Introduction to Xinhu Zhongbao

As a company whose main business is real estate, Xinhu Zhongbao seems restless. In addition to real estate, the company's business also penetrates into the fields of finance and technology. From the reorganization of the same company Xinhu Ventures in early 2009 to the great wisdom of investing in shares in the middle of the year, they were all topics that the media talked about at that time.

In August 2009, Xinhu Zhongbao signed an agreement with the Dalian Jinbo Coastal Modern Service Industry Development Zone Development and Management Committee to participate in the investment in coastal tourism and other real estate in the Dalian Jinbo Coastal Modern Service Industry Development Zone. development projects. Then in November, Xinhu Zhongbao won the bid for Lot 18 on the south side of Puhe Avenue in Shenbei and Lot 19 on the south side of Puhe Avenue in Shenbei for 106 million yuan. In its base in Hangzhou, Xinhu Zhongbao develops properties such as "Xinhu Shangri-La" and "Xinhu Green".

But in addition to real estate, Xinhu Zhongbao's operation in the capital market is even more remarkable. Its most outstanding performance lies in its good use of capital leverage. In July 2009, Xinhu Zhongbao established a mutual guarantee relationship with Meidu Holdings, another company also engaged in real estate development, and provided mutual economic guarantees. According to the agreement, the two parties will provide credit guarantees for each other's loans up to a limit of RMB 100 million; both parties can provide a one-time guarantee within the limit, or provide guarantees in installments. Although the 100 million yuan quota is not large, it plays a great role in supplementing its operating current assets.

Shortly after establishing a mutual guarantee relationship with Meidu Holdings, Xinhu Zhongbao established a mutual guarantee relationship with real estate giant Greentown, with a mutual guarantee limit of RMB 300 million and providing credit guarantees for each other's loans. Each has signed a loan contract with the creditor bank with a loan maturity date before December 31, 2011. The 300 million yuan limit established this time is applicable to the cyclical disbursement of various items within the validity period of the loan contract signed with the creditor bank. Loans and various lines of credit. However, the funds provided through mutual guarantee relationships are generally limited, and in order to control their own risks, real estate companies also have limits on the amount of guarantees. But in addition to using mutual insurance, equity pledge is also a tried and tested method of Xinhu Zhongbao.

As the largest shareholder of Xinhu Zhongbao, Zhejiang Xinhu Group Co., Ltd. holds 2.17 billion shares of Xinhu Zhongbao, accounting for 76.8% of the total share capital. At the beginning of March, Xinhu Group unpledged 16 million shares of the company originally pledged to Hangzhou Caikai Investment Group Company, and then pledged 70 million shares of the company it held to Bank of China Hangzhou High-tech Development District branch. Then at the end of March, Xinhu Group Co., Ltd. pledged 100 million shares of the company it held to Huabao Trust Co., Ltd. So far, the stocks pledged by Xinhu Group account for 71.21% of the total share capital of Xinhu Zhongbao. In July, a total of 288 million shares of Xinhu Group’s shares previously pledged to Industrial Bank Co., Ltd. Hangzhou Branch, Agricultural Bank of China Hangzhou Gudang Branch, Zheshang Bank Co., Ltd., etc. were unpledged. Immediately afterwards, Xinhu Group continued to pledge its 103 million shares and 90 million shares of Xinhu Zhongbao shares to Industrial Bank and Zheshang Bank Hangzhou Branch respectively.

This cyclic process of equity pledge-unpledge-re-pledge is a common financing technique used by Xinhu Zhongbao. In this process, Xinhu Zhongbao cleverly uses the leverage effect of capital to maximize the funds available to the enterprise.