2020 interim results presentation - htsc.com.cn
TRANSCRIPT
2020 Interim Results Presentation
September 2020
(A joint stock company incorporated in the PRC with limited liability
under the Chinese corporate name 华泰证券股份有限公司 and
carrying on business in Hong Kong as HTSC)
1
Agenda
22
23
21
Financial overview
Business overview
概要Company overview
24 Development strategy
2
Company overview
Financial overview
Business overview
Agenda
Development strategy
3
0
200
400
600
800
1,000
1,200
1,400
1,600
01/19 05/19 09/19 01/20 06/20
13.5
16.9
1H19 1H20
61
144
1H19 1H20
(RMBbn)
2,000
3,000
4,000
5,000
6,000
7,000
01/15 11/15 10/16 09/17 08/18 07/19 06/20
Shenzhen Composite Index Hang Seng Index
FTSE 100 S&P 500
Shanghai Composite Index
Performance of key market indices1
Scale of mutual funds (NAV)
Market Environment
Number and offering size of IPOs
(RMBbn) (RMBtn)
(人民币十亿元)
-7.7%
+50.6%
+3.5%
Northbound trading volume and
proportion
4,917
8,242
1H19 1H20
Stock trading volume
+39.6%
-5.7%
High: 1,415
(RMBbn)
7.1% 9.3%Trading %
Margin financing and securities
lending (MFSL) balance
(RMBbn)
64 128# of IPO
0
100
200
300
400
6,000
7,000
8,000
9,000
10,000
11,000
12,000
01/19 05/19 09/19 01/20 06/20
融资余额 融券余额
1,200
1,100
1,000
900
800
700
600
40
30
20
20
0
Margin financing Securities lending
Margin financing Securities lending
Source: Securities Association of China, Wind, Asset Management Association of China
Note: 1. All indices are rebased to the beginning level of Shanghai Composite Index
In the first half of 2020, the capital market continued to reform and open up despite COVID-19. Trading is active in A-share market
with surging margin financing and historic record of securities lending balance. The registration-based reform has propelled growth
in direct financing, mutual fund scale recorded historic high and institutionalization of market participants accelerated
4
4,057
6,405
1H19 1H20
Performance Overview
562 594
126 128
2019 1H20Total assets Net assets
Net profit
ROAA and ROAE 1 1H20 revenue breakdown
Significant improvement in profitability with expansion of total assets and optimization of revenue structure
0.9% 1.1%
3.8%
5.0%
1H19 1H20
ROAA ROAE
(RMBmm)
Total assets and net assets
(RMBbn)
Wealth
management
30.3%
Capital-
based intermediary services
13.3%
Institutional
services23.8%
Investment
management
14.3%
Internationa
l business14.1%
Others
4.2%
Source: Company data
Note: 1. ROAA = net profit / average total assets, ROAE = net profit / average net assets
5
Business Highlights
Strengthening leadership Pursuing breakthrough
Ranked #1 in terms of interest income from
margin financing and securities lending
business1
AssetMark’s platform AUM reached USD63.2bn,
with steady growth from 2019
Among the first to be selected for core
businesses pilot qualifications including
pilot regulation on consolidated basis and pilot
fund investment advisory services, etc.
