Main points of investment
Rapid growth in operating income and net profit: as of June 30, 2018, BoCom International achieved operating income of HK $730 million in the first half of 2018, an increase of 57.8% over HK $470 million in the same period last year, and a pre-tax profit of HK $240 million, an increase of 90.6% over the same period last year. Net profit attributable to shareholders was HK $230 million, an increase of 108.9%. Earnings per share were HK $0.08, up 60.0% from HK $0.05 in the same period last year. The company did not pay an interim dividend in the current period, nor did it pay an interim dividend last year.
Revenue from brokerage and margin financing business increased: BoCom's international brokerage and margin financing business earned a total of HK $330 million in the first half of 2018, an increase of 39.1% over the same period last year. BoCom International earned HK $110 million in brokerage commissions in the first half, up 35.1% from the same period last year, while margin financing income was HK $220 million, up 34.0% from the same period last year.
The net interest rate improved year-on-year, and the asset-liability ratio increased: the company's net profit margin in the first half of 2018 was 32.1%, up 8.3 percentage points from 23.8% in the same period last year. At the same time, the company's asset-liability ratio was 66.4%, up 1.8 percentage points from the end of 2017 and 19.9 percentage points from the same period last year, mainly due to the rapid increase in corporate liabilities due to the increase in bank loans. But the overall risk of the company is still manageable.
Our point of view: BoCom International Holdings Limited, founded in 1998, is one of the earliest licensed securities companies with a Chinese background in Hong Kong. It is also the only comprehensive platform for well-known securities and securities-related financial services owned by Bank of Communications, a state-owned joint-stock commercial bank in Hong Kong. With Bank of Communications's long-established customer base and extensive brand awareness in Hong Kong and mainland China, the company can take advantage of its competitive advantage to increase customer loyalty and create value for customers and shareholders. BoCom International's operating income increased by 57.8% in the first half of 2018 compared with the same period last year, and the net profit belonging to shareholders increased by 108.9%. In the future, the Group will actively participate in the construction of "Belt and Road Initiative" and continue to provide high-quality securities brokerage, margin financing, corporate financing, underwriting and asset consulting, so as to enhance the value of the company. As of August 20, 2018, the PB of the company's share price was 0.75.
Risk tips: 1), macroeconomic downward; 2), capital market fluctuations; 3), business development is lower than expected; 4), risk of policy change