MASON GP HOLD(00273) Company Profile
    Company Profile  
  Stock Name Mason Group Hold  
  Listing Date N/A  
  Sector Industrials  
  Chairman Ko Po Ming  
  Par Value 0  
  Total Issued Capital 44.375B  
  Market Cap 4.837B  
  Principal Activities

The Group is a health and wealth solutions service conglomerate. It principally provides comprehensive financial services in Hong Kong, including dealing in securities, commodities broking, provision of securities margin financing, provision of investment and corporate finance advisory services, investment in securities trading, money lending and investment holding.

Latest Results

The Group's profit attributable to shareholders for the year ended 31-12-2018 amounted to HKD 90.18 million. Basic earnings per share was HKD 0.002. A final dividend of HKD 0.00067 per share was declared. Turnover amounted to HKD 3.51 billion, an increase of 20.9% over the same period last year, gross profit margin up 1.5% to 23.1%. (Announcement Date: 26 Mar 2019)

Business Review - For the year ended December 31, 2018

Financial Services Business

Global business sentiment was dampened during the year by the escalated trade friction between the US and China. Given the anxiety on the global economic landscape, the Group has taken a more prudent approach in risk management to mitigate market uncertainty.

The Group’s financial services business segment comprises asset management, wealth management, private banking, financing services, trading of securities investments, financial brokerage and related services.

In financial services, the Group’s performance was boosted by the joining of European private bank, RPL, and Hong Kong-headquartered wealth management company, HFG Group. The two new acquisitions enabled the Group to further establish a global wealth management-centric financial platform with global presence and private banking at its very core. The combination of organic growth, acquisitions and investments during the Year resulted in the substantial expansion of the Group’s geographical footprint to Europe and Asia Pacific. All these efforts significantly strengthen the Group’s distribution channels and service capabilities, allowing it to provide more comprehensive wealth solutions to its clients and create a foundation on which further development can thrive.

The total turnover and operating income contributed by this business segment amounted to approximately HK$901.39 million and HK$334.12 million, respectively, during the Year (2017: HK$1,033.77 million and HK$212.48 million, respectively), accounting for approximately 22.12% and 9.53% of the Group’s total turnover and operating income, respectively. The total loss contributed by this segment amounted to approximately HK$48.42 million during the Year (2017: loss of HK$6.81 million) due to the trading of securities investments recorded a loss of approximately HK$58.78 million.

Wealth and Asset Management

The Group strengthened its wealth and asset management operation with the newly acquired Liechtenstein-based private bank, RPL, in March 2018 and the Hong Kong-headquartered wealth management company, HFG Group, in May 2018. With the integration of RPL and HFG Group, our wealth and asset management business generated a total operating income of approximately HK$169.74 million and total profit of approximately HK$19.63 million to the Group during the Year. We expect our prudent risk management and client targeting strategies will pave the way for good returns throughout the coming year.

The acquisition of RPL and HFG Group marked significant milestone in the Group’s endeavor to establish a wealth management-centric financial platform with global asset allocation capability, reconfiguring the Group’s financial services in shifting our focus on financial service to wealth and asset management. The joining of RPL has added impetus to the growth of the Group’s wealth and asset management operation, with the expectation of generating synergies in bringing European private banking solutions to the Group’s clients in Asia and facilitating cross-selling across the globe. The addition of HFG Group to the Group’s financial services platform has taken HFG Group’s development beyond Hong Kong and enhanced the Group’s service offerings in investment and financial advisory services. New growth plans are in the pipeline for both RPL and HFG Group, including the broadening of HFG Group’s network in Asia, as well as widening of both HFG Group and RPL’s product and service range to offer better finanFollowing the introduction of the Group’s first multi-strategy fund, targeting financial institutions and professional investors in early 2018, an additional Hong Kong equities fund was launched during the Year as part of the implementation of the Group’s strategy to increase asset under management (“AUM”). There are also plans to introduce more funds that can generate consistent and long term returns for wealth and asset management and institutional clients.

Investment banking services — securities and futures brokerage and related services, securities margin financing, leveraged and acquisition financing, corporate finance services and related services

The Hong Kong stock market experienced high volatility in 2018. After reaching a record high in January 2018, the Hang Seng Index (“HSI”) corrected and hit a 17-month low in October 2018. During the Year, the HSI and the Hang Seng China Enterprises Index (“HSCEI”) dropped 13.6% and 13.5% respectively, which was the largest drop in the past 7 years against a backdrop of trade tensions between the US and the Mainland escalated. A slowing China economy coupled with a weakening Renminbi further raised uncertainties about the outlook for corporate earnings.

