Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: Financials
AGBA’s Q323 results continued to be affected by the weak recovery in China and consequent subdued mainland demand for Hong Kong health and wealth products. As a result, revenues were flat year-on-year at US$13.2m, but down from US$17.4m in Q223. The pre-tax loss was US$12.9m, putting the company on track to meet its US$49m projected loss for FY23. AGBA also announced that it has entered into term sheets for a US$6.2m private share placing with a new institutional investor, AGBA’s group president and AGBA management at US$0.70 per share plus warrants with an exercise price of US$1.00/share. The amount could expand subject to ongoing conversations with additional potential investors. The significant premium to the current share price signals management’s confidence in AGBA’s long-term value. The capital will go towards funding organic growth, strategic acquisitions and managing liquidity until projected material profitability in FY25.
Written by
AGBA Group Holding |
Year-to-date pre-tax result in line |
Q323 results |
Financials |
21 November 2023 |
Share price performance
Business description
Analysts
AGBA Group Holding is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||||||||||
AGBA’s Q323 results continued to be affected by the weak recovery in China and consequent subdued mainland demand for Hong Kong health and wealth products. As a result, revenues were flat year-on-year at US$13.2m, but down from US$17.4m in Q223. The pre-tax loss was US$12.9m, putting the company on track to meet its US$49m projected loss for FY23. AGBA also announced that it has entered into term sheets for a US$6.2m private share placing with a new institutional investor, AGBA’s group president and AGBA management at US$0.70 per share plus warrants with an exercise price of US$1.00/share. The amount could expand subject to ongoing conversations with additional potential investors. The significant premium to the current share price signals management’s confidence in AGBA’s long-term value. The capital will go towards funding organic growth, strategic acquisitions and managing liquidity until projected material profitability in FY25.
Year end |
Revenue (US$m) |
PBT |
EPS* |
DPS |
P/E |
Yield |
12/21 |
11.5 |
120.0 |
1.74 |
N/A |
0.29 |
N/A |
12/22 |
31.1 |
(44.4) |
(0.79) |
N/A |
N/A |
N/A |
Note: *EPS is diluted.
AGBA’s flat year-on-year revenue performance in Q323 should not be surprising given the continuing slow recovery in China, with visitor numbers to Hong Kong still only at 70% of 2018 levels. The weaker revenue versus Q223 has been largely offset by fixed cost reduction and the automatic fall in sales commissions, leading to an operating loss of US$10.9m, only US$0.5m below Q223. The year-to-date pre-tax loss of US$35.5m puts AGBA on track to meet its FY23 projection of a US$49m loss.
The minimum US$6.2m private placement at a c 40% premium to the current share price represents a vote of confidence in AGBA’s franchise value by group president Mr Wing-Fai Ng and the management team. Alongside the earlier announced US$50m equity purchase agreement with Williamsburg Venture Holdings, the company should have ample funding to execute its growth strategy based on its sales and pre-tax profit projections. Recent growth initiatives include a new distributor portal accessible across any device, launch of the HSBC Life partnership, a strategic collaboration with Zurich (HK) Life Assurance and signing 14 new general insurance providers. AGBA is expecting stronger Q4 sales and continued momentum into 2024.
Revenue growth may be further supported by recent Hong Kong government initiatives aimed at stimulating the local economy through increased integration with Mainland China. One such recently announced initiative is the Capital Investment Entrant Scheme (CIES). The scheme will allow entry (a precursor to residency) into Hong Kong, provided a minimum HK$30m is invested in stocks, funds or bonds. The CIES could attract substantial funds from affluent Mainland Chinese investors to Hong Kong and provide a boost to its financial markets. According to AGBA management, further initiatives to enhance sentiment and market attractiveness are planned, which will play to the strengths of AGBA’s services.
|
|
Research: Financials
In its Q323 trading update, Secure Trust Bank (STB) posted 1.7% q o q growth in net lending alongside 2.6% growth in its deposits. This was despite a 7% fall in new business lending from an elevated Q223 comparable as consumer spending weakened. More importantly, STB also hosted a capital markets day (CMD), where management reiterated the medium-term 14–16% return on average equity (RoAE) target and presented on the V12 Retail Finance business in detail. The RoAE should be supported by an improved mix weighted towards Retail Finance, combined with moderated volume growth and greater cost efficiency. Project Fusion is developing well and has now been extended to deliver annualised savings of £5m by the end of FY24. We have only changed our estimates for the issue of 0.2m shares under the employee share plan.