Financial Street Holding Co. Ltd.

Public (SZ: 000402)

Company facts

Financial Street Holding Co. Ltd. is mainly into selling and leasing high-end business real estate in Financial Street area of Beijing, including overall planning, land development, realty projects development and comprehensive management.

The Financial Street is considered by Chinese as their ‘Wall Street’, as most well-known Chinese financial giants exclusively have their headquarters on the street, such as China People’s Bank, China Securities Regulatory Committee, China Insurance Regulatory Committee, top four national-owned banks, China Life Insurance, China Telecom, China NetCom and China Mobile.

Financial Street Holding Co. Ltd. was originally from national-owned Chongqing Huaya Modern Papering Limited Liability Company.  On May, 2000, Financial Street Group (parent company of Financial Street Holding Co. Ltd.) bought Chongqing Huaya Modern Papering Limited Liability Company’s entire legal-person shares from its parent company, Huaxi Packing Group Company, and shifted the company’s headquarter from Chongqing city to Beijing.  

Financial Overview

Related companies: (Name, relationship, and percentage of ownership/rights & interests):

Beijing Financial Street Construction Group, Holding shareholder, percentage of rights and interests: 33.26%

Beijing Financial Street Leeds Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Beijing Financial Street Real Estate Consulting Co. Ltd.  Holding subsidiaries, percentage of ownership: 80%

Financial Street Nanchang Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 67.36%

Beijing Shunping Dismantling & Moving Limited Liability Company. Holding subsidiaries, percentage of ownership: 51%

Beijing Financial Street Shopping Mall Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Nanchang World Trade Apartment Development Co. Ltd. Holding subsidiaries, percentage of ownership: 85%

Financial Street Jinmen (Tianjin) Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 99.96%

Beijing Financial Street Real Estate Manager Co. Ltd. Holding subsidiaries, percentage of ownership: 51%

Financial Street Nanchang Real Estate Manager Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Huizhou Sheraton Hotel Company. Holding subsidiaries, percentage of ownership: 100%

Financial Street Chongqing Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Chongqing Lanjing Real Estate Management Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Financial Street (Beijing) Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Beijing Mengke Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Beijing Banker Club Co. Ltd. Holding subsidiaries, percentage of ownership: 80%

Financial Street (Tianjin) Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Financial Street Jinta (Tianjin) Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 99.98%

Financial Street Huizhou Real Estate Co. Ltd. Holding subsidiaries, percentage of ownership: 70.41%

Beijing Xicheng District National-owned Assets Administration Committee. Actual Controller, Holding subsidiaries, percentage of rights and interests: 100%

Stock Health:

As on 25 July, 2008

Open: 8.95    High: 9.48   Low: 8.85   Close: 9.19   Vol.:  22,174,264                 

Business Performance:

     Unite: RMB 10,000

Daily Stats (last one month):

In my opinion, financial and realty sector stocks will become hottest investing points by 4th quarter of year 2008.  Recently in Shanghai and Shenzhen Stock Exchange, capital inflow have strongly inserted into three plates: banking, insurance and realty. However, banking and insurance plates have boosted sharply, while realty plate seems to lag behind, momentarily. Therefore, I believe, being leading real estate company, Financial Street Holding Co. Ltd. will lead realty plate and start picking up sooner than later. Investors are suggested to pay close attention to it as good increase could come across quiet soon.

My assumption is based on the company’s excellent business performance and most importantly, the very nature of its business focus, which is exclusively on top-end business real estates. Chinese government has principally controlled the growth of real estate industry from overheat in order to prevent Chinese economy suffering from realty bubbles and led to economical crisis, like it has happened to Southeast Asian countries in 1997, but the policies aim to residential real estate only.  Therefore, although the Chinese government’s macro adjustment has caused the depression in realty industries, it has not negatively affected the business of Financial Street Holding Co. Ltd. at all; as a result this stock, is likely, to take off before other stocks in realty plates. Investors should not be confused.

Regarding the company’s business performance, since the company has very clear business strategy and exclusively targets most well-known Chinese enterprises and multi-national enterprises as its customers, therefore, its rental returns are assured while in sales section, and percentage increased in down payment has barely created any problem. The company is almost running a monopoly business.

The above daily status graph shows, in last two days the volume has been doubled, which means, main capital inflow has inserted into this stock. I personally assume, highly likely, this stock will be taken off very soon. Investors are suggested to immediate buy-in at any price under RMB 10 Yuan, ideally, the target price should marginally reach RMB 34 Yuan.

Personally, I would like to introduce this stock to middle and long-term investors as well, and assume the target price marginally at RMB 50 Yuan. Investors are suggested to pay attention to the company’s following possible movements: increasing leasing price, new project development, and of course, their published financial reports.