Haitong says wants to be an investment bank as it posts 42pc profit rise

Securities group says it has big plans to offer wider range of services to clients as it reports 42pc profit despite a flat market and falling IPOs

Sophie Yu

Haitong International Securities Group says it will evolve into an investment house providing multiple services to clients.

"An investment bank is what we would like to be," deputy chairman and chief executive Lin Yong said.

Despite a lacklustre market, Haitong posted a 42 per cent gain in net profit year on year to HK$153.2 million in the first half. Revenue rose 10 per cent to HK$558.6 million from a year earlier.

Haitong said it would continue to expand its yuan business and to offer new products.

It was the first issuer of a yuan fixed-income fund and the first securities firm to launch a product in Hong Kong under the RQFII (RMB Qualified Foreign Institutional Investors) pilot programme.

Lin said the company would apply for a US$100 million quota for qualified foreign institutional investors (QFII).

As the external economic environment remained weak in the first half, investors adopted a more conservative attitude, the firm said.

"The overall funds raised in the Hong Kong market through initial public offerings was substantially reduced by 82 per cent [in the first half] compared with the same period last year," Lin said.

Haitong said its broking business had been affected when local brokerage firms and banks joined a commission price war amid tougher competition from new brokerage firms.

The contribution of the broking business to the company's revenue fell to 31 per cent in the first half, compared with 47 per cent a year earlier.

"The fees of financial intermediaries are dropping at the moment, including commissions and consultancy fees," Lin said.

He said Haitong would hire the best talent to establish teams to expand business.

Joint managing director William Lee said growth in the number of customers in the broking businesses slowed in the first half. "We enrolled 4,000 to 5,000 new clients," he said. "Usually during that period of time the number of new clients can reach 8,000 to 10,000."

Lee said the institutional sales business in the first half was brisk and the proportion of customer transactions improved to 22 per cent from 10 per cent a year earlier.

Haitong said it had "seven to eight" IPO projects on hand, involving companies in the finance, consumer goods and manufacturing businesses.

Revenue from its corporate finance business nearly doubled to HK$265 million, contributing 47 per cent of revenue, with a net profit of HK$119 million.

Lin said there was no way the market would perform better this year than last.

The average daily turnover of the Hong Kong stock market fell 23 per cent to HK$56.7 billion from the same period last year, and the number of newly listed companies fell by 15 to 32, according to Haitong.

This article appeared in the South China Morning Post print edition as: Haitong wants to be an investment bank