Accelerates the Deployment of Asset Management and Family Office Business
Records a Significant Increase in Gross Profit of 67.2% Despite Difficult Economic Environment
Results Highlights
Despite the impact of the COVID-19 outbreak and international trade conflicts on the global economy, the Group's gross profit increased to approximately HK$88.9 million for 1H FY2021 from approximately HK$53.2 million for the six months ended 30 September 2020 (the "Last Period"), representing a significant increase of approximately 67.2% mainly attributable to the contribution of gross profit of approximately HK$78.6 million from the Financial Services Businesses. The total asset size of the Group for the six months ended 30 September 2021 was 850 million, representing a significant increase of approximately 72.5% compared to the Last Period. The apparel business turned loss into profit for the first time, from a loss of more than HK$3 million to a profit of HK$0.3 million during the reporting period. The Group's gross profit margin increased to approximately 57% for 1H FY2021 from approximately 31% for the Last Period. An interim dividend for the six months ended 30 September 2021 of HK$0.0104 per ordinary share, amounting to approximately HK$14.87 million, is declared by the Board at the board meeting of the Company.
During the Reporting Period, the Group recorded a decrease in revenue by approximately 7.2% to approximately HK$156.6 million, compared to that of HK$168.8 million in the Last Period. The Group recorded a total comprehensive income attributable to the owners of the Company of approximately HK$51.6 million, representing a decrease of 22.2% from approximately HK$66.3 million from the last period. The decrease in revenue is mainly attribute to the decrease of investment income segment from HK$59 million in the last period to HK$10 million due to the huge volatility of stock market globally especially in Hong Kong, and the financial services segment profit of the licensed business increased 47.5% from HK$30.4 million in the last period to HK$44.9 million, reflecting that the group's income structure is more stable and healthier and its ability to resist external risk fluctuations is strengthened.
As at 30 September 2021, the Group has 297 securities brokerage clients. During the Period, the transaction amount for the securities trading and brokerage services amounted to approximately HK$7,830 million. As at 30 September 2021, the total customer asset size for brokerage services amounted to approximately HK$1,887 million.
The margin financing business includes provision of stock-secured financing for retail, corporate and high-net-worth clients who need financing to purchase securities. As at 30 September 2021, the loan receivables from margin financing services amounted to approximately HK$149.4 million.
Following the acquisition of a licensed entity in the Cayman Islands ("Cayman Investment Manager") and a licensed entity in Singapore ("Singapore Investment Manager"), the Group commenced the provision of investment management services in both places, and the management fees charged by the Cayman Investment Manager and the Singapore Investment Manager contributed to the revenue of the Group during the Reporting Period. The investment advisory services include providing securities advisory services to clients. As at 30 September 2021, the assets under investment management and assets subject to investment advisory services of the Group were approximately HK$4,841 million. During the Reporting Period, the service fees charged by the Group for managing the assets under investment management in Cayman Islands and Singapore amounted to approximately HK$23.3 million.
See more data as below:
HK$'000 |
30-Sep-21 |
30-Sep-20 |
Revenue |
156,583 |
168,790 |
Gross Profit |
88,919 |
53,166 |
Gross Profit Margin |
57% |
31% |
Net Profit |
51,589 |
66,271 |
Total Asset |
850,321 |
492,811 |
HK$'000 |
30-Sep-21 |
30-Sep-20 |
Revenue by Segment |
156,583 |
168,790 |
Licensed Business |
79,397 |
99,731 |
Money Lending Services |
8,056 |
1,944 |
Apparel Business |
69,130 |
67,115 |
HK$'000 |
30-Sep-21 |
30-Sep-20 |
Profit before Tax by Segment |
54,752 |
70,700 |
Licensed Business |
44,871 |
30,415 |
Money Lending Services |
4,608 |
1,325 |
Apparel Business |
311 |
(3,260) |
2020: Asset Management Services |
10,941 |
59,756 |
Corporate Expenses |
(5,979) |
(17,536) |
Intended to Acquire Family Office Business to Accelerate the Company's Deployment of Asset Management and Family Office Business
In September 2021, DL Holdings issued a memorandum of understanding (MOU) of inside information and announced that it intended to acquire part of its affiliated company DL Family Office (HK) Limited which the asset under management and advisory is around US$1.27 billion, equivalent to approximately HK$10 billion. The possible acquisition of part of the equity and business of the family office indicated that DL Holdings is striving to accelerate its deployment and deep cultivation in the fields of asset management and wealth inheritance.
The possible acquisition can be regarded as accelerating the integration of the asset management segment into the business scope of DL Holdings, becoming possibly the first listed financial company on the Hong Kong Stock Exchange that provides licensed services of multi-family offices. In the future, in terms of the expansion of the client base, the linkage between family clients and corporate services, the amount of assets under management and the number of clients will have broader room for growth. Clients and channel resources of family office can fully match with the corporate clients of securities services, resulting in an expected substantial and long-term growth in revenue and profits.
Expanded to Global Residency planning and Wealth Inheritance Consultancy Services
In October 2021, DL Holdings acquired a global immigration consulting services company, to develop its global residency planning and wealth inheritance consultancy services. The Acquisition will be beneficial for the Group to expand its customer base and source of income and increase the service offerings of family offices and wealth inheritance services, which will enhance its expertise and impact in the industry, and serve as an important role in its strategic development for worldwide business expansion.
Joined the Hong Kong Israel Collaboration (HKIC) Working Group
DL Holdings was recommended and selected by Financial Services Development Council (FSDC), Invest Hong Kong and Consulate General of Israel in Hong Kong & Macau to join the Hong Kong-Israel (HKI) Collaboration Working Group as one of the founding members, to address the strategic opportunity that raises the profile of Hong Kong and its role as an international financial center, a leading capital market, and specifically a family office hub in Asia. DL Holdings started a joint venture with a well-known Israel family ten years ago, and was already established a solid partnership with the most experienced family offices in the world. The HKIC will definitely broaden the investment opportunity in Israel and enhance DL's position and importance in Family Office Business.
Favorable External Environment Under Initiatives by the Government
The Limited Partnership Fund Ordinance (Chapter 637), which introduces Hong Kong's very own limited partnership fund (LPF) regime for private equity funds, has officially implemented for over a year. DL has established 18 LPFs as first mover to provide investment services with more efficiency and lower cost.
In the context of the accelerated deployment of the Greater Bay Area, the trading volumes in Hong Kong will find great room for growth based on the launch of the measures such as the Shanghai and Shenzhen Stock Connect, the Wealth Management Connect which will create huge opportunities for the Group in coming future, especially when the pandemic situation is over.
Looking ahead, Mr. Victor Ai, Partner and Chief Marketing Officer of DL Holdings Group commented, "We expect that opportunities outweigh challenges in future. As the pandemic slowed down in China, the economic recovery of China accelerates with further increase in capital demand and liquidity. Given the homecoming listings of China concepts stocks and the huge demand of wealth management of Chinese families, the financial industry in Hong Kong has shown good prospects and we believe that there will be significant growth potential. With the outstanding management and seasoned professionals of the Group, the Group is well positioned to grasp development opportunities to expand business portfolio to maximize returns for Shareholders."
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