耀才证券金融(01428) - 2024 - 中期业绩

Interim Financial Results Consolidated Comprehensive Income Statement The Group's revenue increased by 0.9% to HKD 440 million, with profit for the period up 31.4% to HKD 303.6 million, driven by reduced finance costs and higher margin financing interest income Key Data from Consolidated Comprehensive Income Statement (For the six months ended September 30) | Indicator | 2023 (HKD thousands) | 2022 (HKD thousands) | YoY Change (%) | | :----------------------- | :------------------- | :------------------- | :------------- | | Revenue | 440,016 | 436,239 | 0.9% | | Operating Profit | 453,012 | 307,616 | 47.3% | | Profit Before Tax | 330,833 | 262,186 | 26.2% | | Profit for the Period | 303,627 | 231,084 | 31.4% | | Basic Earnings Per Share | 17.89 cents | 13.61 cents | 31.4% | | Finance Costs | (122,179) | (45,430) | 168.9% | | Other Net Losses | (15,887) | (30,722) | -48.3% | Consolidated Statement of Financial Position As of September 30, 2023, total assets grew to HKD 8.05 billion, but net current assets and the current ratio declined, while increased bank borrowings led to a significant rise in the gearing ratio Key Data from Consolidated Statement of Financial Position (As of September 30) | Indicator | 2023 (HKD thousands) | March 31, 2023 (HKD thousands) | Change (%) | | :----------------------- | :------------------- | :----------------------------- | :--------- | | Total Assets | 8,050,790 | 7,729,370 | 4.2% | | Total Liabilities | (6,861,730) | (5,994,956) | 14.4% | | Total Equity | 1,189,060 | 1,734,414 | -31.5% | | Cash and Cash Equivalents | 400,866 | 504,531 | -20.6% | | Net Current Assets | 1,053,410 | 1,603,532 | -34.3% | | Current Ratio | 1.2 times | 1.3 times | -7.7% | | Gearing Ratio | 435.7% | 254.2% | 71.4% | Notes to Interim Financial Report This section details the financial report's preparation basis, accounting policy changes, segment performance, revenue, other gains/losses, tax, EPS, dividends, and accounts/borrowings Basis of Preparation - This interim financial report is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[45] Changes in Accounting Policies - The Group has applied certain amendments issued by the Hong Kong Institute of Certified Public Accountants, including amendments to HKAS 8 and HKAS 12, which had no significant impact on the current period's results and financial position[30][31][46] - The HKICPA issued new guidance on the accounting impact of abolishing the MPF offsetting long service payment mechanism, and the Group has assessed and decided to change the relevant accounting policies, expected to be applied retrospectively in the financial statements for the year ending March 31, 2024[32][33][34][48][49][77] Segment Reporting - The Group's business is divided into three reportable segments: securities brokerage, commodities and futures brokerage, and spot gold trading, with segment performance assessed by profit before finance costs and tax (EBIT)[35][50][51][52][57][79][80][81][82] Reportable Segment Revenue and Profit (For the six months ended September 30) | Segment | 2023 Revenue (HKD thousands) | 2023 EBIT (HKD thousands) | 2022 Revenue (HKD thousands) | 2022 EBIT (HKD thousands) | | :----------------------------- | :--------------------------- | :------------------------ | :--------------------------- | :------------------------ | | Securities Brokerage | 331,843 | 378,571 | 308,052 | 245,730 | | Commodities and Futures Brokerage | 104,805 | 64,713 | 124,262 | 55,733 | | Spot Gold Trading | 3,200 | 1,831 | 3,509 | 2,137 | | Total | 439,848 | 445,115 | 435,823 | 303,600 | Revenue Revenue by Major Categories (For the six months ended September 30) | Revenue Category | 2023 (HKD thousands) | 2022 (HKD thousands) | YoY Change (%) | | :--------------------------------- | :------------------- | :------------------- | :------------- | | Brokerage Commissions | 234,599 | 299,589 | -21.7% | | Margin Financing Interest Income | 201,770 | 132,300 | 52.5% | | Spot Gold Trading Income | 3,200 | 3,509 | -8.8% | | Leveraged Foreign Exchange Trading Income | 425 | 605 | -29.8% | | IPO Financing Interest Income | 22 | 236 | -90.7% | | Total Revenue | 440,016 | 436,239 | 0.9% | Other Income Other Income Details (For the six months ended September 30) | Income Category | 2023 (HKD thousands) | 2022 (HKD thousands) | YoY Change (%) | | :-------------------------------------------- | :------------------- | :------------------- | :------------- | | Interest Income calculated using effective interest method | 147,056 | 46,745 | 214.6% | | Interest Income calculated using other methods | 19,960 | 19,082 | 4.6% | | Handling and Clearing Fees | 37,360 | 43,114 | -13.3% | | Dividend Income | 1,860 | 2,075 | -10.4% | | Government Grants | — | 2,615 | -100.0% | | Miscellaneous Income | 5,879 | 6,784 | -13.3% | | Total | 212,115 | 120,415 | 76.1% | Other Net Losses Other Net Losses Details (For the six months ended September 30) | Loss Category | 2023 (HKD thousands) | 2022 (HKD thousands) | YoY Change (%) | | :---------------------------------------------- | :------------------- | :------------------- | :------------- | | Realized/Unrealized Losses on Financial Assets at FVTPL | (8,531) | (15,819) | -46.0% | | Net Foreign Exchange Losses | (7,350) | (14,165) | -48.1% | | Loss on Disposal of Property, Plant and Equipment | (9) | (67) | -86.6% | | Error Trades | (20) | (13) | 53.8% | | Others | 23 | (658) | -103.5% | | Total | (15,887) | (30,722) | -48.3% | Profit Before Tax Finance Costs and Other Operating Expenses (For the six months ended September 30) | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | YoY Change (%) | | :---------------------------------------- | :------------------- | :------------------- | :------------- | | Finance Costs | 122,179 | 45,430 | 168.9% | | Other Operating Expenses | 83,981 | 103,401 | -18.8% | | - Advertising and Promotion Expenses | 5,983 | 7,233 | -17.3% | | - Brokerage Commissions, Handling and Clearing Fees | 38,911 | 51,948 | -25.1% | | - Information and Communication Expenses | 19,527 | 23,122 | -15.5% | Income Tax Income Tax Expense (For the six months ended September 30) | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | YoY Change (%) | | :---------------------------- | :------------------- | :------------------- | :------------- | | Total Tax Expense for the Period | 27,206 | 31,102 | -12.5% | | Provision for Hong Kong Profits Tax | 29,268 | 33,051 | -11.5% | | Deferred Tax | (2,062) | (1,949) | 5.8% | Earnings Per Share Earnings Per Share (For the six months ended September 30) | Indicator | 2023 (cents) | 2022 (cents) | | :------------------- | :----------- | :----------- | | Basic Earnings Per Share | 17.89 | 13.61 | | Diluted Earnings Per Share | 17.89 | 13.61 | - There were no dilutive potential ordinary shares during the period, thus diluted earnings per share were the same as basic earnings per share[95] Dividends - The Board did not recommend the payment of an interim dividend for the six months ended September 30, 2023 (2022: nil)[96] Accounts Receivable Accounts Receivable Details (As of September 30) | Accounts Receivable Category | 2023 (HKD thousands) | March 31, 2023 (HKD thousands) | | :-------------------------------- | :------------------- | :----------------------------- | | Receivables from Clearing Houses, Brokers and Dealers | 1,489,309 | 1,123,268 | | Receivables from Cash Clients | 381,121 | 382,430 | | Receivables from Margin Clients | 5,531,798 | 5,466,015 | | Receivables from IPO New Shares | 8,330 | — | | Total | 7,410,558 | 6,971,713 | - Receivables from cash clients are collateralized by a securities portfolio with a total market value of HKD 1.81 billion (March 31, 2023: HKD 2.18 billion), which management believes to be fully recoverable[71] - Margin loans from margin clients are repayable on demand, with insignificant overdue amounts, and are collateralized by securities with a total market value of HKD 20.88 billion (March 31, 2023: HKD 22.71 billion)[129] Accounts Payable Accounts Payable Details (As of September 30) | Accounts Payable Category | 2023 (HKD thousands) | March 31, 2023 (HKD thousands) | | :------------------------ | :------------------- | :----------------------------- | | Payables to Cash Clients | 261,283 | 447,948 | | Payables to Margin Clients | 936,234 | 892,294 | | Payables to Clearing Houses | 131,265 | 1,288 | | Payables to Brokers | 247,667 | 122,585 | | Total | 1,576,449 | 1,464,115 | - All accounts payable are expected to be settled within one year or are repayable on demand, with no aging analysis disclosed[102][131] Bank Loans Bank Loans Details (As of September 30) | Loan Category | 2023 (HKD thousands) | March 31, 2023 (HKD thousands) | | :--------------- | :------------------- | :----------------------------- | | Secured Loans | 4,106,000 | 3,465,000 | | Unsecured Loans | 1,075,000 | 944,000 | | Total | 5,181,000 | 4,409,000 | - All bank loans are repayable within one year, primarily secured by securities pledged by margin clients, with HKD 4.106 billion in utilized bank facilities and re-pledged collateral fair value of HKD 7.287 billion[75][103] Management Discussion and Analysis Market Review Global economic challenges, including