Pi Tu Pi name seeks to exploit P2P lending craze
Print Edition
What鈥檚 in a name? The somewhat non-Shakespearean answer is money.
Or so it seems with Shanghai Duolun Industry Co, a property developer and building materials supplier that has joined the growing trend of listed companies trying to dress up their profiles by adding financial connotations to their names, whether justified or not.
The company announced on Sunday that it was changing its name to Pi Tu Pi Financial Information Services. Though its exact relationship with Internet finance wasn鈥檛 clearly spelled out, the company鈥檚 share price surged to the daily limit of 10 percent on the Shanghai Stock Exchange yesterday, ending at 12.06 yuan (US$1.90) and boosting market value to 4.1 billion yuan.
As of May 10, 81 companies on the Shanghai and Shenzhen stock exchanges have announced name changes associated with digital technology and finance, according to data compiled by Shanghai Daily. The list includes Panda Fireworks Group Co, China鈥檚 largest fireworks maker, which changed its name to Panda Financial Co, and Baiyuan Trousers Co, which has become Kuajingtongbao, which means 鈥渃ross-border financing express.鈥
Duolun鈥檚 new name is an attempt to hop on board the peer-to-peer lending craze. That system provides online channels for individuals to lend to other individuals without going through the traditional banking system. Loan access is simplified and higher rates give lenders higher yields.
The Shanghai Stock Exchange queried Pi Tu Pi on the name change, asking if the company is really qualified in the business its name suggests. The company replied that the new name has nothing to do with its existing business and no operations have started yet in the cyber-realm. However, the company did point to its website www.p2p.com. The website is headed with a slogan that says the new domain name is worth US$100 million without giving any explanation.
Duolun鈥檚 sales last year slumped 91 percent to nearly 100 million yuan. The company blamed the decline on slower property sales in Tier 2 and Tier 3 cities in China.
Pi Tu Pi said in a statement that it is the 鈥渇irst listed domestic Internet financing company,鈥 but that may be a bit of exaggeration given other companies are doing the same thing.
The rename announcement on Sunday coincided with the central bank鈥檚 latest interest cut, the third in six months. That allowed Pi Tu Pi to tag onto market euphoria about cheaper lending rates. At the same time, the reduction in the bank deposit rate may mean that more people will be enticed to shift their savings into higher-yielding online funds.
Gu Lei, a professor at the Finance and Securities Research Institute of Renmin University of China, warned securities regulators that they should ensure that the names of companies should reflect their true business operations so that consumers are not duped.
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