MIRA INFORM REPORT

 

 

Report No. :

343296

Report Date :

08.10.2015

 

IDENTIFICATION DETAILS

 

Name :

HANGZHOU SANXIN PAPER CO., LTD.

 

 

Registered Office :

Shanjian Industrial Area, Fuyang City, Hangzhou Zhejiang Province 311400 Pr

 

 

Country :

China

 

 

Financials (as on) :

31.12.2014

 

 

Date of Incorporation :

07.07.1994

 

 

Com. Reg. No.:

330100400016502

 

 

Legal Form :

Chinese-Foreign Equity Joint Venture Enterprise

 

 

Line of Business :

Manufacturing and selling various cardboard, polyester staple fiber and its products, importing waste paper, waste plastic.

 

 

No. of Employees :

450

 

 

RATING & COMMENTS

 

MIRA’s Rating :

Ca

 

RATING

STATUS

PROPOSED CREDIT LINE

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

Limited with full security

 

Status :

Moderate

Payment Behaviour :

Slow

Litigation :

Clear

 

NOTES:

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

 

 

ECGC Country Risk Classification List – March 31, 2015

 

Country Name

Previous Rating

(31.12.2014)

Current Rating

(31.03.2015)

China

A2

A2

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

CHINA - ECONOMIC OVERVIEW

 

Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, growth of the private sector, development of stock markets and a modern banking system, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors considered important to "economic security," explicitly looking to foster globally competitive industries. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2014 stood as the largest economy in the world, surpassing the US for the first time in modern history. Still, China's per capita income is below the world average.

After keeping its currency tightly linked to the US dollar for years, in July 2005 China moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. In 2014 the People’s Bank of China (PBOC) doubled the daily trading band within which the RMB is permitted to fluctuate.

The Chinese government faces numerous economic challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic consumption; (b) facilitating higher-wage job opportunities for the aspiring middle class, including rural migrants and increasing numbers of college graduates; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2014 more than 274 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of population control policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development.

Several factors are converging to slow China's growth, including debt overhang from its credit-fueled stimulus program, industrial overcapacity, inefficient allocation of capital by state-owned banks, and the slow recovery of China's trading partners. The government's 12th Five-Year Plan, adopted in March 2011 and reiterated at the Communist Party's "Third Plenum" meeting in November 2013, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent in the future on fixed investments, exports, and heavy industry. However, China has made only marginal progress toward these rebalancing goals. The new government of President XI Jinping has signaled a greater willingness to undertake reforms that focus on China's long-term economic health, including giving the market a more decisive role in allocating resources. In 2014 China agreed to begin limiting carbon dioxide emissions by 2030. China also implemented several economic reforms in 2014, including passing legislation to allow local governments to issue bonds, opening several state-owned enterprises to further private investment, loosening the one-child policy, passing harsher pollution fines, and cutting administrative red tape.

 

Source : CIA

Company Name & address

 

HANGZHOU SANXIN PAPER CO., LTD.

SHANJIAN INDUSTRIAL AREA, FUYANG CITY, HANGZHOU

ZHEJIANG PROVINCE 311400 PR CHINA

TEL: 86 (0) 571-58838989/58838990/58838995

FAX: 86 (0) 571-58838986

 

 

EXECUTIVE SUMMARY

 

Date of Registration                     : july 7, 1994

REGISTRATION NO.                              : 330100400016502

LEGAL FORM                                       : CHINESE-FOREIGN EQUITY JOINT VENTURE ENTERPRISE

CHIEF EXECUTIVE                               : wang dequan (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL             : usd 7,060,000

staff                                                  : 450

BUSINESS CATEGORY             : MANUFACTURING & TRADING

Revenue                                            : CNY 358,440,000 (AS OF DEC. 31, 2014)

EQUITIES                                             : CNY -132,990,000 (AS OF DEC. 31, 2014)

WEBSITE                                              : www.hzsanxin.net

E-MAIL                                                 : lijun@hzsanxing.net

PAYMENT                                            : AVERAGE

MARKET CONDITION                            : average

FINANCIAL CONDITION                         : poor

OPERATIONAL TREND             : FAIR

GENERAL REPUTATION                       : fair

EXCHANGE RATE                                : CNY 6.36 = USD 1

 

