COL 2017 INVESTOR PRESENTATION
Highlights Company Overview Financial & Operating Highlights Growth Plans 2
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 a 20.8% stake and actively manages the Company
Ownership Structure OUTSTANDING SHARES 476.0Mil 27.2% 20.8% FREE FLOAT 129.4Mil MARKET CAP* Php7.5Bil * AS OF END DECEMBER 2017 EDWARD K. LEE DAIWA SECURITIES GROUP ALEXANDER C. YU OTHER DIRECTORS & OFFICER 14.9% PUBLIC 13.5% 23.6% 4
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 Champion of the Filipino Investor 5
The Biggest Philippine Based Broker 2017 2017 Value % of Broker Name Rank Turnover (PhpBil) Total 1 UBS Securities Philippines Inc. 339.68 8.7% 2 CLSA Philippines, Inc.. 279.58 7.1% 3 Deutsche Regis Partners Inc. 275.86 7.0% 4 Macquarie Capital Securities (Phil), Inc 251.91 6.4% 5 Credit Suisse Securities (Phil), Inc. 251.25 6.4% 6 COL Financial Group, Inc. 246.73 6.3% 7 Maybank ATR Kim Eng Securities, Inc. 172.41 4.4% 8 Philippine Equity Partners, Inc. 164.51 4.2% 9 First Metro Securities Brokerage Corp. 144.39 3.7% 10 J.P. Morgan Securities Philippines, Inc. 143.37 3.7% SOURCE: PSE 6
Corporate Milestones 7
Bulk of Revenues Generated From Philippine Operations REVENUE BREAKDOWN 100% 4.2% OTHERS COL’s Philippine operations account for 90% 25.8% INTEREST 98.3% of revenues. 80% 70% Commissions from both Philippines and 1.7% HK COM HK account for 70.0% of revenues. 60% 19.2% PH COM- AGENCY & ADVISORY 50% Interest income from margin loans and cash accounts for 25.8% of revenues. 40% 49.1% PH COM-SELF 30% DIRECTED 20% 10% 0% FY17 8
Highlights Company Overview Financial & Operating Highlights Growth Plans 9
Key Highlights Positive Negative • Net profits +15.3%, recurring profits +21.6% • Flattish commissions from agency and advisory business • Philippine business (stock trading & fund distribution) grew faster than the • HK losses increased due to industry booking of impairment allowance on HK trading rights • Market share reached a new record high • Strong growth in new accounts and client equity • Balance sheet remained strong 10
CONSOLIDATED INCOME STATEMENT (IN PHP MIL) 2017 Net Income Change 2016 2017 +15.3% Amount % Income Commissions 605.6 678.7 73.2 12.1% 2017 net income increased by 15.3% to Interest 220.4 250.5 30.1 13.6% Php378.7 Mil. 7.8 40.9 33.1 421.6% Other income Total 833.8 970.1 136.3 16.3% Consolidated revenues increased by 16.3% Expenses Y/Y as all revenue items grew strongly. Commission revenues were up 12.1%, Commission expenses 92.2 89.0 (3.3) -3.5% interest income grew 13.6%, while other Personnel costs 128.6 152.0 23.4 18.2% income rose to Php40.9 Mil from only Php7.8 37.4 42.5 5.1 13.7% Professional fees Mil in 2016. Stock exch. dues & fees 25.2 28.4 3.3 13.1% Communication 31.1 33.8 2.8 8.9% Operating profits grew by 16.9% to Php551.5 Rentals & utilities 20.8 24.3 3.5 16.9% Mil due to higher revenues and the smaller Depreciation 19.1 24.6 5.4 28.4% share of the lower margin agency & advisory business. 9.7 9.7 0.0 0.3% Advertising & marketing Others 32.1 54.3 22.3 69.4% Excluding Php20.6 Mil worth of impairment Total 396.1 458.7 62.6 15.8% allowance on HK trading rights booked under PRE-TAX INCOME 437.7 511.5 73.8 16.9% other operating expenses, recurring income TAXES 109.2 132.7 23.5 21.5% was higher by 21.6% to Php399.4 Mil. 328.5 378.7 50.2 15.3% NET INCOME 11
Recurring Expenses +10.6% BREAKDOWN OF EXPENSES (IN PHP MIL) Change 2016 2017 Amount % Recurring expenses increased by 10.6% to Trading Related Expenses Php438.0 Mil. Commission expenses 92.2 89.0 -3.3 -3.5% Stock exch. dues & fees 25.2 28.4 3.3 13.1% Trading related expenses were flat at Php117.4 Mil, largely due to the smaller Total 117.4 117.4 0.0 0.0% share of the agency and advisory business Fixed Operating Costs to total value turnover. In 2017, the share of 128.6 152.0 23.4 18.2% Personnel costs agency and advisory business to total value Professional fees 37.4 42.5 5.1 13.7% turnover fell to 28.1% from 30.8% in 2016. Communication 31.1 33.8 2.8 8.9% Rentals & utilities 20.8 24.3 3.5 16.9% Fixed operating expenses increased by Depreciation 19.1 24.6 5.4 28.4% 15.0% to Php320.6 Mil. 9.7 9.7 0.0 0.3% Advertising & marketing Others 32.1 33.7 1.6 5.1% The increase in fixed expenses was largely due to higher personnel costs (+18.2%), Total 278.7 320.6 41.9 15.0% professional fees (+13.7%), rentals & utilities TOTAL EXPENSES 396.1 438.0 41.9 10.6% (+16.9%) and depreciation costs (+28.4%), in line with efforts to improve service quality and reach. 12
