- Achieving Encouraging Progress in Digital Assets Business
- Bolstering Core Competencies in Asset Management and Insurance Brokerage Fields
Value Convergence Holdings Limited (VC Holdings, together with its subsidiaries, the Group; HKG: 0821), a well-established and one-stop financial services institution in Hong Kong, is pleased to announce its unaudited interim results for the six months ended 30 June 2023 (the Reporting Period). The Group focused on improving its core competence in the industry by expanding its asset management and insurance brokerage businesses, while encouraging progress was made in its digital assets business during the Reporting Period.
During the Reporting Period, the Group’s consolidated revenue increased by about 10% year on year to approximately HK$39.4 million (1H 2022: approximately HK$35.7 million), attributable primarily to the growth of sales and marketing in its digital assets business, as well as the commencement of its insurance brokerage and asset management businesses. Despite sound operations and the rollout of innovative developments, brokerage commissions declined substantially, in line with the deterioration of Hong Kong’s capital markets. The volatile and weakened equity market hampered the Group’s key business, leading to an increase in net realised and unrealised loss in financial assets. Coupled with other factors including increase in impairment loss on accounts receivable and other receivables, recognition of equity-settled share option expense and absence of gain on acquisition of financial assets during the Reporting Period, the consolidated loss attributable to shareholders amounted to approximately HK$134.1 million (1H 2022: loss for the period attributable to shareholders of HK$61.8 million). Basic loss per share was HK5.43 cents (1H 2022: HK2.97 cents).
Mr. Peter Fu, Chairman and Executive Director of Value Convergence Holdings Limited, said, “During the first half of 2023, the global economy experienced severe headwinds, attributable mainly to the lingering effects of the Coronavirus Disease 2019 (“COVID-19” or the “pandemic”), the ongoing Russia-Ukraine conflict, and soaring inflation in both developed and developing countries. These issues resulted in reduced investor confidence, leading to significant volatility on financial markets and the Group’s performance. In view of market volatility, the Group made significant efforts to enhance the diversification of its business to create a new engine for revenue growth and mitigate operational risks amid market uncertainty.”
Business Overview
Financial Services Business
During the Reporting Period, with its persistent efforts to diversify its business, the contribution of the Group’s traditional brokerage and financing businesses to its total revenue declined to approximately 80.0%. The Group continued to offer local and overseas securities trading, derivatives and trading in other structure products, placements, underwriting and margin financing services through VC Brokerage Limited (“VC Brokerage”), and financing services through VC Finance Limited (“VC Finance”). The Group also acted as a placing agent and underwriter for a Hong Kong-listed company’s fundraising activities. In addition, the Group offered corporate finance advisory services, including mergers and acquisitions advisory through VC Capital Limited (“VC Capital”) and company secretarial services through VC Corporate Services Limited (“VCCS”).
Significant business development was achieved in asset management and insurance brokerage segments, with both beginning to generate appreciable revenues during the Reporting Period. In April 2023, the Group completed its acquisition of VC International Asset Management Limited (formerly known as “Anli Asset Management Limited”), allowing it to offer Type-9 (asset management) regulated services under and pursuant to the Securities and Futures Ordinance. Operating income was derived from management fees and performance fees earned from the provision of asset management services. Following the acquisition, the Group successfully expanded its customer base, enhanced its asset management business, and improved service quality. This has boosted the Group’s core competence in the asset management market, expecting the asset management business one of its fastest-growing segments. The Group also provides insurance brokerage services through Experts Management Limited, which holds an insurance broker company licence and is authorized to engage in long-term insurance activities.
Proprietary Trading Business
Global capital markets remained volatile during the first half of 2023. As of 30 June 2023, the Group held financial assets for trading, comprising equity securities listed in Hong Kong, worth approximately HK$219.7 million. During the Reporting Period, the Group held stocks mainly in the information technology and energy sectors.
Digital Assets Business
During the Reporting Period, the business segment achieved solid advances and significant revenue growth with both sales and marketing making remarkable progress, indicating that the Group’s long-term efforts in this field have begun to pay off. Following the formation of a professional sales and marketing team to broaden its sales channels, the Group’s gross merchandise value (“GMV”) – the gross sum of virtual assets sold to its customers – increased by approximately 44% year on year to around RMB147.0 million in the first half of 2023.
Outlook
Looking ahead, tighter credit conditions, reduced household savings in the US, and a slower-than-expected economic recovery in post-pandemic China remain major concerns that could prolong the global economic recovery. On a positive note, improved economic conditions in Hong Kong are expected to boost local demand. Meanwhile, Hong Kong’s government will enhance the city’s capital market interconnection mechanism to provide more opportunities for enterprises and investors, promoting a stable recovery of economic activity.
To expedite the development of the Group’s financial services business, additional resources will be allocated to expand its asset management and insurance brokerage businesses, which are expected to yield solid profits for the Group in the near future. With the reopening of the Hong Kong and mainland China border, the Group’s senior management team will visit potential investors and business partners in mainland China more frequently to explore business collaboration opportunities. Besides, the Group intends to expand its client base and improve the quality of its asset management services by leveraging the brands, reputations and management expertise of VC International Asset Management Limited and Anli Investment Fund SPC, boosting its core industry strengths.
Mr. Fu concluded, “To create new impetus for revenue growth and reduce the overall business risk, we will continue to diversify our businesses and prudently explore new opportunities. Our commitment to business diversification has enabled us to remain competitive in an ever-changing business landscape. Both asset management and insurance brokerage businesses, which demonstrated strong business growth during the Reporting Period, will remain as the main focus of our sustainable business development strategy. Capitalising on our solid experience and extensive portfolio of financial products and services, we will continue to improve profitability and generate returns to our shareholders and investors in the long run.”
About VC Holdings Limited
Value Convergence Holdings Limited (HKG: 0821) was listed on the GEM board of Hong Kong Stock Exchange in 2001, and completed transfer of listing to the Main Board in 2008. Being a well-established financial services group committed to delivering premier financial services and products in the Great China region, the Group’s services include (i) provision of financial services comprising securities and options brokering and dealing, financing services, corporate finance and other advisory services, asset management and insurance brokerage; (ii) proprietary trading; and (iii) sale and marketing of digital assets.
For more details, please visit www.vcgroup.com.hk.