geopolitical tensions and high interest rates, led to a slow Hong Kong recovery, weak stock market performance, and a decline in IPO fundraising - Global economic recovery was hindered by US-China relations, geopolitical conflicts, and a high-interest rate environment, leading to a slower-than-expected recovery in Hong Kong's economy, with Q2 GDP growing 1.5% year-on-year, significantly below market expectations[76] - The Hong Kong stock market remained sluggish, with average daily turnover shrinking and the IPO market performing poorly, as total fundraising in the first three quarters decreased by 15% year-on-year, falling to eighth globally[136] - Hong Kong experienced significant talent outflow, impacting productivity and competitiveness across industries, with small and medium-sized brokerages facing closures; 26 securities firms ceased operations in the first three quarters[135][137] Operating Results Despite market challenges, the Group's revenue grew 0.9% and profit for the period increased 31.4%, primarily driven by margin financing interest income, alongside steady customer growth and platform optimization Overall Performance Overall Financial Performance for the Period (For the six months ended September 30) | Indicator | 2023 (HKD millions) | 2022 (HKD millions) | YoY Change (%) | | :---------------------------------------- | :------------------ | :------------------ | :------------- | | Revenue | 440.0 | 436.2 | 0.9% | | Profit for the Period | 303.6 | 231.1 | 31.4% | | Total Comprehensive Income Attributable to Equity Holders | 303.3 | 231.5 | 31.0% | - The Group achieved strong results despite challenging market conditions, primarily due to long-term customer support and continuous optimization of its trading platform and product services[137] Customer Accounts and Assets Customer Accounts and Assets Data (As of September 30) | Indicator | 2023 | 2022 | Increase (%) | | :-------------------- | :------ | :------ | :----------- | | Total Customer Accounts | 555,568 | 547,742 | 1.4% | | Customer Assets (HKD billions) | 533 | 530 | 0.6% | - The Group actively expanded, implemented seven-day operations, integrated online and offline services, and offered 24-hour account opening, deposits, and trading functions via two major mobile applications, successfully attracting customers and maintaining steady growth[111] Revenue Analysis by Business Segment Revenue by Business Segment (For the six months ended September 30) | Business Segment | 2023 (HKD thousands) | Share of Total Revenue | 2022 (HKD thousands) | Share of Total Revenue | Increase / (Decrease) (%) | | :--------------------------------- | :------------------- | :--------------------- | :------------------- | :--------------------- | :------------------------ | | Securities Brokerage | 123,612 | 28.1% | 166,273 | 38.1% | (25.7%) | | Hong Kong Futures and Options Brokerage | 61,911 | 14.1% | 63,969 | 14.7% | (3.2%) | | Global Futures Brokerage | 42,636 | 9.7% | 60,104 | 13.8% | (29.1%) | | Precious Metals Trading | 3,200 | 0.7% | 3,509 | 0.8% | (8.8%) | | Leveraged Foreign Exchange Trading | 425 | 0.1% | 605 | 0.1% | (29.8%) | | Stock Options Brokerage | 6,252 | 1.4% | 7,147 | 1.6% | (12.5%) | | IPO Brokerage | 188 | 0.0% | 2,096 | 0.5% | (91.0%) | | IPO Financing Interest Income | 22 | 0.0% | 236 | 0.1% | (90.7%) | | Margin Financing Interest Income | 201,770 | 45.9% | 132,300 | 30.3% | 52.5% | | Total | 440,016 | 100.0% | 436,239 | 100.0% | 0.9% | - Margin financing interest income significantly increased by 52.5% to HKD 201.8 million, driven by rising HIBOR, becoming the primary contributor to revenue for the period[145] - Securities brokerage commission income decreased by 25.7% to HKD 123.6 million due to sluggish Hong Kong stock market turnover; IPO-related business revenue significantly declined by over 90% due to market contraction[112][145] Operating Expenses and Net Profit Margin Operating Expenses Details (For the six months ended September 30) | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | Increase / (Decrease) (%) | | :---------------------------------------- | :------------------- | :------------------- | :------------------------ | | Staff Costs | 63,388 | 76,235 | (16.9%) | | Amortization and Depreciation | 34,834 | 37,531 | (7.2%) | | Net Expected Credit Losses | 1,029 | 1,149 | (10.4%) | | Finance Costs | 122,179 | 45,430 | 168.9% | | Advertising and Promotion Expenses | 5,983 | 7,233 | (17.3%) | | Auditor's Remuneration | 726 | 800 | (9.3%) | | Brokerage Commissions, Handling and Clearing Fees | 38,911 | 51,948 | (25.1%) | | Information and Communication Expenses | 19,527 | 23,122 | (15.5%) | | Rent, Rates and Building Management Fees | 2,972 | 2,265 | 31.2% | | Legal and Professional Fees | 906 | 856 | 5.8% | | Miscellaneous Expenses | 14,956 | 17,177 | (12.9%) | | Total | 305,411 | 263,746 | 15.8% | - Operating expenses for the period increased by 15.8% year-on-year to HKD 305.4 million, primarily due to a 168.9% surge in finance costs, although staff costs, advertising, brokerage commissions, and information and communication expenses all decreased[118][119] - The Group's net profit margin increased to 69.0% (2022: 53.0%), indicating improved profitability[118] Proprietary Investment Performance - As of September 30, 2023, the Group held an investment portfolio of Hong Kong listed securities, bonds, and futures contracts totaling HKD 58.6 million, recording an investment loss of HKD 8.5 million for the period (2022: HKD 15.8 million loss)[146] Future Plans The Group plans to address future market challenges by investing in FinTech, enhancing platform security, diversifying global products, and strengthening investor education to boost competitiveness Strategic Focus and Market Expansion - The Group anticipates that the aftermath of US interest rate hikes, geopolitical issues, RMB exchange rates, and mainland China's property market will continue to impact Hong Kong's economy, emphasizing the need for Hong Kong to strive for self-improvement and rebuild confidence in its stock market[120] - The Group will continue its "people-oriented" approach, strengthen core FinTech, fully develop integrated online and offline investment services, and continuously seek prime locations to open new branches and expand its sales network[2][120][152] - The Group will continue to hold recruitment days to attract elite talent, aiming to enhance service quality and cultivate the next generation of industry professionals[2] Technology Enhancement and Security - As a FinTech pioneer, the Group invests significant resources annually to expand online trading channels, independently develops trading systems with emergency anti-disconnection features, and offers Hong Kong's first automatic connection service for four major trading systems[167] - The Group is committed to enhancing online trading security by relocating its central computer equipment to HKEX's central machine room, regularly conducting high-load simulation tests, and implementing "two-factor authentication" security measures[151] - The Group's computer systems automatically send real-time emails or app push notifications to alert clients about account and transaction activities, while also closely monitoring fraudulent websites and taking legal action against them[124] Product Diversification and Investor Education - The Group continuously innovates, offering diversified global financial products including Hong Kong stocks, US stocks, Shanghai-Shenzhen-Hong Kong Stock Connect A-shares, Japanese stocks, Taiwanese stocks, Singaporean stocks, Australian stocks, UK stocks, and various futures products[3][149] - To meet growing investor interest in US stocks, the "Bright Smart Baby APP" added a "US Stock Pre-market Trading" function, and launched a "One Account, Five Futures" service, allowing trading of Hong Kong futures products with 20% margin[3][169] - The Group collaborated with a renowned Hong Kong bank to launch the HKMA-approved "24-hour (eDDA) Direct Debit Service," enabling round-the-clock deposits and global stock and futures trading[169] - The Group undertakes the important task of investor education, establishing the "Bright Smart Finance Channel" live broadcast, and actively organizing free investment seminars and simulated competitions to popularize financial knowledge[121] Overall Strategy and Outlook - The Group aims to promote the digitalization and intelligence of client trading services, combining online and offline marketing strategies to reduce costs, increase efficiency, expand client base, enhance client experience, and solidify its industry leadership[170] - Adhering to the philosophy of "customer-centric, service first," the Group maintains its market positioning of "affordable, high-quality, efficient, and fast," adopting a balanced offensive and defensive strategy, continuously optimizing platform performance, and strengthening promotional efforts[152] Financial Management Capital Management The Group maintains ample liquidity and manages its capital structure, ensuring compliance, despite decreased net current assets and increased bank borrowings, with sufficient unutilized bank facilities - The Group maintains ample liquidity, with bank deposits, bank