In brokerage business, the Group continued to empower its business with technologies by upgrading the trading and supporting system and strengthened internal and external cooperation. In response to market volatility and global economic and policy uncertainties triggered by head wind in the trade environment since the second half of 2018, the Group has put extra efforts in and placed more emphasis on risk management, as well as refrained from high risk business endeavors and investments to minimize exposure to adverse conditions.

Due to unsatisfactory performance of the secondary market, many initial public offering (“IPO”) applicants have delayed their IPO plans. Despite the poor market and rigorous regulatory environment, corporate finance department has successfully obtained on IPO sponsor license and built up a professional investment banking team. Corporate finance department mandated several pre-IPO and financial advisory projects and completed the first equity capital market deal in the end of 2018.

The Group’s securities and futures brokerage business, securities margin financing, corporate finance advisory services, and other related financial services generated an operating income of approximately HK$83.29 million (2017: HK$78.96 million), representing a year-on-year increase of approximately 5.48% and loss of approximately HK$15.34 million (2017: HK$16.39 million).

Financing Services (mortgage and loans business)

During the Year, the Group’s financing services business, including leveraged and acquisition finance activities and mortgage loan securitization business in Hong Kong continued to expand, contributing a total operating income of approximately HK$130.68 million (2017: HK$119.08 million), which showed an increase of approximately 9.74%, while profit of the business segment was approximately HK$6.07 million (2017: HK$5.54 million).

The Group launched an asset-backed fixed income product as a part of the mortgage loan securitization business. The product was successfully distributed to institutional clients in Northeast Asia. The total size of the Group’s loan portfolio of mortgage and loan business, including the term loans granted by RPL, amounted to approximately HK$1,509.60 million in 2018 (2017: HK$1,490.97 million). The Group maintains sufficient collateral and guarantees and pays close attention to the credit qualifications of the borrowers.

Trading of Securities Investments

The listed securities held by the Group are mainly listed on the Hong Kong and overseas stock market. In view of the turbulence in the capital markets that was reflected by the HSI, suffering a 15% decline over 2018, the Group has divested the majority of its stock portfolio to redirect its resources to more robust and risk-averse activities in the financial division and to reduce exposure to market volatility. Affected by the downward pressure on stock prices, the Group’s trading of investments recorded a loss of approximately HK$58.78 million (2017: profit of HK$4.05 million). This was mainly due to the increase in fair value losses of the Group’s trading securities investment portfolio. The Group remains caution about the trading performance to minimise trading risks.

Healthcare Business

The infertility ratio of couples in China at childbearing age continues to rise, one in every eight married couples in the country experience fertility problem. The Group has created a solid foundation for the ongoing development of its healthcare business to tap into the promising assisted reproduction market. The market potential is even greater with the rising demand for premium services in this field, particularly from Chinese outbound medical tourism in various medical areas including assisted reproductive services.

Major milestones have been reached with the consolidation of the assisted reproductive services in the region with the establishment of RHG Group through the merger of RHG and The HK Women’s Clinic Group Limited, a leading premium IVF practice in Hong Kong, and the participation in a consortium to invest in Australia-based leading global fertility group, Genea Limited (“Genea”), in the healthcare division.

With the participation in the investment in Genea in October 2018, the Group made considerable progress in building its IVF medical platform. Established for more than 30 years, Genea is the only integrated assisted reproductive technology (“ART”) platform in the industry worldwide that both provides services and develops technology including culture media and embryo transfer catheters used in more than 600 clinics across 60 countries. Genea offers a comprehensive range of ART services, including IVF, egg and embryo freezing, genetic testing, sperm bank, day surgeries, and pathology in Australia, New Zealand, and Thailand. The investment in Genea marked a crucial step for the Group to extend the assisted reproductive services supply chain and for its healthcare division to broaden its reach beyond Asia, and at the same time signaled a major landmark for Genea to expand its presence outside Australia. It is a big leap for the Group to achieve the goal of consolidating premium medical services to expand the geographical outreach of its IVF business.

The Group’s healthcare business, comprising the provision of IVF services, genetic diagnostic and advisory services, and health screening services, generated an operating income of approximately HK$65.35 million in 2018 (2017: HK$143.23 million), contributing approximately 1.86% to the Group’s total operating income. The healthcare division recorded a profit of approximately HK$140.85 million (2017: HK$42.36 million), representing approximately 232.51% increase. The decrease of operating income was due to RHG Group’s cessation as a subsidiary after the merger of RHG and The HK Women’s Clinic Group Limited on 8 June 2018 (“Merger”). The Merger of RHG and The HK Women’s Clinic Group Limited has formed a leading premium IVF practice in Hong Kong during the Year. The merger brought together 14 prominent doctors and specialists and 2 pioneers in the field of assisted reproduction. The consolidation of resources allows RHG to provide a more comprehensive range of IVF medical services including intra-uterine insemination, IVF/test tube baby, frozen-thawed embryo transfer and egg freezing services. Subsequent to the Merger, RHG ceased to be a subsidiary but an associate company of the Group, with the introduction of We Doctor Holdings Limited (“WeDoctor”) as its strategic investor, its operating income no longer contributed to the Group’s overall operating income. The reported profits of RHG Group (including the profits of RHG before the Merger and share of profits after becoming an associate) and the gain on deemed disposal of interests in RHG for the Year was approximately HK$127.41 million (2017: HK$36.34 million).

