China Art Financial Holdings Limited (“China Art Financial” or the “Company”, together with its subsidiaries, the “Group”, stock code: 1572.HK), the leading art finance service provider in China is pleased to announce its annual results for the year ended 31 December 2016 (the “Reporting Year”).
During the Reporting Year, the total revenue increased by 64.4% year-on-year to RMB176.9 million.
The increase was mainly attributed to the significant increase in art auction revenue of approximately RMB44.3 million as a result of the expansion to organize the first spring auction and three online auctions during the year and the steady increase in art and asset pawn revenue of approximately RMB25.0 million.
Meanwhile, in July 2015, the registered capital in Hexin Pawn increased from RMB40 million to RMB100 million, which allowed the Group to lend larger loan amounts for each transaction.
During the Reporting Year, the profit attributable to owners of the Company was approximately RMB89.9 million, representing an increase of 91.9%. The Board recommends a payment of a final dividend for 2016 of HK$0.03 (2015: nil) per share and a payment of special dividend of HK$0.02 (2015: nil).
Mr. Fan Zhijun, Chairman, Executive Director and Chief Executive Officer of China Art Financial, said, “2016 marked the first year of China’s “Thirteenth Five-Year” Plan, and also a milestone for the Company. On 8 November, we were successfully listed on the Stock Exchange of Hong Kong and officially entered the stage of international financial market. Last year was full of opportunities and challenges. We have experienced the continuous downward pressure in domestic macro economy and the transitional dilemma, but also saw a prosperous development of China’s cultural industry and a steady growth in artwork market. Facing the complicated international and domestic economic situation, the management of the Company proactively adapted to the new situation of economic and industrial development, stayed at the cutting edge of market trends and actively pursued innovation to launch the first spring auction and pure online auction. A synergy between our auction and pawn businesses was developed and a fast growth in revenues and profits has been achieved successfully.”
The Group’s art auction business continued to grow. During the Reporting Year, the aggregate hammer price of auctions organized by the Group amounted to approximately RMB490 million and the aggregate hammer price of zisha artworks reached RMB297 million. Revenue from the auction segment of the Company was approximately RMB92.6 million, representing an increase of 91.7% compared with the same period of 2015.
In 2016, the Group successfully organized its first spring auction in late-June, which achieved an aggregate hammer price of approximately RMB165 million.
The Group successfully organized its autumn auction in mid-December 2016, receiving an overwhelming market response. The aggregate hammer price reached RMB280 million, representing an increase of approximately 69.7% as compared with that of the 2016 spring auction.
The highlight of the auction was a zisha teapot set made by Master Gu Jingzhou, which recorded the highest hammer price of approximately RMB45 million. To capture opportunities from the Chinese online auction market, one of the biggest markets worldwide, the Group also launched pure online art auctions in 2016 and organized three pure online art auctions which were held in January, April and September 2016 respectively.
The Group steadily developed its art pawn loan business with a remarkable effectiveness in risk management. During the Reporting Year, revenue from the pawn loan segment was approximately RMB84.3 million, representing an increase of 42.2% from the same period in 2015. As of 31 December 2016, the total amount of new loans granted by the Group amounted to approximately RMB597 million.
The Group implemented a risk management system which is effective in reducing various risks involved in art pawn business. The Group established a multi-level internal approval system and an effective risk management system, and had a professional internal and external authentication team.
The Group also hired third party authoritative authentication institutions as the Company’s independent advisor. The Group’s risk management achieved remarkable results, as of 31 December 2016, the Group’s impaired loan ratio was 0%.
China Art Financial headquartered in Yixing city of Jiangsu province of PRC, which is well-known for zisha artworks, and established a leading position in art finance industry.
It was awarded the AA-Grade Auction Qualification by China Association of Auctioneers and is the only auction house in Yixing city awarded with such auction house grading.
The Group has built good and stable relationship with artists, artworks collectors and amateurs and other parties, in order to enhance its ability to source high-value zisha artworks and other artworks due to relatively ample supply in the proximity, and in turn attract potential buyers to participate in art auctions.
From 2010 onward, the Group started to develop its operations along the art finance industry. It is among the few corporations in China which are capable to build an integrated business model through which it provides clients with a platform for trading of and financing with artworks.
The ability of providing comprehensive services along artwork enhances the Group’s brand penetration in the art markets, concentrates its resources in developing high quality services along artworks and hence contributes to its success in art operations.
Looking ahead, Mr. Fan concluded, “Going forward, we will take the successful listing in Hong Kong as a new momentum and starting point to consolidate our existing businesses advantages and actively expand the business network. For art auction business, based on the absorption of experts’ team, we will expand the types of auction artworks steadily, gradually held auctions in first-tier cities, and strive to develop online auctions.”
“For art pawn business, we will increase registered capital, enlarge loan portfolio, expand loan offices network, as well as develop and utilize online platform. In addition, we will continue to build the one-stop art finance service platform by integrating art pawn loan and art auction businesses, as well as further develop the online auction platform and enhance its trading function. We will also seek opportunities for mergers and acquisitions of enterprises and IT companies engaging in related businesses to increase returns and expand market share. With our in-depth knowledge of the industry, effective risk management system, strong brand reputation in the industry and leading market position, we will capture the opportunity of fast growing art financial market and strive to become the largest art financial integrated service provider in China, creating greater value for shareholders, investors, customers and employees,” he added. – BusinessNewsAsia.com