China Development Bank Ensures 12 PV Companies** Other Companies Will Be Strictly Controlled

The National Development Bank has recently revealed that the National Development and Reform Commission has recently organized various functional departments to research and formulate support for the development of the photovoltaic industry. As one of the most important financial support departments, CDB has recently completed a proposal for further strengthening financial credit to support the healthy development of the photovoltaic industry and will soon submit it to the National Development and Reform Commission. CDB will focus on ensuring the credit lines of 12 photovoltaic companies.

The person said that the proposal made it clear that it will continue to strengthen credit support for domestic enterprises with scale and technology advantages, and ensure that the loan funds plan formulated at the beginning of the year is put in place. CDB will focus on ensuring the credit line of the “six major, six small” and 12 leading photovoltaic companies in the industry, and the remaining PV company loans will be strictly controlled. The "six majors" refer to the leading ones that have become the scale and brand strength, and the "six smalls" refers to the science and technology-oriented enterprises with independent intellectual property rights.

It is understood that in addition to leading companies such as Wuxi Suntech, Baoding Yingli, and Trina Solar, the “Six Large Six Small” companies also listed A-share listed companies such as Hairun Solar, Chaori Sun and Sun Power.

According to this person, in light of previous experience in the development of photovoltaic companies supported by CDB, the principles for future CDB credit support were initially defined: First, the mere expansion of manufacturing capacity for project financing will not be considered; second, technology-based company loans will be given moderate priority. He also said that at present, the country proposes to encourage industry mergers and reorganizations, and CDB will give priority to credit support for the preferential financing of mergers and reorganizations of SMEs by photovoltaic companies.

"The non-performing loan ratio was 0.33%, which was a drop from the 0.4% at the end of last year." This is the latest data released by the China Development Bank last year for 2012.

In fact, the CDB, steel, and wind power industries that CDB has invested trillions of dollars in support have frequently exposed the loan repayment crisis. By the end of 2011, the total amount of CDB's liabilities had reached 5.8 trillion yuan, and the ratio of assets to liabilities was 92.88%. Since 2007, China Development Bank's commercialization reforms have been delayed. Can China Development Bank's performance be enough to support astronomical debt? This has become the most urgent issue for CDB to transform its commercial bank.

PV book

"China's top 10 PV companies have accumulated a total of 17.5 billion U.S. dollars worth of debt, indicating that the industry is close to bankruptcy." A U.S. investment bank report pointed to the debt crisis in the photovoltaic industry.

"As early as 2005, companies flocked into the photovoltaic industry, and the overcapacity is already evident," said a photovoltaic industry analyst.

However, in September 2010, LDK announced that it had obtained a total of RMB 60 billion in credit grants from China Development Bank, making LDK the domestic PV company with the largest amount of credit facilities granted. At present, the debt-to-asset ratio of Jiangxi LDK (NYSE:LDK) is 7.4. The loss for the third consecutive quarter ended in April this year means that according to the Western standards, LDK is already insolvent.

According to the LDK balance sheet, the debt due in 2013 was US$380 million, and its free cash flow was only US$137 million. This also includes the 2011 China Development Bank’s wholly owned subsidiary, China Development Bank, CCB International, BOC International. Given the $240 million injection of Solar Energy, Levi's financial status has clearly deteriorated.

Leverin’s credit support is still only the tip of the iceberg that China Development Bank “spends money”. The reporter sorted out CDB's credit support in the photovoltaic industry. According to this preliminary statistics, CDB's credit scale in the photovoltaic industry amounted to approximately RMB 260 billion since 2009, not counting unannounced agreements and other small and medium-sized PV companies. .

In 2009, China Development Bank led financial institutions to issue “Opinions on the evaluation of solar power development” first, and CDB provided a total of 10 billion credit support for the photovoltaic industry in Jiangsu.

In 2010, this figure continued to increase to the order of 100 billion. On January 11, 2010, Trina Solar signed a long-term loan contract of 100 million euros with the National Development Bank. In April of the same year, China Development Bank also received RMB 30 billion or additional foreign currency loans from 2010 to 2015. At the same time, Suntech Power also sponsored RMB 70 billion of renminbi loan support from CDB for the next five years.