Ranked #1 by ZhangLe Fortune Path in
terms of MAU among PRC securities firms’
apps, MAU exceeded 9.1mm
Ranked #3 in terms of average monthly
balance of actively managed private funds
Ranked #1 in terms of brokerage trading
volume of stocks and funds
# of clients > 15mm
Ranked #2 in terms of the value and number
of CSRC-approved M&A transactions3
Ranked #1 in terms of accumulated incremental
nominal principle of OTC derivatives2
> RMB3.9tn total client assets
Source: Company data, CISP of CSRC, SAC, Wind
Note: 1. 1H20 statistics according to Securities Association of China; 2. OTC statistics as of May 2020
3. 1H20 statistics; 4. Ranking based on Asset Management Association of China’s 2Q20 ranking on monthly average AUM of private funds
6
Company Overview
Financial overview
Company overview
Business overview
Development strategy
Agenda
7
14,728
18,972
1H19 1H20
Continuous Improvement in Profitability and Operational Efficiency
Total revenue
Source: Company data, financial report (IFRS)
Operating profit and net profit
(RMBmm)
(RMBmm)
Earnings per share
(RMB)
Cost-to-income ratio
71.9% 69.1%
1H19 1H20
0.49
0.71
1H19 1H20
4,138
5,858
4,057
6,405
1H19 1H20
Operating profit Net profit
8
Robust Growth across All Business Lines
Wealth management revenue
Investment management revenue
Institutional services revenue
International business revenue
7,315
8,265
1H19 1H20
(RMBmm)
3,113
4,520
1H19 1H20
1,926
2,717
1H19 1H20
1,835
2,666
1H19 1H20
(RMBmm)
(RMBmm)(RMBmm)
+13.0% +45.2%
+41.1% +45.3%
Source: Company data, financial report (IFRS)
9
4,679
69,006
201,279
85,472
286,751
62,176
286,751
73,685
139,569
66,080
291,082
82,910
154,092
4,598
78,312
190,196
100,886
Achieved Steady Assets Growth and Continuous Optimization of Assets Structure
(RMBmm)
Others
Financial assets
Credit assets
Cash assets
2019 1H20 2019
Bond
Other financial
assets
Steady assets growth
Rapid growth in margin financing while stock pledged
lending balance remained low
2019 1H20
Stock pledged
repo1
Stable financial assets with a modest decline in share of
bond assets
Margin financing
1H20
562,181
24.8%
13.1%
51.0%
11.1%
93.6%
6.4%
73,685
70.2%
594,16482,910
291,082
25.9%
14.0%
49.0%
11.1%
94.5%
5.5%
65.3%
Source: Company data, financial report (IFRS)
Note: 1. Calculated after deduction of impairment losses
10
76,700
95,470
41,236
133,661
213,406
118,805
108,006
238,698
89,822 20.6%
54.7%
24.7% 65,467
109,719
63,512
238,698
46.0%
Slight Decline in Financial Leverage and Strong Liquidity
• On February 12, 2020, the Company successfully issued one tranche of USD Bond, with total amounts of USD400mm and floating coupon rate
• On March 26, 2020, the Company successfully issued one tranche of Corporate Bond, with total amounts of RMB8bn and coupon rate of 2.99%
• On April 29, 2020, the Company successfully issued one tranche of Corporate Bond, with total amounts of RMB3.5bn and coupon rate of 2.90%
• On May 21, 2020, the Company successfully issued one tranche of Corporate Bond, with total amounts of RMB3.0bn and coupon rate of 3.20%
• On June 18, 2020, the Company successfully issued one tranche of Corporate Bond, with total amounts of RMB2.3bn and coupon rate of 2.58%
• On June 18, 2020, the Company successfully issued one tranche of Corporate Bond, with total amounts of RMB3.2bn and coupon rate of 3.10%
Bond issuance
Customer funds
Interest-bearing
liabilities
Other liabilities
Net assets
(RMBmm)
Increase in customer funds and slight decrease in
interest-bearing liabilities
2019 1H20 2019 1H20
Long-term
liabilities
Repurchase
agreement (Repo)
Current
liabilities
Strong liquidity
2019 1H20 Current ratio Liquidity coverage
ratio
Optimizing structure of interest-bearing liabilities
Net stable
funding ratio
100%
125,655
436,526
213,406
465,871
128,293
25.5%
45.8%
28.7%
44.7%
150%
235%
144%
11
Financial overview
Business overview
Development strategy
Company overview
Agenda
12
ZhangLe Fortune Path
Established a Headquarter-driven, Onshore and Offshore Integrated Wealth
Management Platform
Monthly active
users (MAU)1
Aggregate downloads
and usages
9,110k
53,563k1,135k
New accounts opened
on mobile 4,748 MAU2
Customer insights
Curated plans
Targeted services
Process management
Optimization of Offline BranchesProfessional Wealth Management Team
2,414 Investment advisors to build a multi-layered,
high-quality and professional team 243 Securities branches
42 Futures branches
～70%Branches located in economically
developed area
Offline branches
3 intelligent branches, 1 wealth management branch, with
more to come
Professional + Intelligent networks
Intelligent branches
A wealth management platform
connecting global markets and
serving global Chinese
Integrated
Operation
Integrated Platform
Empowerment
Source: Company data, Analysys source
Note: 1. MAU as of June 2020; 2. MAU as of June 2020
Securities Lending Path
The first open online securities
