Lenovo 1.6 billion to sell the building experience to see: selling buildings can actually bring out the earnings

2017-03-03 02:57:51 Source: Beijing News (Peking)

Beijing News (reporter Liu Suhong intern Yang Yi) March 2, Lenovo Group announced that its wholly-owned affiliated company Lenovo (Beijing) Co., Ltd. has entered into a share transfer agreement with Beijing Rong Rong Branch Real Estate Co., Ltd., which will sell to the latter at about RMB 1.617 billion yuan, Chengdu Lian Chuang Rong Investment Co., Ltd 49 Equity The announcement revealed that Chengdu joint venture Rong Jin and its subsidiaries are mainly engaged in residential and commercial real estate development business.

In the third quarter of fiscal year 2016, net profit dropped 67.3%

Lenovo said the proceeds from the sale would provide general operating capital for Lenovo's operations and investments, as well as boost the company's long-term competitiveness and earnings growth.

It is noteworthy that over the past year, Lenovo has been selling property many times. September 18, 2016, Lenovo held a stake in the sale of China's 41 property companies, the price of 13.8 billion yuan. September 30, Lenovo issued a notice that the wholly-owned affiliated company Lenovo (Beijing) and the Beijing Haidian District state Capital Management Center signed a share transfer agreement, to 1.78 billion yuan to sell joint venture (Beijing) Asset Management of all equity, its main assets for the Beijing Association of the Institute of the building.

And the purchase of Beijing Rong Rong Branch Real Estate Co., Ltd., the parent company to create China's recent strategic investment in the video network. It in the main real estate sector also frequently shot, March 1 announced the acquisition of financial science and technology Hefei City and Wuhan financial division days domain two project rights and interests, become the two projects of the wholly-owned owners.

The frequent sale of property with Lenovo is accompanied by falling revenues and layoffs.

Lenovo Group February 16 issued a notice, as of last December 31, the company's 2016 fiscal year in the third quarter of the total revenue of 12.169 billion U.S. dollars, down 6% year-on-year, the third quarter net profit of 98 million U.S. dollars, down 67.3%. Total revenue in the first three quarters was also down 6% from last year, down about 2.323 billion dollars.

Lenovo has been slashing jobs since 2015, and industry analysts say Lenovo is boosting profits by cutting employee welfare costs. Earnings showed that Lenovo's employee benefits cost was reduced by 76 million trillion in the second quarter of 2016, accounting for about 40% of the current net profit.

"Real estate is no longer a strategic focus of investment"

And from the previous earnings, the sale of the building does have a bright effect on Lenovo earnings.

Last August 18, Lenovo released its first-quarter earnings as of June 30. The handset business, which had previously been heavily seized by Lenovo, still lost money, but its net profit grew nearly 2/3 per cent year-on-year, thanks to a one-time asset sale. In the first quarter, Lenovo's net profit was $173 million, an increase of 64% per cent. Lenovo's sales of Beijing office building received 132 million of dollars in revenue. Foreign media analysts believe Lenovo has started to sell non-core assets.

Li Chengdong, an independent IT analyst, argues that Lenovo's move was primarily a financial consideration for profit. Second, because Lenovo has a large number of real estate assets, the sale of a part of the assets to withdraw funds, indicating that real estate is no longer the focus of its investment strategy.

Tang Xin, an independent IT analyst, believes that Lenovo's consumer electronics business, such as PCs and mobile phones, is not a business that requires a lot of cash flow. Therefore, this time the sale of property is based on the real estate market judgment, is the optimization of the portfolio of behavior.