Margin loan impairment expenses led to a decline in net profit in the second half of 2019. In the second half of 2019, the company's revenue surged 41.1% year-on-year to HK$1.88 billion, mainly benefiting from the strong performance of corporate finance business and investment income. In the second half of 2019, investment income surged 132% year on year to HK$683 million, and corporate financing income increased 37% year over year to HK$356 million. However, the company recorded impairment expenses on margin loans of HK$409 million, an increase of 426% over the same period last year. This dragged down net profit for the second half of 2019 by 11.6% yoy to HK$256 million. Historical issues have been largely resolved. The company recorded total impairment expenses of HK$909 million in FY19, equivalent to 7.8% of the outstanding margin financing balance. Management stated that the accumulated impairment expenses covered 75-80% of the loans in question prior to 2017. Given the high coverage ratio, management believes that issues left over from history will not be a cause for concern in the future. The company emphasized that in the past two years, the focus of the margin financing business has shifted to high-quality stocks in an attempt to reduce risk. As of the end of 2019, the loan-to-value ratio was 31%. A large portion of investment income comes from interest income. Investment income in FY19 reached HK$1.7 billion, an increase of 172% over the previous year. Management stated that of this amount, HK$841 million was interest income from bond coupons. Only HK$475 million came from trading proceeds. The balance is mainly derived from fee income related to its financial products business. Since about half of the return on investment comes from interest, we believe that the risk in FY20 should be manageable under market fluctuations. A strengthened capital base and increased impairment expenses provided a buffer for this year's profits. The company has just completed a stock offering and raised nearly HK$2.8 billion. Therefore, the company's sound financial position should help withstand extremely weak market conditions in the short term. At the same time, as the company made huge margin loan impairment expenses of HK$909 million in FY19, it also helped to cushion this year's earnings, as we do not expect the impairment expenses in FY20 to be that high. The current valuation already reflects most market concerns. Considering the uncertain market outlook for this year, we gave a more conservative forecast for each business, and as a result, lowered our earnings per share forecast for FY20 by 38.3%. However, we maintain our “increased holdings” rating. The new target price is HK$1.33 (equivalent to 0.89 times the predicted net market ratio for FY20; previously 1.22 times the predicted net market ratio for FY19), and the target price is estimated according to Gordon's growth model (cost of equity was 9.5%; medium term return on equity was 9% (previously 10.5%)). The stock's current net market ratio for FY20 is 0.65 times, the lowest level in history, 1.4 standard deviations below the historical average. Although stock prices may remain volatile in the short term, the current extremely low net market ratio does not reflect the potential for recovery in FY21.