Thursday, March 28, 2024
 
Columnist
Martin Hennecke
 
EMPEROR CAPITAL
HKEx Stock Code : 00717 
 
Corporate Profile
The principal activities of the Group are to provide a wide range of financial services including (i) brokerage services for securities, futures and options traded on the exchanges in Hong Kong, the United States, Japan and United Kingdom, as well as wealth management and asset management services; (ii) provision of margin and initial public offering financings as well as loans and advances such as personal money lending and second mortgage loan; (iii) placing and underwriting services; and (iv) corporate finance advisory services.

Business Review - For the year ended September 30, 2012

Facing intense competition in brokerage industry in recent years, the Group has strategically diversified into other financial services including assets management and money lending business. The gains from these new businesses had helped offset the revenue decline in brokerage resulted from the weakened market sentiment. During the Year, the Group was able to deliver stable growth despite the volatile market environment, reflecting the success of new businesses diversification.

Brokerage

The Group provides brokerage services for securities, futures and options traded on the exchanges in Hong Kong, the United States, Japan and the United Kingdom as well as wealth management and asset management services. During the Year, the Group was awarded as ˇ§Capital Merits of Securities Servicesˇ¨ in the Capital Merits of Achievements in Banking and Finance annual program, the second consecutive year for recognition of its excellent service by Capital Magazine.

During the Year, revenue generated from the brokerage services segment was HK$75.5 million (2011: HK$99.3 million), accounting for 33.8% of the revenue of the Group.

In view of the growing demand of structured products, the Group extends the product range to various financial products, such as RMB-denominated ETF and new futures products. During the Year, the Group continued to explore new business opportunities and strengthened its effort to enrich the investment knowledge of retail customers by offering informative workshops and seminars.

A branch was newly established in Central in August 2012, further expanding its network to cover key areas in Hong Kong. During the Year, the Group had also set up an institutional division to serve its corporate clients by providing a full range of brokerage services.

Regarding asset management business, the Group provides customised discretionary investment services to its customers for catering various investment needs. The Group also runs a private equity fund, namely ˇ§Emperor Greater China Opportunities Fundˇ¨. During the Year, the concurrent management fee and performance fee from the discretionary investment services and private equity fund served as a new revenue source.

As for the wealth management business, the Group had continued to focus on China investors seeking investments under the Capital Investment Entrant Scheme. Acting as a one-stop investment centre, the wealth management segment offers wide scope of investment tools including securities, mutual funds, insurance-linked products, as well as real estate investment advisory. During the Year, the Group had established strategic cooperation with the immigration consultancy companies in China, to fully capture the quality and potential customers.

Financing

Major source of revenue in this segment comes from interest income from margin and IPO financing as well as loans and advances. The loans granting to customers are ranging from short-term unsecured loans to long-term second mortgage loans.

During the Year, the demand for margin financing, second mortgage loans and personal loans remained strong. Attributable to the significant growth in money lending business, revenue from the financing segment climbed by 47.6% to HK$94.4 million (2011: HK$64.0 million), accounting for 42.2% of the Group's total revenue.

Placing and Underwriting

The Group offers placing and underwriting services, and acts as placing agents and underwriters for various Hong Kong listed companies.

During the Year, the Group secured a number of primary and secondary market financing projects. Despite the corporate fund raising initiatives over the market had been downsized or even withdrawn due to the weakened market sentiment, the Group successfully participated in several IPO related transactions and many placing and rights issue fund raising exercises. Segmental revenue increased remarkably by 47.7% to HK$42.8 million (2011: HK$29.0 million), accounting for 19.1% of the Group's total revenue.

Corporate Finance

The division holds a full corporate finance licence under the Securities and Futures Ordinance, allowing it to advise on Takeovers Code related transactions and undertake sponsor work for IPO on top of general corporate finance advisory services. Apart from IPO-related services, the Group offers secondary market financing services such as placing, rights issue and advisory services on various corporate transactions including merger and acquisition. In April 2012, the Group had successfully sponsored Synertone Communication Corporation to list on the main board of the Stock Exchange where the Group also acted as the Sole Lead Manager in the IPO fund raising exercise. During the Year, segmental revenue was HK$11.1 million (2011: HK$12.1 million), which accounted for 4.9% of the Group's total revenue.

Business Outlook - For the year ended September 30, 2012

The overall investor sentiment towards the global economic environment has improved after the announcement of a third round of quantitative easing (QE3) by the United States Federal Reserve in September 2012. At the local level, the Stock Exchange has continued to initiate various supportive measures to extend the breadth and depth of local market. In the long run, the Group is optimistic towards the Hong Kong's equity market given its advantageous position as an international financial center is likely to persist. On the brokerage front, the Group will strive to capture the opportunities ahead through enhancing customers' user experience, delivering professional services and expanding its product offerings.

With the first Renminbi-traded equity security outside Mainland China commenced trading on the Stock Exchange in October 2012, the pace of transforming Hong Kong into an offshore RMB financial centre is expected to accelerate. Being one of the local leading financial institutions, the Group is poised to tap the potential growth from the trading of RMB-denominated products.

In the ever-changing financial landscape, the management believes the Group's sustainability is rooted in strategic diversification. The Group will continue to pursue a balanced mix of businesses to secure steady earnings growth. In view of the growing demand for second mortgage loans and personal loans, the Group expects the financing business will be the key driver for business growth in the near term. Riding on its well established network and clientele, the Group will further accelerate the expansion of the money lending business and second mortgage loan, and at the same time, implement a sound credit risk management framework that includes effective loan policy guidelines and independent credit analysis.

The year 2012 was a milestone for the Group as it marked the 5th anniversary of the Company's listing on the Stock Exchange. A celebration event was held on 12 July 2012 to commemorate the occasion with the frontline staff, business partners and senior management, recogising the Group's remarkable progress and development in the past 5 years since listing. The Group will continue to accelerate the business development and expansion to further put forward the next stage of growth.

Source: Emperor Capital (00717) Annual Results Announcement
Chairman N/A Issued Capital (shares) 2,597M
Par Value HKD 0.01 Market Capitalisation (HKD) 870M
 
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