HI secures stable cash flow
By Kim Tae-gyu
People care about balance sheets and income statements when poring over the financial status of companies. From the perspective of managers, however, of more significance is the actual cash flow rather than profits in account books.
That explains why careful investors tend to delve into the cash flow statements before making decisions. In this sense, securities firms may be not attractive as their profitability heavily banks on brokering commissions, which vary a lot depending on the economic situation.
HI Investment & Securities is an exception in that it chalks up the vast majority of its revenue from various businesses, which are not related to commissions for brokering stock transactions.
``We started as an asset management firm in the late 1970s. Hence, our DNA is different to those of others. Our main clout lies in such areas as asset management, investment banking (IB) services and principal investment (PI),’’ an HI Securities official said.
``Accordingly, we are far less vulnerable to the ups and downs of the economy as amply demonstrated by our performances in the wake of the global financial tsunami.’’
During the fiscal year 2008 when Hyundai Heavy Industries acquired HI just before the financial crisis, the securities firm recorded a net deficit of 10.7 billion won on sales of 265.9 billion won.
The Seoul-based outfit turned to positive territory the next year despite the aftermath of the economic turmoil to net 18.3 billion won in profit on turnover of 318 billion won.
Last year, it furthered embellished its financial statement with 399 billion won in sales and 25.4 billion won in net income. Among the profit, 92 percent has come from three cash cows of asset management, IB and PI. PI means investing its own capital.
Furthermore, the company has expanded into other non-brokerage segments such as real estate project financing, block sales, private equity funds, pension funds and merger and acquisition.
As an affiliate of the world’s largest shipyard, HI has also introduced vessel funds to Asia’s No. 4 economy. Up until now, the company has underwritten a total of 21 such funds.
``We are expanding our business horizons to areas where we can take the pole position. After that, we will enter offshore markets through taking advantage of the global network of Hyundai Heavy,’’ the official said.
Currently, it boasts of 1.79 trillion won in assets, 558 billion won in own capital and 53 branches, which employ around 1,000.