东方汇财证券(08001) - 2024 - 年度业绩

Performance Overview Performance Summary The Group achieved a significant performance turnaround in FY2023/24, with total revenue surging 93.1% to HKD 94.88 million, driven by strong underwriting and placement business, resulting in a HKD 3.39 million profit attributable to owners of the Company Key Performance Indicators for FY2023/24 | Metric | Year Ended March 31, 2024 | Fifteen Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenue | Approx. HKD 94,878,000 | Approx. HKD 49,125,000 | | Profit/(Loss) attributable to owners of the Company | Profit approx. HKD 3,392,000 | Loss approx. HKD 125,702,000 | | Basic earnings/(loss) per share | 2.73 HK cents | (120.48) HK cents | | Final dividend | Not recommended | Nil | - The current financial period covers 12 months (April 1, 2023 to March 31, 2024), while comparative figures cover 15 months (January 1, 2022 to March 31, 2023), making the data not directly comparable[182] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income The Company achieved a pre-tax profit of HKD 7.58 million this fiscal year, reversing a HKD 126 million loss from the previous period, with total revenue of HKD 94.88 million successfully covering costs and losses, resulting in an annual profit of HKD 3.39 million Consolidated Statement of Profit or Loss Summary | Item (HKD Thousands) | Year Ended March 31, 2024 | Fifteen Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenue | 94,878 | 49,125 | | Other income | 1,188 | 125 | | Employee costs | (5,893) | (10,175) | | Administrative and other operating expenses | (22,608) | (11,486) | | Impairment loss on trade receivables, net | (19,692) | (6,456) | | Impairment loss on loans and interest receivables, net | (38,127) | (143,107) | | Profit/(Loss) before income tax | 7,577 | (125,702) | | Income tax expense | (4,185) | – | | Profit/(Loss) for the year/period | 3,392 | (125,702) | Consolidated Statement of Financial Position As of March 31, 2024, the Group's total assets were HKD 274 million, total liabilities were HKD 34.46 million, and net assets were approximately HKD 239 million, largely consistent with the prior year; net current assets were HKD 224 million, and cash and cash equivalents significantly increased from HKD 5.77 million to HKD 41.65 million, indicating substantially enhanced liquidity Consolidated Statement of Financial Position Summary | Item (HKD Thousands) | As at March 31, 2024 | As at March 31, 2023 | | :--- | :--- | :--- | | Non-current assets | 15,121 | 17,634 | | Current assets | 258,539 | 241,623 | | Total assets | 273,660 | 259,257 | | Current liabilities | 34,463 | 23,219 | | Non-current liabilities | – | 233 | | Total liabilities | 34,463 | 23,452 | | Net assets | 239,197 | 235,805 | | Total equity | 239,197 | 235,805 | Notes to the Consolidated Financial Statements Operating Segments The Group's business is divided into five main segments, with the 'Underwriting and Placement' business becoming the absolute core of revenue and profit this fiscal year, contributing HKD 70.35 million in revenue and HKD 46.19 million in profit, while 'Margin Financing' and 'Lending' businesses recorded significant losses due to high impairment provisions, and revenue from the top three clients, all from underwriting and placement, accounted for 52.33% of total revenue, indicating high client concentration Performance by Operating Segment (Year Ended March 31, 2024) | Segment (HKD Thousands) | Revenue | (Loss)/Profit | Assets | Liabilities | | :--- | :--- | :--- | :--- | :--- | | Brokerage | 567 | (118) | 32,279 | 12,523 | | Underwriting and Placement | 70,349 | 46,190 | 17,965 | 1,347 | | Margin Financing | 2,033 | (18,747) | 25,829 | 7,707 | | Lending | 21,241 | (21,624) | 196,897 | 365 | | Asset Management | 688 | 688 | 356 | – | | Total | 94,878 | 6,389 | 273,326 | 21,942 | - This year's revenue is highly concentrated among a few major clients, with the top three clients (all from the underwriting and placement business) collectively contributing over HKD 50 million in revenue, accounting for 52.33% of total revenue[29][194] Revenue Total revenue for the year was HKD 94.88 million, a significant increase from HKD 49.13 million in the previous reporting period, primarily driven by a surge in 'Underwriting and Placement income' from HKD 0.71 million to HKD 70.35 million, while interest-based margin financing and lending service revenues declined Revenue Breakdown | Revenue Type (HKD Thousands) | Year Ended March 31, 2024 | Fifteen Months Ended March 31, 2023 | | :--- | :--- | :--- | | Recognized under HKFRS 9 | | | | - Interest income from margin financing | 2,033 | 3,905 | | - Interest income from lending services | 21,241 | 43,237 | | Recognized under HKFRS 15 | | | | - Commission income from brokerage