In 2023, Hong Kong stocks will still have a hard time.
By the end of 2023, the Hang Seng Index closed at 17047.39 points.The annual decline was 13.82%, the fourth consecutive year of decline. The number of IPOs listed in Hong Kong in 2023 is 70, a decrease of 89 from 19 last year.The scale of initial public offerings also shrank by 57%, setting a new low in the amount of funds raised by Hong Kong stock IPOs in the past 10 years.
Hong Kong is not without advantages. It has financial infrastructure, mainland funds, and sufficient capital base. If it can carry out diversified financial innovation and maintain open policies, funds will still be willing to return to Hong Kong to make up for the scarce liquidity.
For this reason, the development of virtual assets in Hong Kong has become increasingly important.Financial institutions, Internet giants, and technology companies from the East and the West are concentrated here. Hong Kong, which connects the world, is an excellent testing ground for RWA, stablecoins and other businesses. Using new technologies to build a new generation of world financial center is the best way for Hong Kong to regain its status.
Not only native crypto companies and financial institutions can participate. There are many listed companies in Hong Kong, and those who are capable can make bold attempts under the premise of compliance. If the virtual asset business can achieve a certain scale, it will be a supplement to the company's revenue and capital performance.
This is indeed the case. More and more Hong Kong-listed companies are involved in virtual assets. In this article, Bailu Living Room collects and summarizes the dynamics of 10 listed companies engaged in virtual asset business for readers, and finds opportunities worth paying attention to in 2024.
Zhongan Online
ZhongAn Online's stock market performance was average in 2023, opening at 21.20 and closing at 17.84, a drop of 17.02%.
2023年上半年，众安在线集团收入合计达约人民币142.31亿元，同比增长28.3%；集团录得净溢利约人民币0.26亿元，而截至2022年同期则录得净亏损约人民币6.85亿元；实现归属于母公司股东的净溢利人民币2.21亿元，相较于去年同期归属于母公司股东的净亏损人民币6.36亿元改善了人民币8.58亿元。
The full-year financial report is not yet known, but no matter what the data is, it cannot stop ZhongAn Bank’s momentum in rapidly occupying the virtual asset market.
On November 2023, 11, ZhongAn Bank announced that it would join forces with YuanBi Technology and Hashkey to issue stablecoins in Hong Kong. ZhongAn Bank will serve as the commercial support bank for YuanBi Technology.
On December 2023, 12, Yao Wensong, CEO of ZhongAn Bank, said in an interview that ZhongAn Bank has provided commercial banking services to more than 25 Web80 companies including OKX Hong Kong to date, and is also a banking partner of local licensed virtual asset trading platforms HashKey and OSL.
As early as May 2023, 5, ZhongAn Bank announced plans to provide virtual asset trading services to retail investors. On October 24, the "Joint Circular on Virtual Asset-Related Activities of Intermediaries" was issued, and brokerages and banks were officially approved by regulators to carry out virtual asset retail business with licenses. The opportunity that belongs to ZhongAn Bank has been delivered to them.
ZhongAn has already performed well in traditional finance. A large user base and funds are ZhongAn Bank's unique advantages. If it can bring huge traffic into virtual asset transactions and the most profitable stablecoin business, its future performance will surely be even better.
Mito
As the first Hong Kong-listed company to hold virtual assets, Meitu is also surrounded by the most controversy.
Meitu's stock market performance in 2023 was excellent, with an annual increase of 166.67%. From the performance of the first half of 2023, Meitu achieved total revenue of 12.61 billion yuan (RMB, the same below), a year-on-year increase of 29.8%. The adjusted net profit attributable to the parent company's equity holders was 1.51 million yuan, a year-on-year increase of 320.4%. The number of monthly active users of Meitu reached 2.47 million, a year-on-year increase of 2.5%.
As early as March 2021, 3, Meitu announced its entry into the cryptocurrency circle, announcing the purchase of $7 million worth of Ethereum and $2210 million worth of Bitcoin, totaling $1790 million. Cai Wensheng, chairman of Meitu, wrote at the time, "Meitu continues to deploy blockchain, and this time it purchased ETH and BTC digital currencies as value reserves for the long-term development of blockchain strategies." He also said, "Someone has to be the first to try it. This should be the first Hong Kong listed company to purchase BTC digital currency, and it is also the first listed company in the world to use ETH as a currency value reserve."
Needless to say, Meitu was also deeply affected by the bear market in the past two years. It was not until the first half of 2 that Meitu was able to withdraw 2023 million yuan to recover its losses. Kang Yicong, senior investor relations manager of Meitu, said in an interview that the company's focus is not on cryptocurrency investment or selling related cryptocurrencies at the right time.
