Chinlink International :Serving the financing needs of SMEs

Multi-licensed financial services provider for SMEs

Chinlink is a multi-licensed financial service provider aiming to serve the financing needs of SMEs. The Company obtained official approval from Shaanxi authorities to establish wholly foreign-owned financing guarantee enterprise and finance lease company in mid 2013 and mid 2015 respectively. Besides, Chinlink started to provide supply chain finance services (including procurement, inventory and receivable financing) in Xi’an, Hong Kong and Shenzhen since mid 2015. Such comprehensive financing platform was well-received by SMEs, as they generally face challenges in obtaining bank financing. Management stated that the Company is applying for the licenses of other financial services such as factoring.

Potential capital injection from local government subsidiaries to support Chinlink’s future development。

Chinlink’s financing services were supported by local government. In March 2017, investment company of the Hantai District Bureau of Finance of Hanzhong Municipality and Shaanxi Tourism Group (a SOE) have entered into letter of intent with the Company to invest RMB100mn and RMB120mn to Chinlink’s financial guarantee company and finance lease company respectively. Management expect these capital injection would bring synergy and new potential customers to the two financing platforms, and Chinlink could also obtain more credit facilities provided by local banks with the support from local government authorities.

“Inventory as collateral” approach to mitigate credit risk

To mitigate credit risk from financial services business, the Company adopts an “inventory as collateral” risk management system. Chinlink is capable in offering a total supply chain solution, which included procurement financing, inventory and receivable financing, custom clearance, warehousing, inventory management, transportation and delivery, hence the Company could takes physical custody of customer‘s inventories as collateral. Under such approach, the business recorded a zero default rate since its inception. Chinlink used to focus on building, construction supplies and furniture sectors, and has extended into electronic components and white goods sectors in FY15.

Chinlink-Worldport scheduled to open in 2017

On the other hand, Chinlink is expanding its commercial property portfolio. In Aug 2015, the Company acquired Daminggong Construction Materials and Furniture Shopping Center (Dongsanhuan Branch) in Xi’an City, which is a nine-floor shopping center with ~90% occupancy rate in recent years. Besides, the Company recently announced to acquire an under-construction office project in Xi’an. Moreover, Phase 1 of Chinlink-Worldport, which was located in Hanzhong Baohe Logistics Park, is scheduled to commence operation in 2017. This project would include a building and construction materials wholesale centre, a Chinese herbal medicine trading centre, warehousing and distribution centre and custom import bonded warehouse. Management expressed that the Company’s commercial property portfolio not only generate steady cash flow from rental income and management fees, but also provide opportunities for Chinlink to cross-sell the tenants with its financial services unit.