HONG KONG — GF SECURITIES CO., LTD. (“GF Securities” or the “Company”, stock code: 1776.HK; 000776.SZ) is pleased to announce its interim results for the six months ended June 30, 2017 (the “Reporting Period”).
In the first half of 2017, the Chinese economy operated within a reasonable range and supply-side structural reform had received remarkable effects, GDP grew by 6.9% on a year-on-year basis, while the growth rate of the tertiary sector was 7.6%. With the intensive progress of the strategy of “One Belt, One Road”, research and formulation of the development and planning of Guangdong – Hong Kong – Macao Bay Area, new opportunities will be brought to promote the national economic development status and future regional economic development.
As of 30 June 2017, total assets of the Group amounted to RMB358,328 million, operating revenue amounted to RMB13,536 million, total expenses were RMB7,941 million.
Facing complicated capital market conditions and the industry regulatory environment that emphasizes “lawful, stringent and comprehensive supervision”, GF Securities consistently adhered to the basic principle of “Making Progress While Maintaining Stability” and managed to achieve good results in the market condition characterized by strict supervision and increasing competition. The various main businesses of the Company have achieved relatively balanced development and ranked among the top in the industry. Total revenue and other income from the investment banking business segment was RMB1,346 million; total revenue and other income from the wealth management business segment was RMB5,298 million; total revenue and other income from the trading and institution business segment was RMB3,290 million, representing a year-on-year increase of 9.31%; total revenue and other income from the investment management business segment was RMB3,280 million, representing a year-on-year increase of 18.77%. Various major operation indicators of the Company continued to rank among the top in the industry, which created good returns for its Shareholders.
Implement onshore and offshore operations in the investment banking business, and rank among the top in the industry
During the Reporting Period, in order to adapt to economic structural transformation and policy changes, GF Securities made greater efforts to develop large customers on the basis of solidifying the advantages of emerging industries and potential small and medium business customers. Meanwhile, onshore and offshore connected operations continued to be implemented in the investment banking business, to enhance the international business competitiveness of the Company. During the Reporting Period, the Company acted as a lead underwriter for 35 equity financing projects, ranking 2nd in the industry. The lead underwritten amount was RMB21.346 billion, ranking 4th in the industry. Among these projects, the Company acted as a lead underwriter for 20 IPOs and the lead underwritten amount was RMB10.566 billion, ranking 1st in the industry, respectively. During the Reporting Period, the Company’s commission and fee income from stock underwriting and sponsorship was RMB867 million, representing a year-on-year increase of 56.55%.
During the Reporting Period, in order to cope with regulatory changes and changes in the market environment, the Company continually optimized its bond business quality control and management system, and its quality control center kept moving forward. The Company continually expanded and reserved quality products, grasped the market opportunities to actively make greater efforts to issue corporate bonds. During the Reporting Period, the Company acted as the lead underwriter for 52 bonds, with a total underwritten amount of RMB49.366 billion. The Company recorded commission and fee income from the bond underwriting business of RMB225 million.
During the Reporting Period, the overheated market of the M&A and restructuring of listed companies was cooling down. GF Securities acted as a financial advisor for 12 material asset restructurings (including the CSRC M&A and Restructuring Committee projects and non-administrative material asset restructuring projects), ranking 2nd in the industry, the transaction amount completed was RMB 81.382 billion, and ranking 1st in the industry. The Company, acting as the independent financial advisor, completed the large scale cross border acquisition of C2 Aviation Capital LLC by Bohai Financial Investment Holding Co., Ltd. in an amount of approximately USD10 billion, which further enhanced the Company’s brand influence.
Implemented wealth management, scientific finance and integrated operation
In the first half of 2017, GF Securities focused on the strategic task of the transformation of retail business and implemented wealth management, scientific finance and integrated operation. The Company strengthened cooperation with banks and security companies, promoted the building of broker team, established customer demand-driven wealth management products system, built customer service system of private banks and fully promoted transformation development towards wealth management.