Kang Yicong pointed out that the AI business will be the growth driver of Meitu, and it is expected that the profit contribution will continue to increase in the future. In addition, Meitu is also constantly expanding its corporate customer base, such as launching a new solution "Beauty Industry" to help businesses provide consumers with makeup trials, skin testing and other services. However, since the related business is still in the early stages of development, its contribution to the company's profits is not as high as that of the imaging division.
Although it seems that Meitu will no longer be involved in virtual assets, there are signs that Cai Wensheng's enthusiasm for virtual assets has not diminished at all. In 2023, Cai Wensheng publicly expressed his views many times to support and promote the development and implementation of RWA in Hong Kong. If the virtual asset market breaks through the previous high, will Meitu include virtual assets as part of its development again? The story of Meitu is exciting.
OSL Group
With BGX's investment and leadership reorganization, OSL finally saw a glimmer of hope in the stock market in 2023, with the highest increase reaching 289.74%.
从2023年中期报告上看，OSL集团国际财务报告准则收入为1亿2,640万港元，较2022年上半年2,830万港元增加9,810万港元。来自持续经营业务的国际财务报告准则亏损由2022年上半年3亿1,210万港元大幅度减少至9,470万港元。“非国际财务报告准则计量” 所呈列的数据来看，集团非国际财务报告准则收入为8,830万港元，较2022年上半年1亿2,760万港元减少3,920万港元。
In January 2024, OSL stock experienced another significant pullback. The 1 full-year financial report has not yet been released, and whether OSL can take the lead in 2023 remains uncertain.
On November 2023, 11, OSL announced on its official website that it had received a strategic investment of approximately HK$14 million from BGX Group. BGX held 7.1% of the shares, becoming the largest shareholder of OSL Group. On January 29.97, 2024, the transaction between BGX and OSL was completed. Subsequently, the board of directors was reorganized and Pan Zhiyong, currently the CEO of BGX, was appointed as the new chairman and CEO.
In 2024, after Pan Zhiyong took over, he adjusted OSL's strategic pillars to: global expansion, service innovation, digital financial collaboration and compliance standards, helping OSL determine a new development direction.
Business and capital performance have recovered, and OSL, which has gained compliance advantages, is worth the efforts of investors. However, the challenges facing them are still daunting. Hashkey is vigorously expanding its business territory in front, and there are more than a dozen competitors waiting to fight behind. Whether OSL can maintain its momentum remains to be seen.
Huake Intelligent Investment
Huake Smart Investment has not performed well in the stock market in recent years, with slightly more stable fluctuations in 2023 and a decline of 6.17% for the year.
集团2023/2024财务年录得总收益港币1.4742亿元，较去年同期的港币8,590万元增加71.62%。盈利港币2,315万元，去年同期则为港币2.1321亿元。业绩包括债务投资所得收益港币1.4709亿元、分占联营公司及合营企业溢利港币2,019万元及预期信贷亏损拨备拨回港币1,121万元，但被按公平值计入损益账之投资未变现亏损港币1.1215亿元，及已变现亏损港币4,514万元所抵销。
The weak macro environment has a great impact on the valuation of Huake Intelligent Assets. Perhaps because of this, Huake Intelligent has already made arrangements in virtual assets. In 2022, Huake Intelligent invested in Maicapital, a Hong Kong asset management company, which has been approved by the China Securities Regulatory Commission to manage an investment portfolio that is 100% invested in virtual assets and operates two active blockchain hedge funds, with a total asset management scale that has increased by more than 20 times.
In 2023, Huake Smart completed the account opening in Hashkey Exchange. As a cross-border investment platform, Huake Smart will certainly take more actions with the development of the virtual asset market. As for whether virtual assets can help Huake Smart return to its peak, the market still needs to give an answer.
OKLink
Also as a native crypto-listed company, OKLink performed well throughout the year, with the highest increase of 70%.
In 2023, OKX applied for a Hong Kong-compliant virtual asset trading platform, which became one of the focus events in the market. The top large firms embraced compliance.On the one hand, it indicates that the compliance of global virtual asset trading platforms has become a major trend; on the other hand, it also injects a shot in the arm for Hong Kong to become a global virtual asset activity center.
As of the date of publication, 16 institutions have submitted applications for virtual asset trading platforms to the Hong Kong Securities and Futures Commission, and native crypto companies, traditional financial institutions, and mainland-based startups have joined the competition.
If OKX successfully expands its main trading platform business in Hong Kong, OKLink will also have more opportunities to catch the virtual asset train and achieve stronger performance.
New Fire Technology
Xinhuo Technology's stock market performance in 2023 was poor, with a decline of 20% for the year.
