AstraZeneca Financial is a financial services provider operating in Hong Kong that provides (i) securities trading and brokerage services; (ii) placement and underwriting services; (iii) corporate finance advisory services; (iv) financing services, including securities and initial public offering loans; and (v) asset management services. All business activities of the Group are carried out through the Company's operating subsidiary, AstraZeneca Capital. The company is licensed to carry out regulated activities under the Securities and Futures Regulations under the Securities and Futures Regulations under the Securities and Futures Regulations under Class 1 (trading securities), Class 2 (trading futures contracts), Class 6 (providing opinions on institutional financing) and Class 9 (providing asset management).
AstraZeneca Capital is also a participant in the Stock Exchange and currently holds a stock exchange trading right.
We recommend speculative purchasing of this stock.
Company advantages
(1) Providing a variety of financial services to clients; (2) Establishing good relationships with customers; (3) having been in the financial services business for over 11 years; and (4) an experienced and competent management team.
Industry Overview
The number of listed companies in Hong Kong increased sharply from 1,037 at the end of 2003 to 1,866 at the end of 2015. Of these, 1,644 companies were listed on the Main Board and 222 were listed on the Founding Board. On May 31, 2016, the number of listed companies further increased to 1,899.
In terms of capital raising activities in the Hong Kong stock market, Hong Kong was the world's main initial public offering center from 2009 to 2011. Over this period, there were 69 separate initial public offerings, 101 and 89 initial public offerings, which raised a total of HK$248 billion, HK$449 billion and HK$260 billion, respectively. In 2012, 62 initial public offerings went ahead in Hong Kong, raising approximately HK$90 billion. The amount raised in Hong Kong fell to fourth place in the global ranking. In 2013, Hong Kong rose from fourth place to the second largest initial public offering market in the world, raising a total of HK$169 billion. The initial public offering for the year ended December 31, 2014 raised a total of approximately HK$233 billion, an increase of approximately 37.6% over the same period in 2013 of approximately HK$169 billion. In the year ended December 31, 2015, 124 initial public offerings were carried out, raising approximately HK$263 billion.
In the securities market, from 2003 to 2007, there was an overall upward trend in transaction value. The turnover in 2008 and 2009 also declined due to the global financial crisis that broke out in the second half of 2008. The total turnover in 2009 was approximately HK$15515 billion, down about 12.1% from 2008. In 2010, total turnover increased to approximately HK$1721 billion, an increase of about 10.9% over 2009. The turnover in 2011 was approximately HK$17154 billion.
Market activity at the end of 2011 was relatively low due to uncertain factors in the European debt problem. In 2012, trading activity was even lower, with the average daily turnover falling by about 22.9% from HK$70 billion in 2011 to approximately HK$54 billion. The turnover in 2012 was approximately HK$13301 billion. In 2013, trading activity improved, and the average daily turnover increased by about 16.2% from the 2012 level to approximately HK$63 billion. The average daily turnover in 2014 was approximately HK$69 billion, an increase of approximately 11.0% over HK$63 billion in 2013. The average daily turnover in 2015 was approximately HK$106 billion, an increase of 53.6% over HK$69 billion in 2014.
Profitability and financial figures
The Group's revenue increased from HK$15.3 million in fiscal year 2013 to HK$91.8 million in fiscal year 2015, with a compound annual growth rate of 145.3%; net profit increased from HK$2.8 million in fiscal year 2013 to HK$38.3 million in fiscal year 2015, with a compound annual growth rate of 268.9%. The increase in total revenue was mainly due to (i) an increase in the turnover of clients' securities transactions; (ii) an increase in the number of placements and underwriting appointments obtained and completed; and (iii) an increase in the number of financial advisory projects undertaken.
Fund-raising purposes
Proceeds from this fund-raising of approximately HK$55.3 million (calculated at the mid-sale price of HK$0.5 per share) will be used for the following purposes: approximately 90% will be used as capital resources for expanded financing services (including securities and initial public offering loans); approximately 10% will be used as general working capital.
valuations
According to the prospectus price of HK$0.4 to 0.6, the price-earnings ratio is about 8.4 to 12.5 times; the market account ratio is about 2.9 to 3.5 times. Comparing local securities firms, the market account ratio of Semi-IPO Finance (1469.HK) is 1.8 times; Yao Cai Securities (1428.HK) has a market account ratio of 1.9 times; Emperor Securities (717.HK) has a market account ratio of 1.0 times; and the market account ratio of Shifu Finance (510.HK) is 2.4 times; the above reflects that the pricing of Astran Finance is quite advanced. In the first half of 2016, trading activity continued to be sluggish, with transaction amounts mainly rising and falling between HK$50-60 billion, giving the Hong Kong securities industry quite a bit of experience. Furthermore, we also expect that the launch of the “Shenzhen-Hong Kong Stock Connect” will not bring new stimulus to the financial market in the future, so we suggest that this stock should only be speculatively licensed.
Risk Factors
(1) Business is regulated by the representation of the Hong Kong securities market and competitor expressions and is not within the Group's control and we do not guarantee that income can be maintained at a historical level; (2) A number of regulatory requirements must be complied with, and failure to comply may result in fines, restrictions on group activity, or even the suspension or revocation of part or all of the group's licences that allow the Group to carry out business activities; (3) Brokerage services involve the interaction of activities between employees and customers; therefore, human error may occur, and the company must accept such mistakes, etc. loss caused; (4) if the securities underwritten by the company were undersubscribed or placement activities were not completed Faced with business risks in the placement and underwriting business; (5) if customers default on refunds or if the value of related securities collateral is insufficient to cover the unreimbursed balance due to large market fluctuations; (6) the group relies on key management personnel to carry out the business, and the loss of any senior management or professional staff of the group may have a negative impact on the group's operation.