Overall, China’s leasing market is expected to continue rapid growing in the next few years. For the normal case of leasing structure, the major players would include Leasing Company, Lessee and Residual Investor.
Residual investors is somebody to arrange the structure of the leasing arrangement and earn its profit when it sells the residual asset after the maturity of contract ). In general, the residual investors would quite certain that the market value would be higher than the residual value at the end of the terms and therefore the possibility of real losses is relatively low. . The profitability of the residual investors would be greatly dependent on the difference between market price and residual value.
In our sample transactions, our principal as residual asset investment could be converted into equity of the Leasing Companies. Apart from stable income from interests, the Company already spares enough room to capture the up-side of the future growth of Leasing Company.
Concurrently, the Group is targeting most fast growing sector – transportation industry in China.