lending platform in the industry
Create a financial advisory business system centered
on asset allocation services
ZhangLe Global
Creating a new digital operating
model in the securities lending
industry
Investment Advisor’s
Cloud Platform
Ranked No.1 amongst
Apps developed by
securities companies in
terms of average MAU
13
12,780
13,936
15,057
2.463.35
3.92
0
2
4
6
8
10
10,000
11,000
12,000
13,000
14,000
15,000
16,000
2018 2019 1H20
44 67 77
54
38 36
2018 2019 1H20Margin financing and securities lending Stock pledged repo
98105
Established a Headquarter-driven, Onshore and Offshore Integrated Wealth Management
Platform (Cont’d)
Capital-based intermediary business size
(RMBbn)
Financial products sales volume1
Source: Company data
Note: 1. Tiantianfa is not included in the value of financial products distributed and the number of financial products for sales
(RMBbn)
300 374
264
2018 2019 1H20
5,456 5,533 5,691Number of
financial
products for sale
(Thousands)
14.3
20.6
14.6
2018 2019 1H20
1
(RMBtn)
Stock and fund trading volume
Ranking 1 1
Number of brokerage and wealth management customers
and size of customer assets
Driven by advanced platform, brokerage trading volume maintained No. 1 position, customer base and customer assets significantly
expanded. Sales of financial products and balance of margin financing and securities lending surged with continuous unleashing of
WM platform’s advantages and systematic synergies
(RMBtn)
Number of customers Customer assets size
2018 1H202019
113
14
Developed Best-in-class Competitive Advantages for Investment Banking Business
110 128
48
2018 2019 1H20
204
336
230
2018 2019 1H20
139 132
74
2018 2019 1H20
Maintained steady development and industry leadership by grasping opportunities from the rise of New Economy and the introduction
of registration-based reform, focusing on technology innovation and real economy, deepening engagement with quality customers,
enhancing cross-border collaborations, and seizing business opportunities from GDR, homecoming of overseas-listed Chinese
stocks and offshore listing
Source: Company information, Wind
Note: 1. Value and number of M&A transactions based on CSRC
2. Equity underwriting includes IPO, follow-on offering, rights issue, preferred shares, convertible bond and exchangeable bond
3. Debt underwriting includes local government bond, policy financial bond, non-policy financial bond, enterprise bond, corporate bond, medium term notes, commercial paper, private placement notes
(PPN), foreign issuer bond, government-backed bond, asset-backed securities, convertible bond, exchangeable bond and bonds of other types
股权承销规模与数量排名3 Debt underwriting volume and number ranking 3
(RMBbn)(RMBbn)
Ranking 8 7
39 49 33Number of
transactions
432 1,086 836Number of
transactions
Industry-leading by M&A transaction value1
No.3 in terms of equity underwriting volume2
（RMBbn)
15 14 8Number of
transactions
Ranking 1 1 2
Ranking 3 3 3 6
Huatai United Securities sponsored 9 out
of 74 companies approved by the Listing
Committee of STAR Market in 1H20
12%
34 STAR Market IPOs
accepted by SSE, ranking
No.2 in the industry
Industry-leading position in terms of the number of
accepted and approved IPOs on STAR Market
2
15
Source: Company information
Empowered corporate development by leading investment banking capabilities and facilitate innovative landmark transactions through
seizing policy and market opportunities with foresight. Supported corporate financing for COVID-19 relief and demonstrated social
responsibilities
Embrace capital
market reforms and
support technology
innovation
IPO
Support clients to
be better and
stronger
Refinancing
Close complex and
innovative
transactions
M&A
Support real
economy
Debt
financing
A global leading integrated
smart PV solution provider
A leader in FPC testing
sector
The most profitable biopharma
IPO on SZSE since 2019
The most efficient registration since
the implementation of registration-
based reform
The first power
battery stock on the
STAR Market
Raised RMB12,782mm
The largest private placement in
1H20
Raised RMB11,619mm
The largest equity financing in Jiangsu
in 2020
The first exchangeable bond
offering across markets in
2020
Highest price premium
among >RMB2bn refinancing
in 2020
The first acquisition with
newly offered shares
registered on the STAR
Market
Deal size RMB17,028mm
The largest approved reorganization
and listing in 1H20
The first debt-to-equity swap
via share placement by a
private holding company
RMB14,504mm
The largest M&A deal in
hazardous waste services
industry in A share
RMB100bn+ company in
chip industry
7 working days from
acceptance to approval
The first publicly offered
COVID-19 relief securitized
product
The first COVID-19 relief
ABN product by a private
company
Huatai-Zheshang Phase 1 ABS Specialized Plan
The first special situation ABS by local AMCs in China