services | 567 | 1,119 | | - Underwriting and placement income | 70,349 | 714 | | - Asset management service income | 688 | 150 | | Total | 94,878 | 49,125 | Dividends The Board does not recommend the payment of any dividend for the financial year ended March 31, 2024 - The Company's directors do not recommend the payment of any dividend for the year ended March 31, 2024 (2023: Nil)[225][17] Earnings/(Loss) Per Share Profit attributable to owners of the Company for the year was HKD 3.39 million, resulting in basic and diluted earnings per share of 2.73 HK cents based on 124,416,000 weighted average ordinary shares, successfully reversing a loss per share of 120.48 HK cents in the prior period Earnings/(Loss) Per Share Calculation | Metric | Year Ended March 31, 2024 | Fifteen Months Ended March 31, 2023 | | :--- | :--- | :--- | | Profit/(Loss) attributable to owners of the Company (HKD Thousands) | 3,392 | (125,702) | | Weighted average number of ordinary shares | 124,416,000 | 104,333,222 | | Basic and diluted earnings/(loss) per share (HK cents) | 2.73 | (120.48) | Events After Reporting Period After the reporting period, several significant events occurred: the Company applied for a review of GEM Listing Committee's decision to suspend its shares; it agreed to subscribe for participating shares in a fund for USD 300,000; and most notably, the executive director overseeing the lending business, Ms. Li Yazhen, was suspended due to internal control deficiencies and impairment losses in that segment - The Company submitted an application to the GEM Listing Review Committee on April 3, 2024, to review the decision to suspend the trading of its shares[237][25] - On May 3, 2024, the Company agreed to subscribe for participating shares in the Orient Global Master SPC fund for a total of USD 300,000[238][37] - Due to deficiencies in collateral registration and limited progress in loan recovery within the lending business, the Board decided to suspend the executive director overseeing this business, Ms. Li Yazhen, from June 18, 2024[239][26][155] Management Discussion and Analysis Business Review and Outlook Facing a challenging macroeconomic environment, the Group actively adjusted its business strategy by developing a new offshore bond placement business for Chinese LGFV bonds, which successfully contributed approximately HKD 68 million in revenue this fiscal year, while scaling back its higher-risk lending business to focus on existing loan recovery, and planning to expand into corporate finance advisory services - The Group's traditional brokerage business was affected by the continuous volatility and declining trading volume in the Hong Kong stock market[28] - The Group successfully developed a new business providing placement services for offshore LGFV bonds, which contributed approximately HKD 68 million in revenue for FY2023/24, serving as the core driver of this year's performance growth[40][89] - To control risk, the Board resolved to no longer approve any new loan applications, aiming to scale down the lending business and concentrate resources on the extension and recovery of existing loans[118] - The Group is considering horizontal expansion into corporate finance advisory services by acquiring a corporation holding a Type 6 license under the Securities and Futures Ordinance, aiming to provide one-stop services and enhance client stickiness[41] Lending Business The lending business faces severe challenges due to significant declines in collateral values related to the Mainland China property market and difficulties in cross-border enforcement, leading to approximately HKD 181 million in significant Expected Credit Loss (ECL) impairment recognized this year, and the executive director overseeing this business has been suspended due to internal control issues and continuous losses - The Group's lending business primarily grants loans to private companies and individuals who provide collateral, mostly Hong Kong or Mainland China real estate assets[67][42] - Due to the downturn in the Mainland China property market leading to significant declines in collateral values, and potential delays or unsuccessful enforcement procedures in China, the independent valuer believes the Group faces the risk of losing most loans, thus applying a significant loss rate of up to 99.5%[54][53] Overview of Loans Receivable and Expected Credit Loss Provisions (As at March 31, 2024) | Loan Type | Number of Accounts | Total Outstanding Principal (HKD Millions) | Expected Credit Loss Provision (HKD Millions) | | :--- | :--- | :--- | :--- | | Secured Loans | 34 | 346.5 | 170.6 | | Unsecured Loans | 8 | 31.4 | 10.5 | | Total | 42 | 377.9 | 181.1 | - Due to internal control deficiencies and continuous impairment losses in the lending