2023年12月28日晚间，新火科技公布截至2023年9月30日止2023年度业绩。财报显示，持续经营业务收益约28.34亿港元，同比减少68.7%；毛利1038.9万港元，同比减少90.6%；净利润由2022年的2亿港元扩大至2.87亿港元，同比扩大43.92%。
The report mentioned that Zhen Fund reduced its holdings by 2021 million shares in the first quarter of 243.74 and 2021 shares in the fourth quarter of 88.66. According to data disclosed by the Hong Kong Stock Exchange on December 12 this year, it reduced its holdings by 6 shares again; Sequoia Capital also reduced its holdings by 25.15 million shares on December 12 this year, which was the first reduction of Sequoia China. As of now, Sequoia China holds 6 million shares, accounting for 907.95% of the shares, making it the fourth largest shareholder; Zhen Fund holds 2138.76 million shares, accounting for 4.59% of the shares, making it the seventh largest shareholder. Regarding Sequoia's one-time reduction of more than 617.4 million shares, the above-mentioned Xinhuo Technology person told reporters that this was a voluntary reduction by Sequoia China and a market behavior.
Poor data does not mean that the name of the "Whampoa Military Academy of the Cryptocurrency Circle" is no longer famous. Du Jun's influence and vision make Xinhuo Technology still a force that cannot be ignored in Hong Kong.
In fact, Xinhuo Technology's losses were deeply affected by the FTX incident. It was unable to withdraw cryptocurrency assets from the cryptocurrency exchange FTX, and the relevant impairment loss provision was about HK$8600 million. In addition, the company's new business development expenses increased; the company's human resources restructuring and cost management plan also led to new one-time expenses.
In 2023, Xinhuo Technology reached cooperation with LD Capital US and Alpha Blockchain Capital respectively, and launched two investment funds that are 100% invested in virtual assets. In December 2023, Xinhuo Technology reached a cooperation with Hashkey Exchange. The two parties will conduct a comprehensive exploration in frontier industry tracks such as virtual asset security storage, custody, OpenLoop clearing and settlement network, virtual asset compliance funds, STO, RWA, and public chain technology. In the future, the two parties will also strengthen close communication with regulatory agencies and help a number of high-quality enterprises and projects to land in Hong Kong through investment, incubation and other means.
Xinhuo Technology has always been the backbone of Hong Kong's native crypto-listed companies. Its senior Web3 industry experience and technical experience are the foundation of its survival. When the bull market comes, compared with traditional financial institutions and entrepreneurs, Xinhuo Technology's technology and innovation capabilities will always help it to better follow the trend.
Victory Securities
As a local brokerage firm in Hong Kong, Victory Securities is a model of being at the forefront of the virtual asset market. In 2023, Victory Securities reversed the downward trend in 2022 and achieved a maximum increase of 55.3%.
According to the company's financial report, the revenue for the nine months ended September 2023, 9 was approximately HK$30 million, a decrease of approximately 38.42% from approximately HK$2022 million for the nine months ended September 9, 30. This reflects the decrease in revenue mainly from securities/futures brokerage services, handling fee services and financing services, as the market sentiment in 50.95 was less sluggish and customer transactions decreased compared with the same period in 24.6.
截至2023年9月30日止，九个月的亏损约为10.21百万港元，较截至2022年9月30日止九个月的约9.72百万港元的亏损增加约5.0%，主要是由于上述收益减少，以及其他经营开支增加。
As traditional businesses perform poorly, virtual asset businesses become increasingly important. Victory Securities has obtained virtual asset licenses No. 1, 4, and 9 at the same time. On November 2023, 11, Victory Securities became the first local brokerage firm in Hong Kong approved to conduct virtual asset retail business. In the third quarter, the transaction amount and number of new customers of Victory Securities' virtual assets more than doubled month-on-month, with an average monthly turnover of US$24 million. The virtual asset business has made a profit. In addition, the virtual asset exchange business is also proceeding in an orderly manner. If VDX is approved to conduct business as scheduled, it will be a great boost to the business development of Victory Securities.
In 2024, whether the Hong Kong Bitcoin spot ETF can be approved is also one of the key points of attention. If it is successfully listed, Shengli Securities, which has taken the lead, may also become the biggest beneficiary. Shengli Securities has completely boarded the virtual asset train. For the company, the biggest uncertainty is whether the virtual asset market can achieve the expected bull market.
Boyaa Interactive
After the launch of virtual assets in Hong Kong, Boyaa Interactive, China's largest chess and card game company, became a typical example of high-profile layout of virtual assets.
On August 2023, 8, Boyaa Interactive issued an announcement stating that the board of directors has approved a budget of US$11 million for the group to purchase cryptocurrencies, mainly Bitcoin and Ethereum, on regulated and licensed trading platforms within the next year to promote the company's future business layout in the Web500 field.
Boyaa Interactive said that the funds for the group's purchase of cryptocurrencies come from the group's cash reserves generated by operations in Hong Kong and overseas. The group will make discretionary purchases of cryptocurrencies based on market conditions.