In respect of science and technology finance, the Company continued to maintain its leading position. The Company increases its own R&D and technology innovation efforts in aspects such as big data, artificial intelligence, platform and client terminal. The Company rolls out technology financial platforms with its completely independent research and development, such as big data cloud services platform, micro-service platform, Online Trading Easy version, Yitaojin App and robot investment adviser platform. The Company also launches the first big data-based full-chain quantitative trading cloud platform of the industry by cooperative research and development, which lays the foundation for the subsequent development of technology finance orientation. Among them, the smart investment advisory system, Beta Bull phase II was launched during the first half of this year. Beta Bull has obtained several awards including the 2017 Smart Investment Advisory Pioneer Brokerage Award by the International Finance News, the 2016 Significant Contribution Award for Product Innovation by the Financial Computerizing magazine and the 2016 Best Innovation Award for Financial Technology Product by the American Institutional Investors. As of the end of the Reporting Period, the number of mobile-phone securities users exceeded 12 million, representing a year-on-year increase of 125%, which gradually became an important account opening channel. The Company continued to maintain its leading position.
Diversified Development of the Trading and Institution Business
The Company executes fixed income derivative instruments (such as interest rate swaps and government bond futures) to hedge the risk arising from trading transactions and market-making activities. The Company vigorously expands the FICC business and builds an overseas FICC investment platform mainly through GF Global Capital, its indirect wholly-owned subsidiary, with the assets allocated to 20 countries and regions including Asia, Europe and the United States of America, covering the diversified investment fields including bonds and structured products. The Company is one of the four securities firms granted with market-maker qualification of the interconnection and interworking between the PRC and Hong Kong bond markets (the “Bond Connect”) in 2017.
Since 2017, the Company has been actively developing its OTC derivatives business and conducted OTC options transactions linked with domestic A shares and overseas underlying assets. In addition, the Company continued to develop customized structured notes. Institutional client customization for this year accounted for more than 70% of the total volume of the new additions. Diversity of floating income products continued to increase; underlying assets of linked customized structured notes had coverage over various domestic and overseas assets types since 2017, including individual stocks, indices, commodities, private equity fund, etc., to satisfy the customized investment and risk management demand of investors. During the Reporting Period, the size of bilateral OTC transfer transactions was approximately RMB22.4 billion, which continued to maintain a leading position in the industry. Over the years, the Company is committed to provide a diversified capital pattern and industrial transformation service for the high-quality NEEQ enterprises. As of June 30, 2017, the Company provided market-making services for 195 NEEQ enterprises, of which there were 93 innovative enterprises; and the industries mainly cover TMT, biological medicine, huge consumption, high-end manufacturing industry and others.
Public fund management and private fund management achieved a good momentum of development
During the Reporting Period, the total revenue and other income from the investment management business segment was RMB3,280 million, representing a year-on-year increase of 18.77%. The management size of collective schemes under GF Asset Management ranked first among the peers and the active management size ranked second among the peers. The Group carries out fund management services through its controlled subsidiary, GF Fund, and associate company, E Fund. As at the end of June 2017, the publicly offered funds managed by E Fund reached RMB484.241 billion, increasing by 13.06% over that at the end of 2016 and ranking third in the industry.
In terms of the private fund management services, the private fund management business operated by the wholly-owned subsidiary of the Company, GF Xinde, has also achieved a good development. As at the end of the Reporting Period, GF Xinde and the funds under its management completed 189 equity investment projects, of which 19 projects were listed on China’s A share market through initial public offering. GF Xinde exited seven projects through merger of listed companies. In addition, GF Xinde set up and managed 20 private equity funds and seven mezzanine funds. The total size of customers’ assets under management amounted to RMB7,978 million. During the Reporting Period, leveraging on its past successful experience, GF Xinde further attracted more FOF of the financial institutions and the capital guided by the government to act as the limited partnership contributors of private equity funds, thereby laying the solid foundation for the transition towards high-end asset management. It also newly established the venture capital department and the M&A investment department, realizing the diversified development of the Company.