business, the executive director responsible for overseeing this business, Ms. Li Yazhen, has been suspended from her duties[111][26] Financial Review This fiscal year, the Group's financial performance fundamentally improved, with total revenue increasing from HKD 49.13 million to HKD 94.88 million, driven by explosive growth in underwriting and placement commission income, which offset significant impairment losses and transformed the company from a HKD 126 million loss to a HKD 3.39 million profit Revenue Breakdown (HKD Thousands) | Item | Year Ended March 31, 2024 | Fifteen Months Ended March 31, 2023 | | :--- | :--- | :--- | | Interest income from margin financing services | 2,033 | 3,905 | | Interest income from lending services | 21,241 | 43,237 | | Commission income from brokerage services | 567 | 1,119 | | Underwriting and placement income | 70,349 | 714 | | Service income | 688 | 150 | | Total | 94,878 | 49,125 | - The improvement in annual profit is primarily attributable to increased placement service income from the placement of overseas LGFV bonds, which generated approximately HKD 68 million in revenue this fiscal year[97] - Total administrative and other operating expenses increased to approximately HKD 22.6 million, primarily due to (i) approximately HKD 8.5 million in marketing and business development fees for the new offshore LGFV bond placement business; and (ii) HKD 2 million paid to debt collection agencies[93] - The Group recorded a net profit attributable to owners of the Company of approximately HKD 3.4 million for the year, compared to a loss of approximately HKD 125.7 million in the prior period[124] Liquidity, Financial Resources and Capital Structure The Group's financial position is robust, with net current assets of approximately HKD 224 million and cash and bank balances significantly increasing to HKD 41.7 million at year-end; the current ratio of approximately 7.5 times indicates strong short-term solvency, and with no interest-bearing debt, the debt-to-asset ratio is zero, reflecting a healthy capital structure Liquidity and Capital Structure Indicators | Metric | As at March 31, 2024 | As at March 31, 2023 | | :--- | :--- | :--- | | Net current assets | Approx. HKD 224,000,000 | Approx. HKD 218,400,000 | | Cash and bank balances | Approx. HKD 41,700,000 | Approx. HKD 5,800,000 | | Current ratio | Approx. 7.5 times | Approx. 10.41 times | | Debt-to-asset ratio | Nil (no interest-bearing debt) | Nil (no interest-bearing debt) | - The Group's capital consists solely of ordinary shares, with total equity amounting to approximately HKD 239 million[128] Corporate Governance and Other Disclosures Contingent Liabilities The Group's wholly-owned subsidiary, Orient Finance Securities, faces two legal claims (Claim A and Claim B) from former clients alleging conspiracy, fraudulent misrepresentation, and breach of contract; after seeking legal advice, the Board believes both claims lack merit and are not expected to have any material impact on the Group's financial position - Claim A involves a former client seeking damages for alleged conspiracy by unlawful means; based on legal advice, the Board believes the claim is unsubstantiated and the chance of overcoming the time bar is minimal[131][107] - Claim B involves another former client seeking compensation for fraudulent misrepresentation, deceit, and breach of contract; the Board similarly believes the claim lacks merit and will not materially impact the Group's financials, with parties attempting mediation[108][152] Corporate Governance Practices The Company has several deviations and non-compliance issues in corporate governance, including the absence of a Chairman or CEO, and failing to meet GEM Listing Rules' minimum requirements for independent non-executive directors and audit committee members due to a resignation, with efforts underway to fill vacancies - The Company deviates from Corporate Governance Code Provision C.2.1, currently having no Chairman or Chief Executive Officer, with daily operations and management jointly overseen by executive directors and senior management[140][162] - Due to the resignation of an independent non-executive director on June 25, 2024, the Company does not comply with GEM Listing Rules 5.05(1) (minimum number of independent non-executive directors) and 5.28 (minimum number of Audit Committee members); the Company will endeavor to fill the vacancies within three months[143][164] - Due to inadvertent oversight, the Company failed to timely comply with GEM Listing Rules' disclosure and/or shareholder approval requirements for 34 loan extension agreements, some of which constituted discloseable transactions and some major transactions; the Company will convene an EGM to seek ratification[156][157][138]