K Cash (2483) H2 2023 earnings summary

Executive summary

• FY2023 interest income rose 6.3% YoY to HK$248.7m, while net profit fell to HK$51.6m; adjusted net profit, excluding listing expenses, was HK$73.8m.

• Unsecured property owner loans drove growth, while personal and SME loan interest income declined; the portfolio shifted toward property owner loans amid a subdued economy.

Financial highlights

• Interest income was HK$248.7m, up 6.3% YoY; net interest income increased to HK$223.6m from HK$211.0m.

• Operating profit declined to HK$67.2m from HK$82.7m; profit before tax was HK$66.7m vs. HK$81.9m.

• Net profit was HK$51.6m vs. HK$67.9m; adjusted net profit, excluding listing expenses of HK$22.3m, was HK$73.8m vs. HK$73.2m.

• Basic and diluted EPS was HK13.42 cents vs. HK18.10 cents.

• Net expected credit losses rose to HK$55.8m from HK$37.7m; interest expense increased 9.7% to HK$25.2m.

Outlook and guidance

• FY2024 outlook remains challenging, with high interest rates expected to persist and potentially reduce loan product interest spreads.

• Strategy focuses on loan portfolio growth, technology adoption, customer engagement, partnerships and careful asset-quality monitoring.

• Since March 2024, loan products have been promoted through a business partner’s mobile wallet and e-commerce platforms; overseas funding sources are being explored, including discussions with a Japanese crowdfunding platform.

• The enhanced K Cash GO Platform is in design and analysis, with technology integration planned later in 2024; the Customer Data Platform launched in late 2023.

• Paykool was soft-launched in December 2023, offering personalized interest-free installments through a credit card and participating business partners.