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The Economic Observer: Quantitative and Qualitative Changes of Oceanwide Holdings' Transformation


The transformation of Oceanwide Holdings hasprobably got close to the qualitative change.

On the evening of January23, Oceanwide Holdings (000046.SZ) released the announcement of 2016 business growth forecast,predicting the net profit attributed to the shareholders of the listed companywould reach RMB3.04 to RMB3.49 billion with a year-on-year growth of 35%-55%.

The high growth of OceanwideHoldings with a history of more than 30 years and the construction scale of one hundred trillion[Y1]  accumulated over 30 years’ of development shall be attributedto the successful implementation of the transformation strategy in the pastthree years.

At the beginning of2014, Oceanwide Holdings put forward the strategic transformation concept of “finance + real estate +investment”;one year later, Lu Zhiqiang resumed his post and came up with the updatedtransformation objective to become an “international enterprise group with theintegration of industry and finance that focuses on finance on the basis ofindustry via the platform of Internet.” During the period, such along-established real estate enterprise underwent changes in almost every monthwith investments of large scale and high density. It included MinshengSecurities and Minsheng Trust into the listed companies and increased theircapital, acquired Min’an Property & Casualty Insurance (currently renamedas Asia-Pacific Property & Casualty Insurance), set up MJS, acquired HutchisonHarbour Ring (currently renamed as China Oceanwide Holdings), a listed companyin Hong Kong, and Quam Limited, a full-licensed securities company, launchedreal estate projects in major cities such as Los Angeles and San Francisco andthe power plant project in Indonesia, and made strategic investments infinancial assets such as China Minsheng Investment Group and CITIC Group.

At the very beginning of 2017, Oceanwide Holdingsre-adjusted its members of the Board of Directors. When it was known as OceanwideConstruction, almost all the members of the Board of Directors came from thereal estate field. However, after adjustment, nine out of 11 non-independentdirectors, except Chairman Lu Zhiqiang, have financial and capital backgrounds.The inclusion of senior people from the securities, insurance and asset managementindustry indicated the personnel deployment in the further transformation intoa financial controlling company.

It can be seen from both the arrangement of thecore management and the business composition that Oceanwide has successfully transformedinto a financial controlling group. Speaking of Oceanwide, anyone familiar withthe domestic financial pattern will think of a financial holding group with acomplete layout rather than a single real estate enterprise or a cross-industrycompany with one or two financial licenses.

The transition from “successful transformation”to “transformation success” is the overall requirement of the leader ofOceanwide for the enterprise transformation. Lu Zhiqiang once said at theyear-end summary meeting in 2016 that given the current situation of OceanwideHoldings, the company is in the transition from “successful transformation” to “transformationsuccess,” and a solid “foundation for the ‘transformation success’ has been laid”currently. However, it still has large room for growth compared with otherfinancial holding groups which started their business from the financialindustry.

Oceanwide Holdings have laid solid foundation interms of the financial layout and internationalization: Minsheng Securities andMinsheng Trust have respectively increased their capital to RMB4.58 billion andRMB7 billion, and realized higher revenue and position in the industry than twoyears ago; and the acquisition of Hong Kong full-licensed securities company QuamLimited has been nearly completed.

In addition, Oceanwide Holdings is currently participatingin the acquisition of US Genworth Financial Group, creating a great potentialfor the development of the insurance business of Oceanwide Holdings; ChinaOceanwide has also successfully acquired the famous US company IDG, realizingrapid development in the financial holding layout and internationalization.

Moreover, the increase in capital and acquisitionby Oceanwide with RMB one or even ten billion have realized initialachievements, especially in Minsheng Trust. Under the background of the overallslowdown in the trust industry over recent years, Minsheng Trust has realized thecompound annual growth rate of over 100% in terms of the business indexes suchas operating income and net profit as a company that just resumed its business in2013.

Comparatively speaking, under the intensifiedcompetition in the financial industry, Oceanwide’s other platforms in thefinancial plate still need further development, and the linkage and collaborationbetween different platforms need to be further strengthened.

“We shall establish a complete financial industrychain and create diversified modes of financial services in order to realizethe transformation objective of building an international enterprise group withthe integration of the industry and finance that focuses on finance on thebasis of industry via the platform of Internet.” Mr. Lu Zhiqiang said on theabove occasion.

In 2017, Oceanwide may not take big moves, whilemore thorough qualitative changes may take place internally.