Philippines REVENUE BREAKDOWN (IN PHP MIL) Continues to Change 2016 2017 Amount % Drive Growth Philippines Commission 595.5 662.0 66.4 11.2% Revenues from Philippine operations were Self-directed 412.2 476.1 63.9 15.5% up 15.7% as all revenue items grew strongly. 183.3 185.9 2.5 1.4% Agency & advisory Interest 220.4 250.5 30.1 13.6% Commission revenues were up 11.2%, Others 7.3 39.7 32.4 444.0% largely driven by the 15.5% jump in Philippine Revenues 823.2 952.1 128.9 15.7% commissions from self-directed clients. This Hong Kong more than offset the flattish revenues from the agency & advisory business. 10.0 16.8 6.7 67.2% Commission Interest 0.0 0.0 (0.0) - Interest income jumped by 13.6%. Interest Others 0.6 1.3 0.7 125.8% income from margin lending was up 15.1% HK Revenues 10.6 18.0 7.4 70.2% as average daily margin lending increased Revenue Share by 37.9% to Php822Mil during 2017. Interest 98.7% 98.1% Philippines income from cash placements likewise increased by 13.1% due COL’s higher cash HK 1.3% 1.9% balance, higher bank yields and the placement of Php403 Mil in higher yielding Self-directed 69.2% 71.9% longer term instruments. Agency & advisory 30.8% 28.1% 13
Philippines REVENUE BREAKDOWN (IN PHP MIL) Continues to Change 2016 2017 Amount % Drive Growth Philippines Commission 595.5 662.0 66.4 11.2% Self-directed 412.2 476.1 63.9 15.5% Other income increased by Php32.4 Mil largely due to the booking of trading gains 183.3 185.9 2.5 1.4% Agency & advisory resulting from clients’ unexercised SROs. Interest 220.4 250.5 30.1 13.6% Trailer fees from our MF distribution business Others 7.3 39.7 32.4 444.0% also jumped from Php5.7 Mil to Php10.6 Mil Philippine Revenues 823.2 952.1 128.9 15.7% due to the growing size of assets under Hong Kong administration (AUA). 10.0 16.8 6.7 67.2% Commission Interest 0.0 0.0 (0.0) - HK revenues rebounded by 70.2% to Php18.0 Mil as commission revenues Others 0.6 1.3 0.7 125.8% jumped by 67.2% to Php16.8 Mil. HK Revenues 10.6 18.0 7.4 70.2% Revenue Share Despite this, the HK business generated an 98.7% 98.1% Philippines operating loss of Php30.4 Mil due to the HK 1.3% 1.9% booking of a Php20.6 Mil impairment allowance on HK trading rights. Self-directed 69.2% 71.9% Agency & advisory 30.8% 28.1% 14
Market Share Reaches New Record COL’s average daily turnover rose 17.3% COMPARATIVE PERFORMANCE (COL VS. PSE) Y/Y to Php1.0 Bil in 2017, outpacing the 4.9% growth in the PSE’s average daily Change 2016 2017 turnover. Amount % PSE Ave. Daily T/O 7,811.7 8,194.0 382.3 4.9% Consequently, COL’s market share in terms (PhpMil) of value turnover increased to 6.3% in 2017 COL Ave. Daily T/O 879.9 1,032.3 152.4 17.3% (PhpMil) for the whole market from 5.6% in 2016. 5.6% 6.3% Share of value turnover for local investors COL Market Share (Total) likewise increased during the same period to 11.9% 13.1% COL Market Share (Local) 13.1% from 11.9%. 6 6 PSE Ranking No. of Transactions – PSE 34,768.4 36,056.3 1,287.9 3.7% In 4Q17, COL’s market share in term of (‘000) value turnover reached a new record high of No. of Transactions – 7,167.3 7,814.8 647.5 9.0% 6.8% for the whole market and 14.1% for COL (‘000) local investors. 20.6% 21.7% COL Market Shares 1 1 PSE Ranking 15
Market Share Reaches New Record COL MARKET SHARE (VALUE T/O) 14.1% 13.3% 12.8% 12.7% 12.5% 12.3% 11.3% 10.8% 9.3% 8.8% 8.6% 8.4% 7.8% 7.8% 7.8% 7.5% 7.2% 7.3% 6.9% 6.8% 6.4% 6.2% 6.0% 6.0% 5.8% 5.6% 5.2% 4.8% 4.6% 4.6% 4.3% 4.1% 4.1% 4.1% 3.9% 3.6% 3.3% 3.3% 3.3% 2.6% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 COL Market Share (Total) COL Market Share (Local) 16
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