GF SECURITIES CO., LTD. (“GF Securities” or the “Company”, stock code: 1776.HK; 000776.SZ， the Company and its subsidiaries, the “Group”) is pleased to announce its annual audited and consolidated results for the year ended December 31, 2017 (the “Reporting Period”).
In 2017, facing complicated capital market conditions and the industry regulatory environment, GF Securities insisted on the principle of changing according to circumstances, thereby speeding up the pace of business transformation and manage reformation. By continuously consolidating existing advantages, upgrading business layers, optimizing resource allocation, the Company steadily build a competitive edge in the entire business chain and showed an overall spiraling growth trend. The Company successfully managed to achieve impressive results in the market condition characterized with improved economic fundamentals and tight liquidity. Various major operation indicators continued to rank among the top in the industry, which created good returns for its shareholders. As at the end of 2017, total assets of the Group amounted to RMB356,905 million； During the Reporting Period, total revenue and other income of the Group was RMB28,614 million with a year-on-year increase of 4.10%, net profit attributable to owners of the Company was RMB8,595 million with a year-on-year increase of 7.04%.
The principal business of the Group can be divided into four segments, namely investment banking business, wealth management business, trading and institution business and investment management business. During the Reporting Period, the total revenue and other income from the investment banking business segment was RMB2,766 million; the total revenue and other income from the wealth management business segment was RMB11,306 million; the total revenue and other income from the trading and institution business segment was RMB7,018 million, representing a year-on-year increase of 15.53%; and the total revenue and other income from the investment management business segment was RMB6,793 million, representing a year-on-year increase of 12.27%.
Investment Banking Business Segment Enjoyed Industry-leading Position
In 2017, in order to adapt to the changes in economic structure, market environment and regulatory policies, the Company continued to consolidate its advantages in the field of high-quality small and medium-sized enterprise customers and increased its efforts in securing large customers. At the same time, the Company continued to promote cross-border investment bank business and strive to enhance the international competitiveness of investment banking business. During the Reporting Period, the Company completed 61 equity financing projects for which the Company acted as a lead underwriter, ranking 1st in the industry. Among these projects, the Company acted as a lead underwriter for 33 IPOs, ranking 1st in the industry and the lead underwritten amount was RMB16.965 billion, ranking 2nd in the industry. During the Reporting Period, the Company’s commission and fee income from stock underwriting and sponsoring business was RMB1,455 million, representing a year-on-year increase of 22.31%.
During the Reporting Period, there was an overall growth in the market of the M&A and restructuring. The Company acted as a financial advisor for 16 material asset restructurings (including the CSRC M&A and Restructuring Committee approved projects and non-administrative material asset restructuring projects), ranking 3rd in the industry, the transaction amount completed was RMB85.248 billion, and ranking 2nd in the industry. The Company recorded the commission and fee income from the M&A and restructuring financial advisory business of RMB313 million during the Reporting Period, representing a year-on-year increase of 4.66%. M&A and restructuring financial advisory service of the Company was graded as “A” by the Securities Association of China for 3 consecutive years.
Wealth Management Business Segment Achieved Reformation Derived by Four Driving Forces
During 2017, the Company continued reform of retail business. Taking technological finance, wealth management, institutional brokerage and integration as the four driving forces, the Company adhered to the principle of customer focus, established customer demand-driven wealth management products system, built customer service system of private banks, optimize the layout and continuously promoted business transformation. The Company’s self-developed Beta Bull (貝塔牛) smart investment advisory system phase II was launched in 2017. Beta Bull has obtained the 2017 Smart Investment Advisory Pioneer Brokerage Award by the International Finance News (《國際金融報》2017智能投顧先鋒券商獎項), the Significant Contribution Award for Product Innovation by the Financial Computerizing magazine (《金融電子化雜誌》產品創新 突出貢獻獎), the Best Innovation Award for Financial Technology Product by the American Institutional Investors (美國《機構投資者》金融科技產品最佳創新獎) and etc. The Company continued to deepen the layout in the field of artificial intelligence and mobile transaction terminals, completed the establishment of “Smart GF智慧廣發”, a smart application strategy support platform and released a number of smart applications such as “Smart Customer Service智慧客服”, “Smart Voice Assistant智慧語音助手” and “Accurate Information精準資訊”. As of the end of the Reporting Period, the number of mobile-phone securities users exceeded 15.73 million, representing a year-on-year increase of over 50%, which gradually became an important account opening channel; the number of subscribers of the Company’s WeChat account was over 3.17 million; during the Reporting Period, the sales and transfer amount of products of the Yitaojin E-commerce platform amounted to RMB115.7 billion.