Adopted abbreviations (as follows)

SC - Subject Company (the company inquired by you)

N/A – Not available

CNY – China Yuan Ren Min Bi

 

 

OPERATIONAL TREND & GENERAL REPUTATION

 

This section aims at indicating the relative positions of SC in respect of its operational trend & general reputation

 

Operational Trend:-                                            General Reputation:-

Upward                                                             Excellent

Steady                                                              Good

Fairly Steady                                                     Fairly Good

Ordinary                                                            Average

Fair                                                                   Fair

Stagnant                                                           Detrimental

Downward                                                         Not known

Not known                                                         Not yet be determined

Not yet be determined

 

 

LEGAL STATUS & HISTORY

 

SC was established as a Chinese-foreign equity joint venture enterprise of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 330100400016502 on July 7, 1994.

 

SC’s Organization Code Certificate No.: 60913179-9

 

 

SC’s Tax No.: 330183609131799

 

SC’s Customs registration No.: 3301937040

 

SC’s registered capital: usd 7,060,000

 

SC’s paid-in capital: usd 7,060,000

 

Registration Change Record:-

 

No significant changes of SC have been noted in SAIC since its incorporation.

 

Current Co search indicates SC’s shareholders & chief executives are as follows:-

 

Name of Shareholder (s)

 

% of Shareholding

Wang Dequan

70.11

Wonder International Group Limited (Hong Kong)

29.89

 

SC’s Chief Executives:-

 

Position

 

Name

Legal Representative, Chairman and General Manager

Wang Dequan

Director

Wang Guanye

Li Jun

Wang Jianli

Wang Liying

 

 

RECENT DEVELOPMENT

 

No recent development was found during our checks at present.

 

 

SHAREHOLDER CHART & BACKGROUND

 

Name                                                              % of Shareholding

 

Wang Dequan                                                               70.11

 

Wonder International Group Limited (Hong Kong)            29.89

 

 

Wonder International Group Limited (Hong Kong)

-----------------------------------------------

Registration No.: 0859780

Legal Form: Private

Status:: Live

 

 

MANAGEMENT

 

Wang Dequan, Legal Representative, Chairman and General Manager

------------------------------------------------------------------------------------------------------

Gender: M

Age: 66

ID# 330123194902214337

Qualification: University

Working experience (s):

 

At present, working in SC as legal representative, chairman and general manager

 

Mei Yunguo, Vice Chairman

-------------------------------------------------

Gender: M

Qualification: University

Working experience (s):

 

At present, working in SC as vice chairman

 

Director

-----------

Wang Guanye               ID# 330123196807194314

Li Jun                           ID# 330123197110105515

Wang Jianli                   ID# 330123197912294418

 

 

BUSINESS OPERATION

 

SC’s registered business scope includes manufacturing and selling various cardboard, polyester staple fiber and its products, importing waste paper, waste plastic.

 

SC is mainly engaged in manufacturing and selling paper products.

 

Brand: Sanxin

 

SC’s products mainly include: PET straps and paper and polyester staple fiber.

 

SC sources its materials 60% from domestic market, and 40% from overseas market. SC sells 85% of its products in domestic market, and 15% to overseas market, mainly U.S.A., etc.

 

The buying terms of SC include Check, T/T, L/C and Credit of 30-60 days. The payment terms of SC include Check, T/T, L/C and Credit of 30-60 days.

 

*Major Customer*

---------------------

Southwest Textiles Inc.

 

Staff & Office:

--------------------------

SC is known to have approx. 450 staff at present.

 

SC owns an area as its operating office & factory of approx. 80,000 sq. meters at the heading address.

 

 

RELATED COMPANY

 

SC is not known to have any subsidiary at present.

 

 

PAYMENT

 

Overall payment appraisal: ( ) Excellent      ( ) Good      (X) Average      ( ) Fair      ( ) Poor      ( ) Not yet be determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay.  It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

 

Trade payment experience: SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

 

Delinquent payment record: None in our database.

