COL Financial Group, Inc. · PSE:COL
COL Financial — H1 2013 Earnings Presentation
38 slides from COL Financial's earnings presentation, Aug 22, 2013
Slide 1: 1H13 Results
@) COL FINANCIAL PHILIPPINES
Slide 2: Investor Presentation Highlights
INVESTOR PRESENTATION HIGHLIGHTS COMPANY OVERVIEW FINANCIAL AND OPERATING HIGHLIGHTS GROWTH OUTLOOK 2
Slide 3: Company Overview
COMPANY OVERVIEW Established and licensed by the SEC in 1999 The leading and fastest-growing online stockbroker in the Philippines Focused on tapping the underserved retail investor base in the stock market Founder (Edward K. Lee) retains 19.5% stake and actively manages the Company. 3
Slide 4: Ownership Structure
OWNERSHIP STRUCTURE Edward K. Lee, 19.5% Public, 44.7% Alexander C. Yu, 13.4% Other Directors & Officers, 22.5% Outstanding Shares 468.7Mil Free Float 209.4Mil Market Cap* Php8.9BIl *As of end of June 2013 4
Slide 5: Business Objective
BUSINESS OBJECTIVE To be the preferred source of financial services, a trusted provider of guidance and investment and a strong organization committed to delivering great value to its customers. “ OUR GOAL IS TO BE THE CHAMPION ” OF THE FILIPINO INVESTOR 5
Slide 6: Leading & Fastest Growing Online Stockbroker in the Philippines
LEADING & FASTEST GROWING ONLINE STOCKBROKER IN THE PHILIPPINES IN TERMS OF NUMBER OF ACCOUNTS Total Accounts % of Total 2012 Broker Name % Change Accounts Rank 2011 2012 Online 1 COL Financial 27,969 46,444 66.1% 59.4% 2 BPI Securities 16,543 19,721 19.2% 25.2% 3 First Metro 4,217 6,638 57.4% 8.5%
Slide 7: And in Terms of Value and Volume of Online Transactions
AND IN TERMS OF VALUE AND VOLUME OF ONLINE TRANSACTIONS Rank Value TO (Php Bil) % of No. of Trades (‘000) Online % of Online Value No. of Broker Name % % 2011 2012 Value 2011 2012 Transactions TO Trades Change TO Change 1 1 COL Financial 121.9 150.4 23.3% 76.8% 1,242.2 2,664.5 114.5% 82.2% 2 2 BPI S
Slide 8: Also Amongst the Biggest Philippine-Based Brokers
ALSO AMONGST THE BIGGEST PHILIPPINE-BASED BROKERS 2011 2012 Value Turnover 2012 Broker Name Rank Rank (Php Mil) % Total 2 1 Deutsche Regis Partners Inc. 382,244 10.80 4 2 UBS Securities Phil. 355,272 10.03 3 3 CLSA Phils. Inc 304,177 8.58 1 4 Maybank ATR KimEng Securities, Inc. 259,447 7.32 5 5 Macq
Slide 9: Corporate Milestones
FEBRUARY 2012 Launched the Relationship CORPORATE MILESTONES TeELeTMe Poe Outstanding rMenaget services for Domestic IPO Award for 2006 and special recognition for Active MARCH 2012 Investor Educaton. COL was SEC approves the change MARCH 2001 ranked by the PSE as the #1 in the corporate name The CO
Slide 10: Bulk of Revenues Generated from Philippine Operations
BULK OF REVENUES GENERATED FROM PHILIPPINE OPERATIONS 100% 0.4% REVENUE BREAKDOWN • COL’s Philippine operations account for 90% 23.2% PH COM-SELF-DIRECTED 94.0% of revenues, while its HK PH COM-AGENCY & 80% operations account for the balance. ADVISORY 5.8% • Commissions from both Philippines 70% HK
Slide 11: Investor Presentation Highlights
INVESTOR PRESENTATION HIGHLIGHTS COMPANY OVERVIEW FINANCIAL AND OPERATING HIGHLIGHTS GROWTH OUTLOOK 11
Slide 12: Key Highlights
KEY HIGHLIGHTS Positives Negative • Profits up 6.3% • HK revenues down Y/Y • Double digit growth in revenues and pre-tax profits • Operating margins up • Strong growth in new accounts and net new asset flows • Increased market share in terms of local value T/O • ROAE increased to 35.5% • Asset base
Slide 13: 1H13 Net Income Up by 6.3%
Consolidated Income Statement (in PhpMil) Change 1H13 NET INCOME UP 1H12 1H13 Amount % BY 6.3% INCOME Commissions 261.5 338.6 77.1 29.5% Interest 92.5 102.9 10.4 11.2% • Consolidated net income rose 6.3% Y/Y to Other income 1.9 1.9 0.0 2.6% Php222.2 Mil. Pre-tax profits, which is a Total 355.9 443.4
Slide 14: Philippines Drives Revenue Growth
Revenue Breakdown (in PhpMil) PHILIPPINES DRIVES 1H12 1H13 Change Amount % REVENUE GROWTH Philippines Commission 227.9 312.7 84.9 37.2% • Revenues rose by 24.6% to Php443.4 Self-directed 149.4 188.2 38.8 26.0% Agency & advisory Mil driven by the 29.4% growth in 78.5 124.5 46.0 58.6% Interest 92.5 10