The first onshore non-FI
climate bond
The first corporate
bond by funds
Developed Best-in-class Competitive Advantages for Investment Banking Business (Cont’d)
16
Developed Platform-based Systematic Capabilities for Institutional Services and
Improved Integrated Financial ServicesScale of fund custody and administration business improved continuously, mutual fund trading volume further increased;
investment and trading relied on platform-based systematic capabilities to further upgrade and transform in order to secure more
pricing power and better trading capabilities and further diversify profit model
73
131 160
71
156
221
2018 2019 1H20Custody Administration
445
672
469
2018 2019 1H20
Investment and Trading Business
Scale of fund under custody and administration
services1
(RMBbn)
Mutual Funds trading volume(RMBbn)
Note: 1. The size of fund administration services excludes that of AM subsidiaries; 2. Statistics from Wind Info; 3. Statistics from Securities Association of China, as of May 2020
Institutional Investor Services
Platform-driven business innovation
Platform-based systematic capabilities
Boost trading volume Rank No.22 in terms of bond
settlement volume
Secure pricing powerIndustry-leading market-
making volume of exchange-
traded options
Enhance product
conversion
Rank No.13 in terms of
incremental nominal principal
of OTC
Provide professional services to credit
investment research including credit
risk assessment, alerting and pricing
Credit analysis
managementFlash trading
platform
Flash low-latency trading services
for quantitative and algorithmic
based trading
Application Platform
17
563 623
709
266 299369
2018 2019 1H20
Mutual funds Other funds
98 108
132
2018 2019 1H20
2624
19
0
2018 2019 1H20
Fund size (RMB100mm)
113 147 150
583 444 432
81 112 101
783 726 718
2018 2019 1H20
Collective AM Targeted AM Special scheme AM Mutual fund
AUM of securities firm asset management
Maintained Leadership in Investment Management Business with Enhanced Active
Management Capabilities
AUM of affiliated mutual funds
Number and value of private equity investments
(RMBbn)
Ranking
by AUM1
3 3
(RMBbn) (RMBbn)
4
By leveraging extensive customer base and full coverage of the business chain, created a diversified product portfolio to address
differentiated customer demands; maintained industry leadership with significant expansion in share of active management business
and substantial growth in private equity investments
Source: Company information, Wind
Note: 1. 1H20 ranking based on Asset Management Association of China’s 2Q20 ranking on monthly average AUM of private funds
(RMB100mm)
59 40 20Number of
investments
18
Improvement in Competitiveness and Influence of International Business
International business deepens cross-border collaborations and platform advantages. HK subsidiary fully integrated the group's
entire business chain system to provide a full range of cross-border comprehensive financial services for domestic and foreign
customers; AssetMark grasped the core business highlights, and the scale of assets under management and operating performance
grew steadily; Huatai Securities (USA) continued to expand its business
61,608
63,229
2019 1H20
AUM (USDmm)
Financial advisors
8,400+
Note: 1.HKEx, Dealogic，deals that raised>USD50mm; 2. As of the end of 3Q2019; 3. As of the end of 2019; 4. Growth compared with the end of 2019; 5. Growth compared with the end of 2019
Investor households
179,000+
Enhanced Huatai Securities (USA) platform with active business development
11.0%2 11.0%3Market share
Market share
ranking3 3 6.5%4
10.4%5
2.6%
Improving performance
• Launched institutional sales and trading businesses
• Continuous promotion of IB business
• Continuous optimization of cross-border collaboration mechanism between US
business and onshore/Hong Kong businesses
Officially launched ZhangLe Global 2.0
• WM platform for worldwide Chinese investors
Huatai International led CPIC’s GDR listing by leveraging
integrated collaborations between onshore and offshore
IB businesses, further solidified Huatai’s leadership in serving
Chinese companies for GDR listing
Institutional business: Actively promoted new account opening, engaged top-tier clients,
deepened client classification, provided customized solutions for different types of clients
• Renowned global long funds • Global quant funds and hedge funds• Top-tier Chinese overseas/cross-border
institutions
• Top-class Hong Kong funds
213 new cash/stock accounts opened in 1H20, up by 350% YoY
Awards
• Corporate Finance Excellence Awards
Bloomberg Businessweek/Chinese Edition: “Financial Institution Awards 2020”
• Risk Management Excellence Awards
• Best Private Debt Institutional Investor in Asia Pacific
2019 Annual Award by Global renowned private debt market magazine “PDI”
Completed 8 IPOs in 1H20, including listing of Peijia and Kintor on the Main Board of HKEx
