China Development Financial Holding Corporation (CDF) will host its 1H18 investor conference on April 18, 2018. For 2017, CDF recorded net income of NT$11.69 billion, up 97.5% YoY, its best results in eleven years. In 1Q18, CDF posted unaudited net income of NT$3.19bn, up 77.8% YoY. The company will uphold a lucrative dividend policy, as its cash dividend payout ratio throughout recent years has been above the FHC peer average. President Alan Wang notes that as CDF has now evolved into a full-fledged business group of four key earnings drivers, the utmost priority will be its commitment to stronger corporate governance practices and advancing ROE, which has already garnered recognition as CDF was ranked within the top 5% in the latest Corporate Governance Evaluation System surveyed by the Securities and Futures Institute (SFI). The company’s business roadmap and strategic plans are expanded upon below.
Addressing capital efficiency through re-allocation & greater financial leverage
Since its transition into a private equity (PE) and venture capital (VC) asset management business, CDIB Capital Group has continued its focus on fundraising, reducing its shareholding in in-house PE/VC funds and steadily increasing management fee income, while rigorously seeking opportunities to further divest its non-core portfolio. President Wang recognizes that China Life commands the highest capital efficiency among all subsidiaries, and aspires to make China Life a wholly-owned subsidiary of CDF by end-2020.
Seeking change in corporate culture & advancing both retail & institutional businesses to create a model of steady recurring revenue sources
As all four business drivers have come full circle, CDF has now managed to achieve a balance between consumer and institutional clientele, whereupon the group will seek to strengthen connections with individual customers. The business strategy is shifting towards a model of steady recurring revenue sources with additional returns derived from capital gains, as the group looks to shore up the basis of recurring income.
Leveraging resources across the group to improve customer relationship management & achieve cross-selling synergy
CDF in the past few years has built a foundation for consolidating corporate client businesses across subsidiaries. Its next step will be to integrate retail customer businesses into one platform, cultivate customer relationships and incorporate product cross-selling to improve the quality of services.
Fostering asset management brands & expanding portfolio scale
CDIB Capital Group is committed to strengthening its asset management brand and scale-up its assets under management (AUMs), which is on track to reach NT$45bn by the end of the year from NT$37bn now. Besides, KGI Securities Investment Trust plans to expand its AUMs ten-fold within three years to NT$80bn, after the new team comes on board.
Enhance prudent risk management and accelerate asset monetization
Aside from the continuous risk control monitored by our risk management team, we will also ask every staff from each business unit to fully understand the nature of the products they provide as well as the associated risk and return.
Dedication to corporate governance & sustainability
CDF’s sustainability engagements have garnered increasing recognition. In its participation in the FTSE ESG Survey, CDF was selected to become a constituent stock of the FTSE4Good Emerging Market Index and FTSE4Good TIP Taiwan ESG Index, which helps raise its visibility on the global stage and boosts investor interest from all over the world.
President Wang says that with all four major business arms coming together as one, CDF subsidiaries’ profitability will benefit from the synergies. The group not only is a veteran in Taiwan’s finance industry, but has also established an international network of branch offices in Shanghai, Hong Kong, Singapore, Bangkok, Jakarta, Seoul, New York, and other cities, allowing the company to provide corporate and individual clients with a full range of financial services. China Life has a solid track record of profitability, continues to deliver growth on premium income and earnings, and maintains strong capital adequacy. China Life will join forces with KGI Bank, KGI Securities and CDIB Capital Group in expediting cooperative cross-selling business. In 2018, KGI Bank will continue to expand its lending base to optimize its profit structure, further enhance capital efficiency, and seek to broaden product offerings to shore up fee income. KGI Securities will focus on transforming its domestic brokerage business towards a wealth management business, while Hong Kong subsidiary KGI Asia Limited will look to expand local market share by strengthening its margin finance business. CDIB Capital Group has managed to raise additional capital for existing funds of NTD Innovation Fund and Growth Fund. It will also soon be launching USD Global Opportunities Fund and RMB Healthcare Fund.