Public Financial Holdings Ltd (PFHL) is a HKEX-listed investment and real estate holding company where its major subsidiaries are mainly involved in retail and commercial banking activities in Hong Kong, China. As of 27 March 2019, PFHL is worth HK$ 3.73 billion in market capitalisation.

In this article, I’ll highlight its fundamentals and bring an update on its financial results and valuation figures based on its current share price of HK$ 3.40. Thus, here are 10 key things to know about PFHL before you invest.

  1. Key Subsidiaries
    PFHL has two key subsidiaries namely, Public Bank (Hong Kong) Ltd and Public Finance Ltd.

    Public Bank (Hong Kong) Ltd provides an array of retail and commercial banking services via 32 branches in Hong Kong and 4 branches in China.

    Public Finance Ltd is involved in personal financing activities through its extensive 42 branches in Hong Kong.


  2. Loans, Advances, and Financing Assets (LAF Assets)
    LAF assets had grown marginally by CAGR of 2.2% to HK$ 29.8 billion in 2018 from HK$ 24.5 billion in 2009. From which, 79.5% of its LAF assets or HK$ 23.7 billion are owned by Public Bank (Hong Kong) Ltd. 20.5% of its LAF assets or HK$ 6.1 billion are owned by Public Finance Ltd. Public Bank (Hong Kong) Ltd’s LAF assets are of a higher quality as it has lower gross impaired loans ratio (GILR) of 0.3%. Whereas, Public Financial Ltd has recorded GILR of 1.9% for its portfolio of LAF assets in 2018.


No.SubsidiaryLAF AssetsGILR (%)
1Public Bank (HK) LtdHK$ 23.7 billion0.30%
2Public Finance LtdHK$ 6.1 billion1.90%
Total PFHLHK$ 29.8 billion0.65%


Source: Public Bank Bhd & PFHL’s Annual Reports


  1. Net Interest Income (NII)
    NII has increased by CAGR of 2.0% to HK$ 1.40 billion in 2018 from HK$ 1.17 billion in 2009. It is in line with PFHL’s increase in LAF assets in the 10-year period.



Source: PFHL’s Annual Reports

  1. Other Operating Income
    After a fall in 2012, PFHL has maintained its other operating income at HK$ 200 – HK$ 250 million per annum. This is because PFHL’s slight dip in fees & commission income was offset by a slight increase in rental income during the period.


Source: PFHL’s Annual Reports

  1. Profitability
    Overall, PFHL has increased its operating revenues by CAGR of 1.5% to HK$ 1.63 billion in 2018 from HK$ 1.43 billion in 2009. It is driven from a slow but consistent growth in its NII arising from growth in LAF assets during the 10-year period. Shareholders’ earnings have increased from HK$ 278.1 million in 2009 to HK$ 510.5 million in 2018. It has averaged 6.57% in return on equity (ROE) for the last 10 years. This means, PFHL has made, on average, HK$ 6.57 in annual earnings from every HK$ 100 in shareholders’ equity from 2009 to 2018.


Source: PFHL’s Annual Reports

  1. Balance Sheet Strength
    As at 31 December 2018, PFHL has reported total capital ratio (TCR) of 15.7%. It indicates that PFHL is well-capitalised now to meet its capital requirements and to fund its growth in LAF assets for greater profits in the future.


  2. Who Owns PFHL?
    PFHL is a 73.2%-owned subsidiary of Public Bank Bhd. Tan Sri Dato’ Sri Dr. Teh Hong Piow is appointed as the Chairman of PFHL. Hence, PFHL is a key source of income to Public Bank Bhd’s international operations presently.


  3. P/E Ratio
    In 2018, PFHL has generated earnings per share (EPS) of HK$ 0.465. As such, its current P/E Ratio is 7.31 based on its stock price of HK$ 3.40 a share presently. It is close to its lowest in 10 years. This is because PFHL has experienced a gradual fall in its stock price despite having recorded continuous growth in shareholders’ earnings during the 10-year period.


  1. P/B Ratio
    In 2018, PFHL has reported having a net asset of HK$ 7.06 per share. As such, its current P/B Ratio is 0.48, which is also closer to its lowest in 10 years. It is because PFHL’s stock price had been gradually falling despite the company’s continuous increase in its net assets in the 10-year period.


  1. What’s my Dividend Yields?
    After a dip in 2012, PFHL has gradually raised dividends per share (DPS) from HK$ 0.14 in 2012 to HK$ 0.22 in 2018. It is in line with its ongoing increase in EPS for the last 6 – 7 years.


Source: PFHL’s Annual Reports

If PFHL is capable to maintain its DPS at HK$ 0.22 in subsequent years, then, its dividend yield is 6.47% per year, which is closer to its 10-year high and well above its 10-year average of 4.57% per annum.


VIA’s Verdict

Evidently, beginning in 2012, PFHL had delivered a much stable financial results to its shareholders with a slow but sustainable increase in its operating revenues, shareholders’ earnings, and dividend payouts. It has maintained a solid balance sheet with TCR of 15.7% as of 31 December 2018.

Despite its improvements, PFHL’s stock prices remained rather sluggish as it fell from HK$ 5.68 a share as of 31 December 2010 to HK$ 3.40 presently.


Source: Yahoo! Finance

Thus, in terms of valuation figures, PFHL is trading close to its 10-Year low in P/E and P/B Ratio. It is offering 6.47% per annum in dividend yields if you decide to invest in its shares at HK$ 3.40 a share today. So, is this an investment for all?

I believe the answer is no. It depends on what you are looking for in a stock before investing. If you are attracted by a straight forward dividend yield of as much as 6.47% per annum, then, it is for you. But, if you are concerned about its growth rate, then, it may not be for you as PFHL’s earnings have grown slowly over the last 10 years as a result of slow growth in its LAF assets during the period.

Would you personally invest in PFHL? Please do leave your comments below:

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