Mainland broker posts sterling 2015 performance despite profits setback in H2

Haitong International Securities - the mainland's second-largest brokerage - saw both its revenue and profit plummet in the second half of 2015 amid the stock-market turmoil, but still managed to post sky-high growth for the whole of the year.

Annual revenue soared 114 percent to HK$5.81 billion as at Dec 31, whereas net profit more than doubled - up 147 percent - to HK$2.51 billion, the company said on Thursday.

A final dividend of 4 Hong Kong cents was proposed which, along with an interim dividend of 20 Hong Kong cents, brings the total dividend for 2015 to 24 cents, compared with 23.5 Hong Kong cents the previous year.

The second half of last year recorded HK$1.67 billion in revenue and HK$385.14 million in net profit, registering drops of nearly 60 percent and 82 percent, respectively, compared with the first six months, according to Haitong data.

The results emerged despite both the mainland and Hong Kong equity markets being on a downward spiral since mid-2015. The Shanghai Composite Index had plunged 48.6 percent from above 5,166 on June 12 to 2,656 at the end of January this year, while Hong Kong's benchmark Hang Seng Index (HSI) had dived 29.64 percent during the same period to 19,196.

Haitong International Securities' stock fell 2.03 percent on Thursday to close at HK$3.87 apiece, with the price-to-earnings ratio standing at 10.43 times.

The HSI edged down 0.06 percent, or 11.84 points, to 19,984.42, after touching an intra-day high of 20,173.

Lin Yong, deputy chairman and chief executive officer of Haitong International Holdings - the parent company of the Hong Kong-listed broker - expressed confidence in the Hong Kong and mainland markets for 2016. It won't be as good as it was in the first half of 2015, but "there are definitely opportunities", he said.

Lin said the supply-side reform and upgrade of consumption on the Chinese mainland have brought new opportunities to the market.

He attributed the group's drop in earnings in the second half of last year to exchange losses, saying the unexpected fluctuation in the renminbi exchange rate last August had had a significant impact on the broker's profits.

China's exchange rate regime reform in August last year led to a sudden 4-percent drop in the renminbi against the US dollar in the first few days, and triggered the currency's depreciation. In the second half of 2015, the redback tumbled nearly 6 percent against the greenback.

As for 2016, Lin estimated that warrants would be a significant investment opportunity because the fluctuation in the Hong Kong stock market is relatively moderate and mainland investors would be interested in investing in warrants for higher return.

Haitong is the only mainland securities company so far to have issued warrants approved by the Hong Kong Stock Exchange. On March 7, the two approved warrants issued by the company were listed and began trading.

Lin said the company aims to be among the top five traders in warrant products in the SAR.

On the much anticipated Shenzhen-Hong Kong Stock Connect, he's confident the new "through train" will start running this year.

"There shouldn't be any technical problems because of the successful operation of the first stocks link between Shanghai and Hong Kong," he said.

Another positive factor, he said, is that overseas investors are very interested in having a go at the mainland's emerging and growing enterprises.

Contact the writers at emmadai@chinadailyhk.com

(HK Edition 03/11/2016 page8)