Summary of results for FY18:
In 2018, the company's operating income was 1484 million Hong Kong dollars, up 21.6 percent over the same period last year; its net profit was 411 million Hong Kong dollars, up 1.9 percent from the same period last year; and its profit per share was 0.15 Hong Kong dollars, with a dividend payout ratio of 53.7 percent.
Sino-Thai comments:
Affected by the rise in the base interest rate, the company's revenue growth and net profit remained flat: in 2018, the company's operating income increased by 21.6%, and net profit increased by 1.9%, mainly due to the increase in expenditure costs from HK $785.4 million in 2017 to HK $1061.9 million, up 35.2% from the same period last year. Of this total, financing costs increased by 219.2 million Hong Kong dollars, an increase of 164.8% over the same period last year, mainly due to the increase in the base interest rate and the average monthly growth of the company's investment and loan balance. The company's average financing cost in 2018 was about 3.67%, an increase of about 80 basis points over the same period last year.
Actively manage fixed income investments, focusing on high-quality structured financing: in 2018, the company's net current assets increased from 1278.5 million Hong Kong dollars in 2017 to 9351.3 million Hong Kong dollars, and the current ratio increased from 1.1 to 6.4; leverage ratio decreased from 174.0% in 2017 to 118.3% in 2018. Since the first half of last year, based on the judgment of the macroeconomic environment, in order to avoid frequent market volatility risk and credit risk, the company has taken the initiative to reduce its bond holdings, and the bond balance has dropped from HK $3119.2 million in 2017 to HK $1750.7 million. The proportion of the company's fixed income investment has dropped from 72% to 57%, focusing on the allocation of high-quality asset mortgage structured financing, and has prepared sufficient funds to deal with business operations and possible investment opportunities in the near future, reflecting the management's sound management style.
Grasp the rising trend of the new economy, equity investment has achieved excellent results: since 2016, the company began to layout the conversion of new and old kinetic energy, with the help of forward-looking research, strive to increase the proportion of new economic business in each business sector. The company has actively participated in the construction of the Greater Bay area and the opportunity of financial supply-side reform, and has set up an Internet Research Center and a Shenzhen Equity Investment Center. In 2018, BoCom International added HK $440.3 in equity-linked loans and about HK $160m in equity investments, focusing on areas such as mobile Internet, artificial intelligence, biomedicine and new retail, with an overall annual return of about 10 per cent.
In terms of valuation, in the past three years, the company's PE is between 6.67 and 22.50 times, the historical PB is between 0.58 and 1.82 times, and the current PE/PB is about 10.26 times / 0.667 times, which is at an all-time low. The company's overall performance is stable, active investment has achieved good results in 2018, and a large amount of liquidity has been reserved for investment preparation at this stage, which is worthy of attention. It is suggested that we should wait and see the investment trend of the company and the development of new business of structured financing in the future.
Risk factors: equity investment business risk; long-end interest rate trend continues to decline, macroeconomic decline risk; securities trading volume decline, economic business is not as expected.