To: Business Editor [For immediate release]
Guotai Junan International Announces 2018 Interim Results
Core Businesses Grew Steadily with Dividend Payout Increased to 50%
[22 August 2018, Hong Kong] Guotai Junan International Holdings Limited ("Guotai Junan International", "the Group" or "the Company", Stock code: 1788.HK) today announced its interim results for the six months ended 30 June 2018 (the "Period"). During the Period, Revenue steadily increased to HKD1,678 million (2017: HKD 1,560 million), the Group recorded a Profit Attributable to Shareholders of approximately HKD507 million (2017: HKD674 million). Excluding the effect of the income gained from the listing of parent company in the first half of last year, the Profit Attributable to Shareholders for the Period increased by 14%, while its core businesses grew steadily. Income of the Group's financial products and Debt Capital Markets ("DCM") business increased significantly, by 271% and 75% respectively.
The Board has declared an interim dividend of HKD0.033 per ordinary share. The payout ratio increased to 50% as compared to 46% during same period last year.
Financial Products fit various needs from clients
The financial products business has been one of the fast-growing sectors in recent years. During the Period, the Group achieved an income growth of 271% year-on-year to HKD387 million which already surpassed the whole-year gain from 2017 (HKD304 million), not to mention a phenomenal CAGR of over 150% for the past three years. Due to the market fluctuations in first half 2018, demand on institutional clients' side was heightened for financial products. With the advantages of leading credit ratings (S&P long-term issuer rating: "BBB+"; Moody's long-term issuer rating: "Baa2") as well as well-established partnerships with major international financial institutions and multiple funding sources, the Company has further improved product competitiveness and pricing capacity to outperform the peers. Meanwhile, leveraging expertise and rich experience, financial products team constantly launched customized products to carter to the risk appetites and expected return of clients, which has been appreciated by the market.
DCM team maintained its leadership, creating another financial record year
During the Period, the Group continued to maintain the leading position in Hong Kong debt capital market. The underwriting income of DCM business increased by 75% year-on-year to HKD258 million with a CAGR of approximately 100%. In the first half of 2018, DCM team has participated in 76 debt issuance activities, and assisted corporations in fund raising of nearly HKD165.3 billion. The Group ranked the second in the Asia (ex-Japan) G3 Corporate High-Yield Bond Underwriter League according to Bloomberg (in terms of the issuance amount). With deep experience in the market, DCM team managed to introduce qualified issuers to the market as well as to capture the best issuance opportunities for the corporate clients, continuously making record-high income.
Commission from HK stock market elevated with an increasing number of "PI" customers
Excluding the effect of the income from parent company's IPO in the first half of 2017, the brokerage income grew by 40% year-on-year to HKD271 million, among which the commission income from securities trading in Hong Kong market soared by 60% to approximately HKD155 million. The new products and services launched by the Group in the second half of last year, such as the preferential financing rate, "Jun Hong Wealth Management Club (君弘財富管理俱樂部)" service, and the advanced mobile trading platform "Tradego (交易寶)", attracted many high-quality clinets. The number of the Group's professional investors has increased steadily to 1,758 in the first half of 2018, with average account balance increasing by nearly 54% to approximately HKD38.03 million as compared with the same period of last year.
Loans and financing income grows steadily
In the first half of 2018, the income from loans and financing business increased steadily by 12% to approximately HKD716 million, among which the IPO loans and securities borrowing and lending business have recorded significant growth in interest income. The interest income from securities borrowing and lending business rose by 485% year-on-year to approximately HKD35.61 million, while the interest income from IPO loans soared by around 18 times to HKD9.56 million approximately.
During the Period, the interest income from margin loan business dropped slightly by 7% to approximately HKD475 million. Last year, the Company took the lead in adjusting margin loan business by reducing the proportion of collaterals with low liquidity and market value, to improve its overall quality of net assets. As at the first half of 2018, the proportion of Hang Seng Index stocks and blue chips stocks among the collaterals held increased significantly and continuously. The management believes that strengthened risk control on margin financing business will bring a healthy and sustainable development in a long run as well as elevate the Group's competitive edge.
Opportunities in wealth management market
In the second half of the year, Renminbi ("RMB") may face exchange rate pressure as the US interest rate continues to hike. However, such volatility in exchange rate is expected to fuel the demand of corporates, institutions and high net worth clients in the Mainland China for overseas asset allocation, overseas financing and credit business. The Group believes that there are boundless opportunities in overseas wealth management products and services. Hence the Group plans to expand wealth management team in the next half of the year. Leveraging on core competence including industry-leading capital cost, high-quality client base and international team of experts, the Group will provide more competitive wealth management products and services to high net worth clients.
Dr. Yim Fung, JP, Chairman and CEO of Guotai Junan International, said: "We always believe that the capacity of risk management is a vital long-term core competence for financial institutions. With over 20 years of service experiences in the Hong Kong market, Guotai Junan International, as a comprehensive financial service provider, has set the risk-adjusted return on capital as our core goal and good quality of company as top priority. As we have consistently adhered to prudent risk management, facts show that it has already achieved remarkable results. Business has increased despite the economy cycle and we are applauded by the clients and market. We are full of confidence for the second half 2018 given existing market uncertainties. We are going to fully seize the opportunities arising from the overseas capital flowing into the Mainland market, the overseas financing, mergers and acquisitions of the Mainland enterprises, the construction of Guangdong-Hong Kong-Macao Greater Bay Area and the 'Belt and Road Initiative' and repay our clients, investors and shareholders for their trust and support with sustainable compound growth rate."
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About Guotai Junan International Holdings Limited
Guotai Junan International is the market leader and first mover for internationalization of Chinese securities company. The Company is the first Chinese securities broker to list on the Main Board of The Hong Kong Stock Exchange by way of initial public offering. Based in Hong Kong, the Company provides diversified integrated financial services. The five core services include: (i) brokerage, (ii) corporate finance, (iii) loans and financing, (iv) asset management, (v) financial products, market making and investments.
The Company is one of the constituents of HSCI, Hang Seng Composite LargeCap & MidCap Index, FTSE HK index and FTSE HK ex H share index. Guotai Junan International has been assigned "Baa2 / Prime-2" and "BBB+ / A-2" rating from Moody's Investor Service and Standard & Poor's Global Ratings respectively.
Our controlling shareholder, Guotai Junan Securities Company Limited ("Guotai Junan", Stock Code: 601211.SH; 2611.HK), is the comprehensive financial provider with a long-term, sustainable and overall leading position in the Chinese securities industry. Backed by strong operational support, the Company will be able to further explore the HK and the Asia-Pacific market.
For more information about Guotai Junan International: http://www.gtjai.com.
24/08/2018 Dissemination of a Financial Press Release, transmitted by EQS Group.
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