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　　机构：招商证券

　　评级：NON RATED 

　　目标价：2.5港元

　　Robust 2017 results

　　 Total revenue up 24% YoY to HK$3,132mn, and net profit up 30% YoY to HK$1,336mn in 2017, on the back of excellent performance in brokerage, corporate finance, and structured financial products businesses . The company posted superb ROE in 2013-2017 consecutively, which came in at ~15% in 2017. 

　　Quality growth in wealth management business 

　　There has been a decline in the number of new account openings in 2017 due to Hong Kong stock connect program launch and stricter crossborder capital movements control. In response, the company’s mgmt.  accelerated the development of its wealth management business. The strategy worked well, as there are 1,024 new PI accounts in 2017 and per-PI-account balanced is HK$33.5mn . We like its quality growth in wealth management business. 

　　Low cost of funds is a key competitive strength 

　　One of the company’s key competitive strength lies in its solid risk control and a low cost of funds, because the company enjoys the highest credit ratings among Chinese financial institutions in HK. According to the company, its average cost of funds is the lowest among HK-based Chinese brokers. Leveraging on its low fund cost, the company is able to develop its capital based business and attract more PI and institutional investors. 

　　Low-risk and sustainable growth 

　　The company’s strategy is to optimize balance sheet structure, further control funding costs and become a one-stop financial services provider. The company focuses on fee-based and capital-based intermediary business. Only less than ~HK$3bn is invested on investment-type business. The stock is now trading at 11.7x FY18E consensus P/E vs. 2-year historical mean of 13.4x. We like the company’s strategy as it is low risk and the growth is sustainable. 

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