvements of the net profit of the financial investments. For financial investments, there were some other important things. For example, in fund raising, our new divestments and the project exits that we maintained a very stable rhythm -- tempo.

The newly fund raised -- exceeded CNY 10 billion, project accessing more than CNY 70 million. And over 20 companies got listed in capital markets, both domestically and overseas at a ranking among the top in the VC sector. We are absolutely confident for the fund management platforms, and we will do everything we can to support the future development, especially in terms of the resource allocation. And also then, we would spend more time to forge the synergy between strategic and financial investments now to realize the two-wheel drive model. So much for my answer for your questions.

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Unidentified Company Representative, [10]

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Next with Daniel with HSBC. What is the IPO of the pipeline for the portfolio companies? And how is the process?

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Unidentified Company Representative, [11]

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Thank you for your question. I'll first answer that we do have some of the portfolio companies in preparing for the listing. Last year, Lakala have finished realized that their listing. That's -- in a few months to go, we see Levima new advanced materials have filed for its IPO, and have gone through the IPO counseling. And there is a high probability for Levima Advanced Materials to be listed this year. They had actually very good performance in their business, and as I just mentioned, especially the historical new heights for this profit contribution and also the business layout along all the industrial chain, if we can successfully get listed, every other -- good to raise more funds and resources, important for it to extend to the fine chemical industries in the future.

We have CES Holdings as really important shareholder of Levima. And that they are also transforming their R&D results to the -- to commercialize it by way of Levima Advanced Materials. And we hope to foster most technical transfer and corporation in the areas for them to reserve more projects for the future. Suddenly, EAL already submitted their IPO application, and got accepted. We also hope that that they could realize the IPO and there is a high probability of it.

EAL, after our joining the shareholding, we actually saw the growth of its performance. Although last year, we saw some impacts on its business due to the China-U. S. trade tension. But after this temporary impact, we see a very promising future of EAL. Its IPO will help Legend Holdings to release more of its value. On agriculture and food, Joy Wing Mau is the leading company in the fruits sector, and it's under the IPO tutoring. And we hope that we could realize its IPO in the coming few years. This IPO would help to consolidate its leading position in the fruit supply area and to create more value and returns for its shareholders.

Another example of the agriculture is the Joyvio Agriculture, which is already listed in the A-share market. It's going to offer a private placement to increase the shareholding of the joint group to optimize its capital structure. So for Legend Holdings, the pipeline is basically like what I've just introduced, and we still have some other potential companies, but they are not directly held by Legend Holdings. So I won't talk more about this.

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Unidentified Company Representative, [12]

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Next question comes from Mr. Huang Jing with Industrial Securities. About the high leverage ratio, what is the measures to optimize the capital structure? And how to -- can you ensure the stability and the low-cost of the funding resources?

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Unidentified Company Representative, [13]

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Thank you for your interest in the company's financial position. This is also one of the top priorities of the company's work. And for the long term, we are doing everything to ensure the reasonable level of our leverage ratio. So at the period end, we have the liability-to-asset at 85% and liability-to-equities remaining at 82%, basically flat with that of last year. So this is highly correlated to the sectors we have, where our assets are mainly allocated. So for this 85%, this is actually -- mainly due to BIL, a bank, and also Lenovo. This is determined by the high level ratio of the specific industries they are in. But for them, each of them, the leverage ratio is maintaining at a very rational level and also lower than their specific competitors.

For BIL, the CET1 reaching 12.47%, meaning it's a very safe and stable bank, international bank. For financial structure, we have been closely following and continuously optimizing, especially in terms of the maturity of their liabilities. As I mentioned in the maturity of the liabilities within 1-year, have declined from 47% to 38% this year. But liabilities, especially between 2 to 5 years and over 5 years, have increased their proportion. We also monitor the matching between differences in currencies of the liabilities. For the IPO pipeline, their capital operation will help the targeted companies to gain long-term resources, and also increase the liquidity of the assets of Legend Holdings. Last but not least, about the cash and cash equivalents.

At the period end, we have CNY 62.3 billion of cash reserves, not including the deposits at and over 3 months and did a fixed term deposits. With these two, we can -- the cash reserves would reach CNY 71.7 billion. And we also maintain long-term and very good relationship with the bond investors, fixed income investors. And we also have the untouched credit line from the bank's loans at CNY 89.2 billion. So we believe the financial structures are stable and healthy. We also have adequate vehicles to support the future business development.

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Unidentified Company Representative, [14]

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Next question. Mr. Charlie, with the China Aviation Investment. The resource and inflow, mainly for the portfolio or for the Head Office of Legend Holdings?

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Unidentified Company Representative, [15]

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It's mainly for the head office. But due to the limited time, the last question would be a prevailing question.

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Unidentified Analyst, [16]

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Now we have the historical low level of the stock price. Will the company have some other value management methods like the buybacks or the increased shareholding of the management? So what about the dividend yield at the present?

Now I'd like to give the floor to Mr. Wang Wei, Board Secretary.

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Wang Wei;Board Secretary, [17]

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Mr. Li has just mentioned, and first, our company closely follow the stock price trend and actively communicate with the investors and the shareholders. As we see in 2019, the yield dividend is CNY 0.33 per share. And based on the current stock price, the dividend yield stands around at 4%. So we hope that through the increase of the cash dividend that we can provide a constant returns for our shareholders.

Second, for our company, we are actively formulating the new Strategy 3.0 that -- we believe that's in the -- it's designation and the implementation of where we improve the value of the company, including the corporate governance and also the communication with the shareholders and also the incentive mechanism to comprehensively consider the future development of the company and to design the methods to increase the value and the returns for our shareholders and also the increased market cap and the stock price of the company. For the company, we're confident that through the new strategy, we can provide a higher value for shareholders. And we would like to thank the shareholders and investors for your interest and the support, and we would like to maintain our long-term relationship with you. So one more point. While we are making the strategy 3.0, we approach creating a higher return to shareholders, that's a very important aspect of this strategy.

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Unidentified Company Representative, [18]

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Thank you for the questions and also the management's answers. If you have further questions or want to -- and inquiries, please contact us through e-mails or the telephones. Thank you very much joining us in the annual results presentation. Thank you for the support and your interest, and we look forward to talk with you next time.

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Peng Li, Legend Holdings Corporation - President & Executive Director [19]

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Thank you. Thank you very much.