On December 2023, 12, Boyaa Interactive issued another announcement. The extraordinary general meeting of shareholders voted to pass a resolution authorizing the directors to make potential cryptocurrency purchases within 22 months, with a total purchase amount not exceeding US$12 million. Among them, it is expected that approximately US$1 million will be used to purchase Bitcoin and Ethereum each, and no more than US$4500 million will be used to purchase USDT and US dollar stablecoins.
Boyaa Interactive's move is a typical example of a Hong Kong-listed Internet company entering the virtual asset industry. At this stage, it is still impossible to judge what effect the development of the virtual asset business will bring to Boyaa Interactive, whether in terms of stock price or revenue performance; but like Meitu, with time, the market will eventually give feedback and verify what effect the Web3 layout can bring to listed companies.
Linekong Interactive
Judging from the overall performance since its listing, Linekong Interactive is still unsatisfactory. But it is worth noting that Linekong Interactive's annual increase is 50.74%. If the Hong Kong virtual asset market can develop as expected, Linekong Interactive is still worth paying attention to.
On April 2023, 4, Linekong Interactive announced the reorganization of the crypto investment and research institution Consensus Lab, and officially established LK Venture in Hong Kong, setting up primary and secondary market funds respectively. Linekong Interactive joined hands with several institutions to become cornerstone investors.
On October 2023, 10, NAGA, a Web26 gaming platform under Linekong Interactive Group, announced a partnership with Conflux to provide GameFi ecosystem solutions for game developers and players.
On November 2023, 11, Linekong Interactive announced the launch of a $8 million Bitcoin network ecosystem investment management fund, BTC NEXT, to participate in emerging crypto assets in the Bitcoin network ecosystem, including but not limited to various types of asset issuance protocols, trading markets, capacity expansion, virtual machines, NFTs, RWAs, and GameFi games.
Linekong Interactive started out as a game company, and to some extent, it is also a typical example of a traditional Internet company transforming into Web3. With the development of the Bitcoin ecosystem and Gamefi in the bull market, whether Linekong Interactive can achieve more results and feedback on the stock market may become the key to the future of Linekong Interactive.
Shengyang Group
声扬集团2023年股市表现较为平淡，最高涨幅仅3.81%。业绩上看，声扬集团表现一般。截至2023年9月30日止，9个月录得净亏损约1900万元至2200万元，相对于2022年同期的净亏损约1700万元。
The increase in net loss was mainly due to the termination of asset management services by a private equity fund and the decrease in the number of corporate finance advisory engagements and average advisory fees amid fierce competition in the corporate finance segment, resulting in a decrease in revenue from the financial services business of approximately RMB800 million.
The poor global market environment has affected the profitability of the Shengyang Group and has become one of the reasons for its entry into the virtual asset field. On November 2023, 11, Shengyang Group issued an announcement stating that Shengyang Group has been seeking suitable investment and business opportunities in response to market conditions, hoping to create long-term sustainable value for the company and its shareholders. In view of the booming development and potential of Web9 in recent years, the company has completed the acquisition of digital business NOIZChain Limited in the second half of 3. With the help of blockchain, artificial intelligence and immersive interactive technology, it creates value and provides protection for individuals, creators, artists, companies and brand owners, and creates opportunities in the entertainment industry, including organizing/producing and investing in concerts, events and festivals. In addition, the Group has officially become the Vietnamese distributor of Proto, Inc.'s holographic imaging products.
Shengyang Group is also a new force entering the virtual asset market in this cycle. The Southeast Asian market has always been a treasure land for the development of the virtual asset industry. The market will continue to pay attention to whether Shengyang Group, which focuses on Southeast Asia, can achieve results and provide a model for more listed companies that want to enter the virtual asset market.
Conclusion
2024年1月24日，香港证监会于官网发布《2024年至2026年策略重点》，重点指出：Hong Kong will lead financial transformation with technology and ESG, and use blockchain and Web3 basic technologies to promote the establishment of a responsible and secure fintech ecosystem.
That's right. Hong Kong's financial predicament requires a strong medicine to completely break the routine. The development of virtual assets is a gamble on financial innovation and a once-in-a-century historical opportunity. Whoever can successfully gain a foothold is most likely to win in 2024.
Honestly speaking, the political and economic difficulties faced by Hong Kong stocks are so complex, can the development of virtual assets save the Hong Kong stock market? No one can make a conclusion.
But for institutions and stockholders who have been disappointed for a long time, the virtual asset market is the hope for tomorrow. We can only hold on to our expectations and hope that the Hong Kong financial market will have a new future.
As long as Hong Kong becomes a world financial center again, Hong Kong stocks will naturally regain their vitality.
Source: Bailu Living Room
Author: Bowen