Guotai Junan International Announces 2012 Interim Results

Loans and financing, corporate finance activities recorded steady growth

Profit reached HK$133.9 million

HONG KONG, Aug. 23, 2012 /PRNewswire-Asia/ --

Financial Highlights

Leading integrated securities enterprise Guotai Junan International Holdings Limited ("Guotai Junan International" or "the Company", with its subsidiaries "the Group", Stock code: 1788) today announced its interim results for the six months ended 30 June 2012.

During the period under review, the global market was affected by the slow recovery of the U.S. economy and the debt crisis in Europe. Although figures showed signs of U.S. economic recovery, investors' confidence remained fragile. Moreover, European economy deteriorated as a result of intensified sovereign debt problems and the distressing high level of unemployment rate. Under the influences of the above external factors, the Company recorded revenue of HK$367 million and profit of HK$142 million for the six months ended 30 June 2012, representing a decrease of 0.5% in revenue and a decrease of 15.3% in profit as compared with the same period in 2011. The Board has proposed an interim dividend of HK$0.03 per share (2011: HK$0.03).

Dr. Yim Fung, CEO of Guotai Junan International, said, "Affected by the instability and poor global economic performance, the Hong Kong market also performed badly. Although the unemployment rate remains low, the future economic growth remains uncertain and investors stay away from the securities market. Even though the global economic environment is unstable, the interest income and corporate finance activities of the Company are the highlight of our performance. During the period under review, despite the poor market sentiment and a significant drop in corporate finance activities, we managed to complete the sponsorship of the listing for 6 companies."

As an international financial service provider, the Group continues to strengthen its core business operations platform: trading and broking, corporate finance, asset management, loans and financing as well as investment business. Income from dealing and broking business, which currently accounts for 36% of the Company's total income, was affected by the poor market performance and intensified market competition. As of June 30, 2012, revenue generated from dealing and broking business has dropped to HK$129 million. The Company's online trading platform currently supports 9 international securities markets, 19 global futures markets and leveraged foreign exchange trading for customers. To develop dealing and broking business, the Company offered a number of promotional campaigns and successfully acquired more than 3,300 new customers. In order to enhance customer services through online platform, the Company has launched the online margin financing service and securities lending service during the period under review.

Due to the poor market sentiment, corporate finance activities were significantly reduced during the period under review. Despite of this, in the first half of the year, the Company has successfully completed the sponsorship of the listing of 6 companies and has been appointed as bookrunner for 8 IPO deals. Meanwhile, the Company has engaged as compliance adviser for 38 newly-listed companies and financial advisor for 7 projects. The income from consultancy and financial advisory services increased by 74.7% to HK$28.9 million.

Given the tight market liquidity, the Company expects that the demand for margin financing and secured lending business will remain strong. In order to ensure sufficient resources to meet the Company's capital needs, the Company successfully launched a programme to issue medium term notes in June 2012. In capturing the corporate finance advisory and fund-raising business opportunities from the Chinese enterprises, the Company will benefit from the cooperation with its parent company Guotai Junan Securities Company Limited. In future, the Company will also commit to develop debt capital markets business so as to assist corporate clients to raise debt capital in Hong Kong dollar or RMB.

Dr. Yim Fung, CEO of Guotai Junan International, concluded, "The second half of 2012 will be challenging for us in further expanding our business. While European debt problem is still unresolved, the global economic recovery is still uncertain and the Chinese economy is facing a possible recession, all of these problems will make our business unpredictable. However; we are still confident in our business. We believe that the loans and financing as well as corporate finance business will remain the major driver of our business growth. At the same time, in order to expand our products mix, we recently established a Global Markets Department focusing on building and facilitating fixed-income products trade for professional customers. To extend value-added services to our customers through our online platform, we are now providing online securities lending service. We believe that these initiatives will not only facilitate more business transactions, but also perfect our one-stop solution to our customers."

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