balances, and cash totaling HKD 400.9 million as of September 30, 2023 (March 31, 2023: HKD 504.5 million)[7] - The Group's total bank borrowings amounted to HKD 5.181 billion (March 31, 2023: HKD 4.409 billion), primarily bearing interest at floating rates and secured by securities pledged by margin clients[7] - Unutilized bank facilities amounted to HKD 16.456 billion (March 31, 2023: HKD 17.637 billion), with net current assets decreasing by 34.3% to HKD 1.0534 billion, and a current ratio of 1.2 times[7] - The Company provided corporate guarantees of HKD 16.4851 billion for subsidiaries engaged in securities and futures brokerage businesses, of which HKD 3.805 billion has been utilized[174] - As of September 30, 2023, and March 31, 2023, the Group's assets were not subject to any charges[8][154] Risk Management The Group employs comprehensive risk management policies, including credit, liquidity, interest rate, foreign currency, and price risks, through strict assessment and monitoring Credit Risk - Credit risk primarily arises from receivables from clients, brokers, and clearing houses, with management establishing and continuously monitoring credit policies[156] - All clients undergo individual credit assessments; cash clients are required to deposit margins, and margin clients must pledge securities collateral, with management daily monitoring market conditions and collateral adequacy[10] - The Group transacts with reputable brokers and clearing houses, resulting in very low credit risk and no significant concentration of credit risk[157][175] Liquidity Risk - The Group regularly monitors liquidity needs, complies with borrowing covenants, and ensures sufficient cash reserves and committed credit facilities to meet both short-term and long-term liquidity requirements[12] Interest Rate Risk - The Group faces floating interest rate risk primarily from margin loans, bank deposits, and bank borrowings, mitigating this risk by continuously monitoring market interest rate changes and adjusting client interest rates[159] Foreign Currency Risk - The Group is exposed to currency risk from financial instruments denominated in USD, RMB, AUD, SGD, JPY, and GBP, but the risk is minor due to the HKD's peg to the USD[178] - Management daily monitors all foreign currency positions and, when necessary, buys or sells foreign currencies at spot rates to address short-term imbalances[178] Price Risk - The Group is exposed to price risk from changes in the fair value of financial assets at FVTPL (listed equity investments and futures contracts), as well as price risk from changes in the fair value of collateral for receivables from margin, cash, and IPO clients[14][15][160][179] Corporate Governance and Other Information Employees and Remuneration Policy As of September 30, 2023, the Group had 198 employees and offers competitive remuneration, bonus schemes, and training to attract and retain talent Number of Employees | Date | Number of Employees | | :------------ | :------------------ | | Sep 30, 2023 | 198 | | Mar 31, 2023 | 206 | - The Group's remuneration policy aims to provide competitive compensation and benefits to recruit, retain, and motivate capable employees, including bonus schemes and appropriate training and development[162] Purchase, Sale or Redemption of Listed Securities Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[181] Compliance with Corporate Governance Code and Standard Code for Securities Transactions by Directors The Company fully complied with the Corporate Governance Code and the Model Code for Securities Transactions by Directors of Listed Issuers during the period - The Company has fully complied with the Code Provisions of the Corporate Governance Code and Corporate Governance Report set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[17] - All Directors fully complied with the required standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers during the period[164] Publication and Review of Interim Financial Information The interim results announcement is published online, with the report to be dispatched to shareholders, and the Audit Committee reviewed the unaudited consolidated results with KPMG - This results announcement has been published on the websites of Hong Kong Exchanges and Clearing Limited and the Company, and the interim report will be dispatched to shareholders in due course[19][165] - The Company's Audit Committee has reviewed the Group's unaudited consolidated results and financial reporting matters of the interim report for the six months ended September 30, 2023, with the external auditor, KPMG[21][183]