Slide 15: Philippines Drives Revenue Growth
Revenue Breakdown (in PhpMil) PHILIPPINES DRIVES 1H12 1H13 Amount Change % REVENUE GROWTH Philippines Commission 227.9 312.7 84.9 37.2% Self-directed 149.4 188.2 38.8 26.0% Agency & advisory 78.5 124.5 46.0 58.6% • Commission from HK fell 23.2% to Interest 92.5 102.9 10.4 11.2% Php25.8 Mil due to th
Slide 16: Philippine Commissions Account for a Growing Share of Revenues
PHILIPPINE COMMISSIONS Revenue Breakdown ACCOUNT FOR A GROWING SHARE OF REVENUES 100% 0.5% 0.4% 90% 26.0% 23.2% 80% 5.8% Others 70% 9.4% 60% Interest 28.1% 22.1% 50% HK Com 40% PH Com - Agency & Advisory 30% PH Com - Self- 42.4% directed 20% 42.0% 10% 0% 1H12 1H13 16
Slide 17: ROAE Improved to 35.5%
ROAE IMPROVED TO Selected Financial Indicators 35.5% Change 1H12 1H13 Amount % • Operating profits rose by 29.2% to Operating Profits Php273.8 Mil despite the continuous Philippines 196.8 262.0 65.2 33.1% weakness of HK as the Philippines Hong Kong 15.1 11.8 -3.2 -21.5% accounted for a larger share
Slide 18: ROAE Improved to 35.5%
ROAE IMPROVED TO Selected Financial Indicators 35.5% Change 1H12 1H13 Amount % • ROAE improved to 35.5% from 33.6%. Operating Profits Aside from the growth in profits, COL Philippines 196.8 262.0 65.2 33.1% benefited from increased leverage as Hong Kong 15.1 11.8 -3.2 -21.5% its asset base continued
Slide 19: Expenses Remained in Check
EXPENSES REMAINED IN CHECK Breakdown of Expenses • Total expenses grew by only 17.7% to Change 1H12 1H13 Php169.7 Mil as fixed operating expenses Amount % fell. Trading Related Expenses • Trading related expenses jumped by 48.4% Commission expenses 47.8 72.5 24.6 51.5% to Php85.0 Mil as value of tra
Slide 20: Strong and Highly Liquid Balance Sheet
STRONG AND HIGHLY Consolidated Balance Sheet (In PhpMil) LIQUID BALANCE SHEET 12/31/12 6/30/13 Change Amount % • COL's balance sheet remained ASSETS strong, with high levels of cash and Cash & equivalents 2,647.3 3,693.9 1,046.6 39.5% no debts. Receivables 1,444.3 2,073.3 629.0 43.6% • Total assets
Slide 21: Strong and Highly Liquid Balance Sheet
STRONG AND HIGHLY Consolidated Balance Sheet (In PhpMil) LIQUID BALANCE SHEET 12/31/12 6/30/13 Change Amount % • Stockholders' equity fell 4.6% largely ASSETS Cash & equivalents 2,647.3 3,693.9 1,046.6 39.5% due to payment of Php295.2 Mil Receivables 1,444.3 2,073.3 629.0 43.6% worth of cash dividen
Slide 22: Sustained Customer Growth
SUSTAINED CUSTOMER GROWTH +83.4% • COL’s client base grew by 83.4% Y/Y Client Base to 68,481 as of end June 2013. • Average monthly additions 80,000 accelerated to 3,657 clients during 70,000 68,481 1H13 from 1,545 clients during 1H12 60,000 and 1,539 clients in 2012. 50,000 46,536 40,000 37,341 30,
Slide 23: Sustained Customer Growth
SUSTAINED CUSTOMER GROWTH +110.2% • Client equity grew more significantly, Client Equity (PhpMil) by 110.2% Y/Y to Php46.4 Bil. • Out of the Php24.3 Bil increase in 50,000 46,417 45,000 client equity, Php17.5 Bil or 72% of 40,000 the total was due to net new flows. 34,359 Php6.8 Bil or 28% was due t
Slide 24: Margin Loans Continued to Recover
MARGIN LOANS CONTINUED TO RECOVER +30.6% • Average daily margin loans Ave Daily Margin Loans increased by 30.6% Y/Y to Php1.2 Bil. 1,400 • As of end June 2013, the total 1,201 number of approved margin 1,200 1,102 accounts reached 1,036, up 17.5% 1,000 952 920 Y/Y. • Meanwhile, 31.3% of approved 800
Slide 25: Market Share Further Improved
MARKET SHARE FURTHER IMPROVED • COL’s average daily turnover grew by 37.8% Y/Y to Php939.7 Mil. Comparative Performance (COL Vs. PSE) • Although this is slower compared to the 50.6% 1H12 1H13 Amount % growth in the average daily turnover of the PSE, this is still faster compared to the 23.9% Y/Y PSE
Slide 26: Investor Presentation Highlights
