China First Capital Group Limited (“CFCG” or the “Group”; stock code: 1269) today announced its unaudited interim results for the six months ended 30 June 2016 (“Reporting Period”). Revenue for the Reporting Period increased by 43.9% to RMB677.37 million, while gross profit increased by 37.7% to RMB140.5 million. Consequently, profit for the period amounted to approximately RMB61.9 million for the first half of 2016. Basic earnings per share were RMB0.10 cents.
Dr. Wilson Sea, Chairman and Executive Director of CFCG, said, “In the first half of 2016, the Group has achieved business transformation to realize its goal as an “Education Investment Plus Financial Services” company with the combined efforts of our management team and staff. Since the end of 2014, the Group has started moving into certain new businesses including asset management services, financial credit services, securities brokerage services and overseas financial services. In the first half of this year, we have continued to move towards the direction of business diversification by devoting more resources to the new business and tapping into education investment business. The Group hopes to achieve rapid market growth by optimizing the Group’s business portfolio, ongoing efforts at improvement and cooperation with diversified service business entities, improving its profitability, thereby delivering long-term and stable cash flow.”
EDUCATION INVESTMENT BUSINESS
CFCG diversified its business portfolio through tapping into education investment business during the Reporting Period. Driven by the growing economy in the PRC as well as the increasing awareness of quality education, the Group entered the education investment sector through acquiring Brilliant Rich Holding Limited (“Brilliant Rich Holding”) in April 2016, which provides a direct platform for the Group’s education investment. To strength its investment portfolio, the Group invested HK$402.8 million to acquire 106 million shares in Virscend Education Company Limited (stock code: 1565), which is the largest provider of K-12 private education services in Southwest China. The Group has also made other considerable progress including signing of a strategic cooperation agreement with the Shenzhen Culture Assets and Equity Exchange and the establishment of several funds to invest in worthwhile education projects, targeting to invest in projects of K12 basic education, higher education, high-end international school, online education as well as vocational training.
To further develop an optimised business portfolio that is centred on educational project investment, the Group’s wholly-owned subsidiary Yunnan First Capital Education Management Company Limited has entered into transaction agreements with Yunnan Shuipai Jinsha Culture & Media Company Limited and an independent third party respectively in August 2016. CFCG is to acquire 70% equity interest in Yunnan Aisitong Education Management Company Limited (“Aisitong Education”) and Yunnan management company (“Hope Education”), the sponsor of Kunming Professional College of Arts (“Kunyi College”), with the aim to enhance profitability and generate long-term and stable fund flow.
FINANCIAL SERVICES BUSINESS
In respect to financial services business, the Group expanded its diversified financial services business by strengthening its “full license” advantage. Apart from providing securities dealing services for individual customers, the Group’s wholly-owned subsidiary undertook the underwriting of shares for listed enterprises including Human Health Holdings Limited (stock code: 1419) and China Golden Classic Group (stock code: 8281). The Group has proactively followed up on the application of the license for regulated Type 6 activities, advising on corporate finance, under the provisions of the Securities and Futures Ordinance (SFO) during the period under review. Once approved, this is expected to lay a foundation to further expand the merger and acquisition activities, merge and listing financial consultancy services of the Group in the future.
Looking ahead, the education investment business will be the key driver of the Group’s focus in the future, in light that the development of education is receiving greater priority in the PRC and a range of favourable policies have been introduced. The management considers it is the optimal time to expand business by seizing the opportunity of first-mover advantage. In the second half of the year, the Group will continue to explore and invest in more quality education projects by focusing on K12 education, higher education, vocational education, overseas education, and preschool education, etc. to forge a presence covering the entire chain of education.
The Group will continue to strengthen its “full license” advantage so as to be fully in line with education investment business in the mainland China and overseas markets. Apart from financing in stock market, the Group will also establish private equity funds with partners like financial institutions to raise funds for investment projects. These funds will be used to facilitate the growth of its educational projects-related investment portfolio, leading it to become a platform for education business operations, investments and financings, which is driven by “Education plus Financial Services”
Dr. Sea concluded, “The private education is currently in a growth stage characterized by low market concentration, considerable demand, huge potential profit and promising prospects. In the future, the Group is committed to expand its merger and acquisition efforts to acquire international education assets for matching international quality brand education resources to satisfy the huge potential domestic market demands of the PRC. The Group has invited Mr. Victor He, the former director of the international cooperation department of New Oriental Education & Technology Group Inc., as the Deputy Chief Executive Officer of the Group in July this year. Additionally, CFCG Investment Partners International (Singapore) Pte. Ltd., a wholly-owned subsidiary of the Group, has officially commenced operation in August this year, which will improve and perfect the overseas arrangement. The Group will also continue to establish branches in the U.K., Australia and other countries with rich education resources. The management believes that such initiatives are beneficial for the Group to more effectively seize global opportunities, thereby integrating international and domestic education resources, to build a leading domestic and international well-known brand of education to create attractive value returns for its shareholders.”