Wuxi Suntech (SIP) currently has a debt-to-asset ratio of 2. The company's operations are also not optimistic. Wuxi Suntech has postponed the release of its second-quarter financial report due to a financial guarantee scam involving a total of US$680 million.

By July 2010, Yingli Group had obtained a credit of RMB 36 billion from China Development Bank. Since then, on September 10, JA Solar has announced that it has received a maximum of RMB 30 billion in credit facilities from CDB.

The time has entered into 2011, and the PV industry has entered a downward channel with obvious performance. China Development Bank is still "in the snow" for the photovoltaic industry.

According to the 2011 financial report of Wuxi Suntech (SIP), CDB's loan amount for this year reached 325 million euros.

In 2011, China Sunergy, Chaoriyue Solar and Hanergy Holdings received credit support of US$160 million, one billion euros and thirty billion yuan respectively.

However, Jinggong Technology, Chaoyue Sun, and Hairun Solar just disclosed their 2012 first-half results announcement, and all three photovoltaic companies also turned losses into profits. Pre-losing expenses reached 7 million yuan to 12 million yuan and 120 million yuan to 1.5 yuan respectively. Billion and 135 million yuan.

Until this year, CDB still persists in the photovoltaic industry. On April 18, 2012, Yingli Group once again received RMB 150 million and USD 300 million in direct financing from China Development Bank.

On August 13, 2012, CDB and ATS Solar signed a 5-year loan agreement of 93 million Canadian dollars (about 93.8 million U.S. dollars). On the same day, a 10-year loan of RMB 41 million was issued for Xingye Solar Energy Company, Hunan Xingye Solar Energy Technology Co., Ltd.

On July 20th, Hairun PV (600401.SH), which was listed on Shenlong's ST-listed ST, went to the National Development Bank to "reach out" and proposed to apply for a loan of no more than 48 million euros to the National Development Bank for a wholly-owned overseas subsidiary. The 2012 semi-annual report was announced on the evening of August 13th. During the reporting period, the net loss was 135 million yuan. Its accounting costs rose from 650.18 million yuan in the middle of last year to 175 million yuan in the middle of the year, an increase of 168.65%.

The reporter learned from an insider of a state-owned asset rights trading platform that the project he is currently working on is a PV company listed on a New York Stock Exchange. “The company’s strong support is unsustainable, and the local government does not let it go bankrupt” companies are constantly looking for Buyers look forward to receiving state-owned funds.

PV industry is just a microcosm of China Development Bank’s Tianqian lending in recent years. As a key industry supported by the state in recent years, and a major credit company of CDB, some wind power, steel, cement and coal energy industries have entered the financial “winter”, indicating that the CDB will open. More than trillion trillions of loans and loan credits may fall into the embarrassment of a bankruptcy like the one in Levy.

According to the 2011 financial report of China Development Bank, during the reporting period, the CDB issued loans and advances balance of 4.97 trillion yuan; in 2010, it was 4.03 trillion yuan; in 2009, it was only 0.94 trillion yuan, of which "other items" accounted for the highest 27.11%.

Taking Rongsheng Heavy Industry as an example, as early as December 2009, China Development Bank took a hair of 2.15 billion yuan in ocean engineering project loans; in 2011 it also carried out 30 billion yuan in strategic cooperation, granted 35 billion yuan in credit, and signed a contract for 100 million US dollars in loans. . However, Rongsheng Heavy Industry was generally pessimistic about its future due to operating losses and two scandals in January.

In the wind power industry, since 2011, CDB has granted 974 million yuan in loan commitments for Damaoqi wind power projects, 1.5 billion euros of Huarui wind power for its Irish wind energy projects, and 6.5 billion US dollars in financing cooperation.

For example, Goldwind Technology, which has experienced a significant downturn in its financial situation, has received RMB 6 billion in CDB financing from China Development Bank during 2010. This year, its wholly-owned subsidiary, Beijing Tianrun Xinneng Investment, received another RMB 35 billion equivalent of China Development Bank’s RMB. Financing cooperation.

According to the data released by the Stock Development and Reform Commission, the installed capacity of wind power in China has increased to 62.73 million kilowatts, ranking first in the world, while domestic newly installed capacity has dropped by about 7% year-on-year, marking the first time “negative growth” in the past 10 years. Since last year, the domestic wind power industry has encountered Waterloo, and the shadow of surplus has shrouded the industry.