INVESTOR PRESENTATION HIGHLIGHTS COMPANY OVERVIEW FINANCIAL AND OPERATING HIGHLIGHTS GROWTH OUTLOOK 26
Slide 27: Equity Investments in an Expansion Phase
EQUITY INVESTMENTS IN AN EXPANSION PHASE TOTAL CIS IN THE PHILIPPINES • Total investments in CIS have (IN PHP BIL) 352 increased by a CAGR of 23.7% from 2008 to 2012. MUTUAL FUNDS • Growth was driven by the 23.0% and UITFS 24.9% CAGR of investments in UITFs TOTAL CIS 250 and mutual funds. 224 206 18
Slide 28: Equity Investments in an Expansion Phase
EQUITY INVESTMENTS IN PSE VALUE TURNOVER (IN PHP BIL) AN EXPANSION PHASE 806.4 538.3 457.3 321.2 360.6 965.6 • Value turnover in the PSE also 665.6 728.5 885.6 increased by a CAGR of 23.6% 397.4 from 2008 to 2012. 2008 2009 2010 2011 2012 • Growth in value turnover of local investors (24.8% CAGR) ou
Slide 29: Driven by Low Interest Rates
DRIVEN BY LOW INTEREST RATES 5.7 SDA RATE & T-BILL RATE • Interest rates are on a downtrend, with the average SDA and 91-day T-bill rates falling from 5.7% in 2008 to 2.4% and 0.4% during the first seven months of 2013. • The drop in interest rates was driven by improving government finances, benign
Slide 30: Removal of Non-Trust Entities' Access to SDA
REMOVAL OF NON-TRUST ENTITIES’ ACCESS TO SDA TO ACT AS A CATAYST FOR MORE EQUITY INVESTMENTS FUNDS PARKED IN SDA • The central bank recently issued a (IN PHP TRIL) circular removing access to SDA 1.9 among non-trust entities effective November 2013, beginning with a 30% reduction by end July. • As o
Slide 31: Removal of Non-Trust Entities' Access to SDA
REMOVAL OF NON-TRUST ENTITIES’ ACCESS TO SDA TO ACT AS A CATAYST FOR MORE EQUITY INVESTMENTS SDA RATE VS. FUND FLOWS (IN PHP MIL) Mutual Fund Date Ave. SDA Rate • Fund flows into managed Net Sale accounts grew as a result of Jan-13 3.0% 7,253 falling SDA rates. Feb-13 3.0% 9,759 • While fund flows s
Slide 32: Growth Potential Remains Significant
GROWTH POTENTIAL CIS AS PERCENTAGE OF DEPOSITS REMAINS SIGNIFICANT Philippines 5.9% Singapore* 6.6% Malaysia 20.8% • In the Philippines, the amount Hong Kong* 104.0% invested in CIS only represents US* 123.7% 5.9% of total deposits. *AS OF END 2011, OTHERS AS OF END 2012 • Meanwhile, based on the SO
Slide 33: Online Brokerage Business in a Secular Uptrend
ONLINE BROKERAGE BUSINESS IN A SECULAR UPTREND SHARE OF ONLINE BROKERS 14.9% CLIENT BASE • Market share of online brokers in VALUE TURNOVER terms of client base grew from 4.3% in 2008 to 14.9% in 2012. • Market share in terms of value turnover also grew from 2.0% in 2008 to 6.7% in 2012. 6.7% SHARE
Slide 34: Online Brokerage Business in a Secular Uptrend
ONLINE BROKERAGE BUSINESS IN A SECULAR INTERNET SUBSCRIBERS 3,242,800 UPTREND 2,803,924 • Growth expected to continue, driven by growing number of 2,138,976 internet subscribers in the 1,710,679 country. • From 2008 to 2012, total number of internet subscribers 1,061,626 increased by a CAGR of 32.2%
Slide 35: Highly Geared Towards the Expanding Retail Investors Base
HIGHLY GEARED TOWARDS THE EXPANDING RETAIL INVESTORS 7% BASE CLIENT BASE 9% COL BPI • COL is currently the dominant FIRST METRO 25% 59% market leader among online OTHERS stockbrokers in the Philippines in terms of number of clients and value turnover. • Market share has consistently VALUE TURNOVER 8
Slide 36: Highly Geared Towards the Expanding Retail Investors Base
HIGHLY GEARED TOWARDS THE EXPANDING RETAIL INVESTORS BASE PHILIPPINES OPERATING 700 PERFORMANCE • The growth in COL’s market share is REVENUES 593 clearly evident in the strong 600 OPERATING INCOME 541 performance of its Philippine operations. 500 417 • From 2008 to 2012, revenues from 400 Philippin
Slide 37: Growth Plans
GROWTH PLANS Leverage on Strong Brand Equity Offer more products • Offer flexible margin rate scheme • Distribute third party funds • Review other products and services that will cater to the growing needs of existing and new clients Expand market reach • Build investor centers in key business areas
Slide 38: Thank You.
Thank You. COLFINWcIN, | acai.