In 2017, the balance of margin financing and securities lending business experienced a volatile rise. As at the end of 2017, the closing balance of the Company’s margin financing and securities lending business was RMB56.003 billion, representing a year-on-year increase of 3.55% as compared to the end of 2016; and the market share was 5.46%, ranking 5th in the industry on a combined basis. During the Reporting Period, the Company recorded interest income from the margin financing and securities lending business of RMB 4,107 million.
Trading and Institution Business Segment Maintained Steady Revenue Growth
In 2017, the company seized structured investment opportunities and achieved impressive investment returns. In the meantime, the Company was awarded the highest annual AA rating of the SSE 50ETF for options market-making business and monthly AA rating for funds market-making business several times. During the Reporting Period, the Company recorded net investment gains from the equity and derivatives trading business of RMB1,517 million, realizing a significant year-on-year increase. The Company provides high-quality asset custody and fund services business for various asset management products, as at the end of 2017, the total asset scale of asset custody and fund service business provided by the Company was RMB150.847 billion, representing a year-on-year increase of 44.50%. In addition, the Company vigorously expands the FICC business and builds an overseas FICC investment platform mainly through GF Global Capital, its indirect wholly-owned subsidiary, with the assets allocated to 20 countries and regions including Asia, Europe and the United States of America, covering the diversified investment fields including bonds and structured products. During the Reporting Period, the Company was one of the first batch of companies which obtained the “Bond Conned” quotation bureau qualification and acquired the qualification of inter-bank gold price inquiry transaction of Shanghai Gold Exchange.
The outstanding research capacity of the Company always enjoys a high reputation. The Company’s equity research covers over 750 listed companies in the PRC in 26 industries, and over 50 companies listed on the Hong Kong Stock Exchange. The Company’s research team ranked No.1 in the “Best Local Research Team”, macroeconomic research and six industry studies for 2017 of New Fortune. During the Reporting Period, the total revenue and other income from the investment research business of the Company was RMB342 million, representing a year-on-year increase of 13.78%.
Investment Management Business Segment Realized Transformation with Organic Growth
In 2017, under the general regulatory direction of reducing leverage risk, reducing channels and turning back to the original business, GF Asset Management steadily progressed with transformation to high-quality organic growth, such as active management, and gradually boosted core competitiveness. The Company carries out asset management business through its subsidiaries, namely GF Asset Management, GF Futures and GF Asset Management (Hong Kong). During the Reporting Period, management fee income from the asset management business of the Group was RMB1,647 million, in which the management size of collective schemes of GF Asset Management ranked first and the active management size ranked second as at the end of 2017.
The Group carries out public fund management services mainly through its controlled subsidiary, GF Fund, and associate company, E Fund. As at the end of 2017, the publicly offered funds managed by GF Fund have reached RMB279.938 billion, and achieved the total revenue and other income of RMB2,957 million, representing a year-on-year increase of 15.88%; the net profit was RMB948 million, representing a year-on-year increase of 22.12%. While the publicly offered funds managed by E Fund have reached RMB607.672 billion, representing an increase of 41.88% as compared to the end of 2016, and the total fund size excluding money market funds was RMB288.210 billion, ranking first in the industry.
The Group mainly engages in private fund management business through its wholly-owned subsidiary GF Xinde and achieves the remarkable development. As at the end of 2017, GF Xinde set up and managed 35 private funds. The total size of customers’ assets under management amounted to RMB9.329 billion. During the Reporting Period, GF Xinde realized the total revenue and other income of RMB1,413 million, representing a year-on-year increase of 124.74%; the net profit was RMB932 million, representing a year-on-year increase of 341.15%.
2017 is the year for the Company’s completion of the last round five-year strategic plan and the starting of a new round of five-year strategic plan. In the future, under the mission of “Becoming a Modern Investment Bank with International Competitiveness, Brand Influence and Systemic Importance”, the Company will continuously uphold its core values of “inquisitiveness, integrity, client focus and teamwork”, and carry out the management philosophy of “stable growth, continual innovations, performance-driven culture and business strategies”. Furthermore, the Company insists on “customer-oriented” as the consistent strategic guideline, and comprehensively promote the transformation and upgrade of all business strategies to seek further sustained, healthy and stable development, thereby maximizing customers’ interests and bringing greater returns to the shareholders of the Company.