 

Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years.

 

 

BANKING

 

Basic Bank:

 

Bank of Communications Fuyang Sub-branch

 

AC#: 306068860010252059390

 

 

FINANCIALS

 

Balance Sheet

Unit: CNY’000

As of Dec. 31, 2013

As of Dec. 31, 2014

Cash

168,553

180,100

Notes receivable

16,504

0

Accounts receivable

116,056

106,700

Advances to suppliers

1,801

0

Other receivable

46,562

0

Inventory

78,538

62,810

Non-current assets within one year

0

0

Other current assets

0

24,180

 

------------------

------------------

Current assets

428,014

373,790

Fixed assets

123,556

118,860

Construction in progress

2,010

0

Intangible assets

21,262

21,790

Long-term prepaid expenses

0

0

Deferred income tax assets

0

0

Other non-current assets

0

0

 

------------------

------------------

Total assets

574,842

514,440

 

=============

=============

Short-term loans

263,250

213,800

Notes payable

287,650

0

Accounts payable

51,030

49,310

Wages payable

1,409

0

Taxes payable

2,430

0

Advances from clients

10,267

0

Other payable

45,774

44,630

Other current liabilities

0

339,690

 

------------------

------------------

Current liabilities

661,810

647,430

Non-current liabilities

0

0

 

------------------

------------------

Total liabilities

661,810

647,430

Equities

-86,968

-132,990

 

------------------

------------------

Total liabilities & equities

574,842

514,440

 

=============

=============

 

Income Statement

Unit: CNY’000

As of Dec. 31, 2013

As of Dec. 31, 2014

Revenue

382,430

358,440

     Cost of sales

414,028

363,810

     Taxes and surcharges

0

0

     Sales expense

1,994

2,200

     Management expense

7,712

7,540

     Finance expense

29,362

3,260

Profit before tax

-33,942

-50,360

Less: profit tax

0

0

Profits

-33,942

-50,360

 

Important Ratios

=============

 

As of Dec. 31, 2013

As of Dec. 31, 2014

*Current ratio

0.65

0.58

*Quick ratio

0.53

0.48

*Liabilities to assets

1.15

1.26

*Net profit margin (%)

-8.88

-14.05

*Return on total assets (%)

-5.90

-9.79

*Inventory / Revenue ×365

75 days

64 days

*Accounts receivable/ Revenue ×365

111 days

109 days

* Revenue/Total assets

0.67

0.70

* Cost of sales / Revenue

1.08

1.01

 

 

FINANCIAL COMMENTS

 

PROFITABILITY: POOR

The revenue of SC appears average in its line.

SC’s net profit margin is poor in both years.

SC’s return on total assets is poor in both years.

SC’s cost of sales is high, comparing with its revenue.

 

LIQUIDITY: FAIR

The current ratio of SC is maintained in a fair level.

SC’s quick ratio is maintained in a fair level.

The inventory of SC is maintained in an average level.

The accounts receivable of SC appears large.

The short-term loans of SC appear large.

SC’s revenue is in a fair level, comparing with the size of its total assets.

 

LEVERAGE: POOR

The debt ratio of SC is high.

The risk for SC to go bankrupt is fairly high.

 

Overall financial condition of the SC: Poor

 

 

CONCLUSIONS

 

SC is considered medium-sized in its line with poor financial conditions. The large amount of accounts receivable and short-term loans may be a threat to SC’s financial condition.

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.65.25

UK Pound

1

Rs.99.53

Euro

1

Rs.73.47

 

 

INFORMATION DETAILS

 

Analysis Done by :

KAS

 

 

Report Prepared by :

TPT

 

               

RATING EXPLANATIONS

 

RATING

STATUS

PROPOSED CREDIT LINE

 

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

 

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

 

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

 

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

 

26-40

B

Capability to overcome financial difficulties seems comparatively below average.

 

Small

 

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

 

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

Credit not recommended

 

--

NB

New Business

--

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)            Ownership background (20%)                  Payment record (10%)

Credit history (10%)                   Market trend (10%)                                Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.