There are also local debt claims that have dragged the country into the quagmire. In the 10th anniversary of the establishment of the municipality of Chongqing in 2007, CDB and the Chongqing government financing platform signed a loan cooperation agreement of nearly 150 billion yuan. In 2009, the loans granted by China Open to support the project of Chongqing Light Rail Lines 3 and 6 were RMB 11.19 billion; In 2010, CDB supported a loan balance of RMB 33.739 billion for the construction of the “Second Ring and Eight Projects” project in Chongqing, and the accumulative committed loans to the project amounted to RMB 50.683 billion.

As of the end of April 2012, the CDB Chongqing Branch included 59 financing platforms for the clearing of statistics by local government financing platforms, and the balance of RMB loans in the table was RMB 106.3 billion. Coincidentally, the CDB Guizhou Branch has issued more than 1,200 billion yuan of loans to Guizhou in the ten years since its establishment. The loan quotas of some other provinces are equally astonishing.

Heavenly debt

As a policy bank, CDB enjoys sovereign-grade credit rating and zero-risk treatment of debt, and continues to raise funds in the bond market at a low cost. Investing in bonds is also a major source of funds. CDB is the second largest bond after the Ministry of Finance. Distribution. At the same time, CDB is also the largest bank with the largest debt balance in the world.

CDB's debt continues to operate at high levels. It is estimated that the total open tender for financial bonds in 2012 will be 1.055 trillion yuan, which is only slightly lower than in 2011. In 2011, CDB updated its bond issuance record, and the total amount of public bidding for financial bonds reached 1.06 trillion. At the end of 2011, CDB’s debt-to-equity ratio was 92.88%, its total liabilities were 5.81 trillion, and its net profit was only 45 billion yuan.

Due to debt problems and liquidity concerns, China Development Bank's bond yields have risen repeatedly. China Development Bank issued a tender for the 17th financial bond in 2012 on April 10th. The issuance results showed that the interest rate for the 5-year financial bond with a scale of 20 billion yuan was 4.11%, and the market expectation was 4.05%.

The net interest income is the main source of income for CDB. In 2011, CDB achieved net interest income of RMB 116.455 billion, a year-on-year increase of 32.85%, accounting for 99.17% of operating revenue.

Anxious during the transitional period

Although as early as the end of 2008, China National Development Bank Co., Ltd. was established as a listed company and started a pilot commercial operation. However, as a result of the financial functions of some countries, CDB's commercial banking operations have been delayed.

In January 2007, the National Financial Work Conference determined to take the lead in advancing the reform of China Development Bank. The CDB's situation has attracted the attention of the market. The time limit for the zero-risk weight of RMB bonds issued by China Development Bank extended from the end of 2011 to the end of 2012, and this year was postponed until the end of 2013.

The delay in the issue of debt credits has made the CDB’s yields rational. According to the requirements of the State Council, the source of funds after the CDB reform is still based on issuing financial bonds. The sources of funding for the CDB projects still rely on issuing financial bonds. Once commercialized, it is difficult for China to obtain the same attractiveness of policy financial bonds, and at the same time, it is also difficult to fight with other bonds.

At the same time, the commercial bank’s red line of compliance has caused people to worry about China Development Bank. According to the “Risk Rating System for Joint-stock Commercial Banks (Interim)”, the provision coverage ratio is the ratio of loan losses provisions to non-performing loans, and the best status of this ratio is 100%. Moreover, the CBRC requires that the CBRC require commercial banks to have a capital adequacy ratio of no less than 8% and a core capital adequacy ratio of no less than 4%. The subsidiary capital of a commercial bank must not exceed 100% of the core capital.

Currently CDB's core capital adequacy ratio is 7.35% and capital adequacy ratio is 10.78%. The ratio of loan impairment provision to loan balance was 2.22%, and the ratio of non-performing loans was 552.26%.

However, because CDB enjoys zero risk, CDB does not use core capital of commercial banks and does not count toward provision, and will not be subject to restrictions on the degree of concentration of credit or concentration of investment. Once you no longer enjoy the zero risk of debt, it is also worrying whether the various indicators can achieve compliance.