Value Partners maintains sound financial health
14 March 2013
News, Asia, Hong Kong
By Asia Asset Management
Value Partners Group Limited announced its final results for the year ended December 31, 2012, yesterday (March 13).
Profit attributable to equity holders of the company was HK$376.4 million, which represents a 125.0% increase from 2011. This was mainly driven by significant gains made with the group’s treasury operation, which include investment in its underlying funds and other treasury returns. The group’s revenue saw a slight drop by 5.4% with a decline in management fees and performance fees. However, the group still earned performance fees with products such as Value Partners’ second largest own-branded fund High-Dividend Stocks Fund. In terms of fund inflow, the group continued to record a net subscription of US$183 million in the year (2011: US$847 million), leveraging Value Partners’ strong branding, distribution network and strategic product development.
Timothy Tse, CEO of Value Partners, said: “We achieved solid results in 2012 despite an uncertain investment environment for much of the year. Our net profit increased while we were able to grow our AUM to reach the record high in our history. We did not benefit much in the year from performance fees but in 2013, this could change.” For reference, the unaudited AUM of the group hit an all-time high of US$9.4 billion by the end of February 2013.
“Currently, many of our funds are on the way to reach their high watermarks, which will allow collection of performance fees,” added Mr. Tse. “Our High Dividend-Stocks Fund even surpassed its high watermark by 4.7% as of the end of February. We are entering a phase of growth for value investing where performance fees will likely be a bigger income contributor.”
In 2012, the group continued to build on its success in Hong Kong by strengthening its distribution channels, solidifying the inflows from pension funds, expanding its global investor base, developing strategic new products and enriching its ETF offerings. Seeing vast opportunities arising in Greater China, the group has been working to capture new business opportunities across the strait.
Capitalising on China opportunities going forward – QFII and RQFII
With the US$100 million Qualified Foreign Institutional Investors (QFII) quota that Value Partners received by the end of 2012, the group launched an A-share product primarily for institutional investors in March 2013. Following the expansion of the Renminbi Qualified Foreign Institutional Investors (RQFII) scheme as announced in March 2013 by the China Securities Regulatory Commission (CSRC) to cover Hong Kong-registered financial institutions with major business in the territory, the group will be applying for RQFII quota to capture related business opportunities.
For 2012, the board of directors of the group recommended a final dividend of HK6.3 cents per share, and a special “anniversary” dividend of HK9.7 cents per share to their shareholders, as Value Partners celebrates the 20th anniversary of its founding in 2013.
Overall, the group managed to maintain sound financial health. The group’s total expenses amounted to HK$272.4 million (2011: HK$253.1 million). The fixed costs of the group’s fund management business were well covered by net management fee income alone, at a coverage ratio of 2.2 times. The group’s balance sheet and liquidity remained strong, with a net cash balance of HK$888.1 million. Net cash inflows from operating activities amounted to HK$41.7 million, and the group had no borrowings.
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