and secondary listing of NetEase and JD.com in Hong Kong; conducted business in “full
circulation” of the domestic shares of H-share companies
• In 1H20, Huatai International ranked #3 among all Chinese securities companies
in HK in both underwriting number and value1 of IPOs
19
Business Development Empowered by Open Platform and Digitalization Mindset
Focused on wealth management and institutional services to build a strong digital middle office, consolidated secure and efficient
infrastructure, and created an advanced client-oriented digital financial services platform, thereby empowering quality development
of all businesses
Leading wealth
management
and
institutional
services
terminals
Intelligent
digital middle
office Provide professional
credit research
services
Investment
Research
Investment
Banking
IB Cloud
Integrated, full-cycle
digital investment
banking service platform
Enterprise-grade risk
management platform for
risk monitoring, alerting
and preventionRisk
managementCloud Security
Active and responsive information
security product to help monitor
the data security and defend
external threat
Industry-leading hybrid cloud
structure to secure business stability
and continuous delivery
Detailed customer
profiling enables better
customer relationship and
business efficiency
CRM
Customer
Relationship
Full-link, automated and
intelligent data management
service system
Data Middle
Platform
Data
Management
Wealth management
Provide first-class investment
and trading experience for
domestic retail customers
Zhangle
Fortune Path
One-stop cloud
platform for financial
advisors
Secure and
efficient
infrastructure
Institutional services
Comprehensive platform providing
exclusive digital financial services
for institutional clients
Xing ZhiZhangle
Global
Wealth management platform
for worldwide Chinese
investors to invest globally
AORTA
The first open online
securities lending platform
Securities
Lending Path
Investment Advisors’
Cloud Platform
20
24.6%
18.5%
27.6%
2018 2019 1H20
648.3%
460.6%
234.9%
2018 2019 1H20
281.9%258.1% 265.9%
2018 2019 1H20
141.0%139.0%
144.2%
2018 2019 1H20
Risk coverage ratio Liquidity coverage ratioCapital leverage ratio Net stable funding ratio
100% 100%8% 100%
Source: Company data
Note: 1. Red dotted lines represent regulatory requirement
Continued to Build an Integrated and Digitalized Risk Management System
Adhere to the risk management concept of full staff, coverage and penetration, and build an integrated risk management system
onshore and offshore based on technology empowerment with the idea of centralization, professionalism and integration; By seizing
the opportunity of being selected for the pilot program of consolidation supervision, benchmark first-class risk management standard,
continue to improve risk management capabilities and support company's international development
Strengthen ex-ante assessment, in-process monitoring and warning, and post-ante handling of risks
associated with key businesses and segments to make risk management strategies and measures more
professional, forward-looking and proactive and effectively prevent and control substantive business risks
Digitalization
System
development
Continue to optimize the structure and process of the comprehensive risk management system by
benchmarking with top-class risk management practice and complying with higher standard to support global
development, and deepen professional risk management to fully cover all the business processes
Continue to construct an effective integrated risk management platform, build digitized risk management
process into the entire business chain, establish a risk management platform driven by data analytics, and
facilitate model transformation and efficiency improvement in risk control through technology empowerment
Risk
prevention
21
Financial overview
Business overview
Development strategy
Company overview
Agenda
22
Development Strategy for 2020
Institutional
services
Investment
management
Client resources
Financial products
Investment
banking
Integration
Cross LOB
Collaborations
Open
Platform-based
Mutual
Empowerment
Wealth
management
Project
resources
High-quality
assets
Two Focuses
#1 To further promote the tech-empowered “two-pronged” development strategy for wealth management and institutional services and to
propel new growth areas through platform-based approach
#2 To develop a client-centric integrated service system, expand the client base and client ecosystem and develop best-in-class investment
banking franchise
23
Disclaimer
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HTSC, (the “Company”), together with its subsidiaries, hereinafter referred to as the “Group”). It is being made available by the Company to a limited number of recipients. The contents of
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