SW Kingsway Capital profit up 25% to HK$46.8mn

The company targets diversified investment opportunities and introduction of new products and services.

SW Kingsway Capital Holdings Limited (“Kingsway”) announced on Monday its interim results for the six months ended 31 December 2010.

In the first half of FY2011, the Company’s turnover increased by 22.1% to HK$110.5 million (FY2010: HK$90.5 million). Net gain on the disposal of financial assets and the remeasurement to fair value rose 28.6% to HK$57.8 million for the first half of FY2011 (FY2010: HK$44.9 million), while commission and fee income for the financial intermediary business jumped to HK$47.5 million (FY2010: HK$41.4 million). Profit attributable to owners of the Company rose 25% to HK$46.8 million (FY2010: HK$37.4 million). Basic earnings per share were HK1.4 cents (FY2010: HK1.2 cents). The Board recommended the payment of an interim dividend of HK0.33 cents (FY2010: HK0.33 cents) per share for the six months ended 31 December 2010, according to a Kingsway report.

Dr Jonathan Choi, Chairman of Kingsway, said, “We are delighted that the Company has achieved favourable results in the six months ended 31 December 2010. Thanks to the recovery in stock market and rising market activities, both brokerage and investment business recorded growth. To better cater the rising demand for our financial advisory services, we are increasing our head count to capture the business opportunities. We are also looking for suitable investment opportunities in IPO projects and new private equity funds.”

Business Review

Brokerage
With the recovery in the fund raising markets and the resultant increase in the market activities, commission income improved in the first half year of FY2011.Total revenue of the brokerage division amounted to HK$37.8 million (FY2010: HK$34.5 million).

The brokerage division is working continuously to introduce new products and service to provide the best investment opportunities for clients. During the period under review, the company’s institutional sales team was appointed by the Bank of East Asia, Limited as its agent to provide liquidity for the structured products issued by the bank.

Corporate Finance and Capital Markets
Total revenue of the division was HK$15.7 million for the first half of FY2011, representing a 73% increase over the same period last year (FY2010: HK$9.1 million). The division participated in several underwriting and placing activities during the reporting period. The division is likely to continue its revenue growth as it is engaging in some projects including IPOs sponsorships. It is expected that the listing of an IPO will be completed in FY2011.

Investment In Securities
The division had total revenue of HK$61.2 million for the first half year of FY2011. (FY2010: HK$30.2 million). The performance of the investment portfolio improved following the recovery in the stock market, as evidenced by the rise in the Hang Seng Index.

Structured Investment
The division invested in an unlisted private fund in the reporting period after a disposal of the jointly control entities and all equity investments last year. The division is looking for suitable opportunities to acquire more unlisted investments in the future.

Mr Michael Choi, CEO of Kingsway, concluded, “Looking ahead, we are confident in the business development and plan to build on the results achieved in the first half year. While we are actively looking for investment opportunities, we will lower the volatility of our investments through diversification of channels and products. With the stronger capital base achieved through completed share placings, we are able to have more resources for our investment activities."