In late 2018, the Group seized the opportunity to invest in a health check centre in Hong Kong which provides health screening services. The centre will add to the Group’s healthcare provision business and is expected to complement the services offered by RHG and its associate company, Pangenia Inc and its subsidiaries (“Pangenia”), a genetic diagnostic and advisory service provider. The reported share of profits of Pangenia for the Year was approximately HK$13.44 million (2017: HK$6.02 million).

Mother-infant-child Consumer Investments

The Group’s investments in mother-infant-child consumer business consists of franchising and retailing of mother-infant-child products, and manufacturing of infant formula and nutritional products. The segment posted an operating income of approximately HK$3,107.53 million during the Year (2017: HK$2,544.73 million), demonstrating an increase of 22.12% and accounting for 88.61% of the Group’s total operating income. Profit recorded for the division was approximately HK$116.16 million during the Year (2017: loss of HK$5.12 million).

Franchising and Retailing of Mother-Infant-Child Products

The foothold of AYD Group Limited (“AYD”) and its subsidiaries (collectively, “AYD Group”) in China strengthened in 2018, accumulating over 1,200 franchised and direct-sale stores and 6,756 partnership stores in its regional network, with growth particularly evidenced by the number of franchise stores in Southern and Eastern China. During the Year, AYD Group’s franchising and retailing of mother-infant-child products contributed an operating income of approximately HK$3,016.01 million (2017: HK$2,511.78 million), which marked an increase of approximately 20.07%, and a profit of approximately HK$136.60 million (2017: loss of HK$5.35 million).

Manufacture of infant formula and nutritional products

The Group’s dairy products business segment, consisting of Australian infant formula manufacturer, Blend and Pack Pty Limited (“Blend & Pack”), generated approximately HK$91.52 million (2017: HK$32.95 million) in operating income and earnings before interest, taxes, depreciation and amortisation (“EBITDA”) of approximately HK$940,000 (2017: HK$7.02 million) contributed to the Group during the Year. In 2018, Blend & Pack produced 4.9 million cans of milk powder and sold 4.6 million cans.

In considering the changing global economic conditions, rising trade barriers between countries, and regulatory uncertainties in the food industry, the Group decided to adopt a more prudent approach by lessening its exposure in cross border trading business. As a result, the Group disposed of its stake of 46% in Blend & Pack and granting of put and call options of 29% in Blend & Pack in February 2019. Further details are set out in the announcements of the Company dated 8 February 2019 and 22 February 2019.

Business Outlook - For the year ended December 31, 2018

Financial platform

With the completion of acquisition and full integration of RPL and HFG Group into the Group’s wealth management-centric financial platform, the Group now eyes expansion opportunities in the Asia Pacific region. The Group will continue to integrate its existing financial assets to maximize the synergies and cross-selling opportunities. The Group will also focus on expanding and strengthening its distribution network, as well as enriching its product offerings to attract more clients in a bid to increase its AUM. The Group believes the preservation and management of wealth and assets should be the focal point for its financial service platform in the forthcoming year, with global economic outlook clouded by uncertainties arising from the disruptions in the trade landscape. Separately, the Group will continue to explore investment opportunities that are synergistic to its existing healthcare investments to create more value for its shareholders.

Healthcare platform

The implementation of the Two Child Policy and deteriorating fertility rates have led to an increase in demand for assisted reproductive services in China. The lack of domestic assisted reproductive medical resources and service due to strict regulation, however, have driven this demand overseas.

The Group achieved a major milestone in 2018 by creating a comprehensive IVF and biotechnology platform with the pioneers in the field to capitalize on the growth potential of the market of assisted reproductive services in Asia, especially China. The Group has also extended the scope of its healthcare services and decided to invest in a healthcare centre in Hong Kong that provides premium health screening and selecting medical services to tap into strong demand in medical tourism.

Going forward, the Group plans to seek and to participate in more investment opportunities in the health sector to reinforce its services capabilities and cement its position as the leading premium medical service provider in the region.

Source: Mason Group Hold (00273) Annual Results Announcement

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Last Update:8/16/2019
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