Executive Summary / Key Takeaways

• Garden Stage Limited (NASDAQ:GSIW) is a Hong Kong-based financial services provider poised for growth through strategic expansion and technological enhancement, despite recent volatility in its core revenue streams.
• The company's diversified business model, encompassing securities dealing, underwriting, asset management, and burgeoning advisory and referral services, aims to create synergies and a stable income base.
• Recent financial performance for FY2025 shows a significant revenue rebound, primarily driven by a surge in introducing and referral income, alongside the successful launch of new due diligence services.
• GSIW is actively investing in advanced IT systems and exploring U.S. market expansion and margin financing to enhance competitiveness and service offerings.
• Key risks include intense competition, customer concentration, and evolving regulatory landscapes in both Hong Kong and potentially Mainland China, alongside the immediate challenge of regaining Nasdaq's minimum bid price compliance.

A Niche Player in a Vibrant Market: Garden Stage's Strategic Foundation

Garden Stage Limited, incorporated in the Cayman Islands in August 2022, operates as a holding company, with its financial services activities rooted in Hong Kong through its subsidiaries, I Win Securities Limited (IWSL) and I Win Asset Management Limited (IWAML). IWSL holds a Type 1 license for dealing in securities, while IWAML is licensed for Type 4 (advising on securities) and Type 9 (asset management) regulated activities. This structure allows GSIW to offer a comprehensive suite of services, including placing and underwriting, securities dealing and brokerage, asset management, investment advisory, due diligence, and introduction and referral services. The company's strategic approach emphasizes leveraging its experienced management team and established client relationships to foster growth, rather than relying on aggressive price competition or extensive marketing campaigns.

The Hong Kong financial market, where GSIW primarily operates, is intensely competitive and highly fragmented. Larger, established players such as HSBC Holdings plc , Standard Chartered plc , Bank of China Limited (Hong Kong operations) (BACHY), and Hang Seng Bank Limited (HSNGY) possess significant advantages in brand recognition, client base, and financial resources. GSIW, as a relatively newer entrant, positions itself as an agile alternative, focusing on personalized services and local market expertise. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, GSIW's strategy aims to differentiate through responsiveness and tailored client solutions.

Technological Edge and Strategic Investments

In an industry increasingly shaped by financial technology, GSIW recognizes the critical role of robust IT systems. The company is actively enhancing its technology infrastructure, a key strategic pillar for fostering business growth and maintaining competitiveness. This includes plans to upgrade its portfolio management and trading systems to improve efficiency, convenience, and user-friendliness for clients.

GSIW is evaluating the implementation of several new initiatives. These include subscribing to an integrated system offering both portfolio management and risk management functions, which would encompass features like security, redundancy, disaster recovery, and database administration, as well as providing comprehensive market data. Furthermore, the company plans to subscribe to a new client relationship management (CRM) system to enhance client satisfaction and invest in a business continuity planning service for data management and cloud storage. Subscriptions to financial and market data vendors, such as the Bloomberg Terminal, are also planned to bolster analytical and research capabilities, supporting the asset management and placing and underwriting services. These technological investments are designed to streamline daily operations, deliver more accurate trading recommendations through advanced machine learning and data analysis techniques, and ultimately strengthen GSIW's competitive moat by improving operational efficiency and client service quality.

Financial Performance and Operational Dynamics

GSIW's financial journey has been marked by significant shifts in revenue composition and profitability. For the fiscal year ended March 31, 2025 (FY2025), total revenues surged by 288.10% to US$5.47 million, a substantial increase from US$1.41 million in FY2024 and US$3.26 million in FY2023. This growth was primarily fueled by a remarkable 1667.10% increase in introducing and referral income, which reached US$4.68 million in FY2025, accounting for 85.70% of total revenues. This surge was largely due to the successful onboarding of a new customer, contributing approximately 62.50% of this income by referring investors to capital-raising activities. The introduction of new due diligence services in FY2025 also contributed US$79,543 from four projects, diversifying the revenue streams.

However, other segments experienced declines. Advisory fees plummeted by 97.50% to US$10,624 in FY2025, a consequence of a previous advisory arrangement's termination and a new engagement commencing only in March 2025. Brokerage commissions decreased by 17.30% to US$329,246, mainly due to a reduction in weighted average commission rates on the Hong Kong Stock Exchange, despite increased active accounts and trading volumes there. Underwriting and placement income also fell by 25.30% to US$114,091, primarily due to fewer equity share projects and lower weighted average fee rates.

Despite the robust revenue growth, GSIW reported a net loss of US$4.32 million in FY2025, a slight improvement from the US$4.59 million net loss in FY2024, but significantly higher than the US$0.21 million loss in FY2023. This continued unprofitability stems from increased expenditures, notably a 315.10% surge in communications and technology expenses to US$1.82 million, reflecting investments in advanced IT systems and financial community networks. Compensation and benefits also rose by 13.20% to US$3.72 million, driven by higher referral commissions and increased personnel costs. Professional fees more than doubled to US$770,898 due to Nasdaq listing annual fees and post-listing activities.

Liquidity and Capital Position

GSIW's liquidity position has been significantly bolstered by recent capital-raising activities. Following its initial public offering (IPO) on Nasdaq in December 2023, which generated US$11.5 million in gross proceeds, the company has continued to raise capital through registered direct offerings. In April 2025, two offerings raised approximately US$1.49 million and US$0.99 million, respectively. A June 2025 offering brought in another US$3.66 million, and a July 2025 offering added approximately US$4.22 million. These funds are primarily allocated for working capital and general corporate purposes, with specific earmarks for expanding underwriting capacity (US$0.66 million), enhancing IT infrastructure (US$1.8 million), and strengthening asset management research capabilities (US$1.5 million).

As of March 31, 2025, GSIW held US$7.89 million in cash and restricted cash, with the majority in Hong Kong dollars. Management believes this capital, combined with anticipated cash flows from operations, will be sufficient for at least the next 12 months. The company's operating subsidiaries remain in compliance with Hong Kong's regulatory capital requirements, with I Win Securities Limited maintaining 204% of its minimum required capital and I Win Asset Management Limited at 454%.

Strategic Initiatives and Future Outlook

GSIW's forward strategy centers on strengthening its core services and expanding into new areas. The company aims to bolster its placing and underwriting services by extending industry networks, seeking more significant project participation, and expanding its team. A key growth area is the expansion of its U.S. exchanges market presence, driven by increasing client demand. GSIW plans to establish long-term partnerships or joint ventures with U.S. licensed financial institutions to secure more favorable commission arrangements and eventually obtain direct U.S. licenses and trading rights.

Another strategic initiative involves developing its securities margin financing services. Having received HKSFC approval in November 2020, GSIW intends to commence and expand this business to increase interest income, enlarge its capital resources in compliance with regulatory guidelines, and create synergies with its asset management offerings, particularly for high-net-worth clients. The company also plans to enhance its asset management business by diversifying schemes and recruiting qualified research analysts to support investment decision-making and increase Assets Under Management (AUM).

Risks and Competitive Landscape

GSIW operates in a highly regulated and competitive environment, presenting several risks to its investment thesis. The financial services industry in Hong Kong is intensely competitive, with larger players like HSBC (HSBC) and Standard Chartered (SCBFF) benefiting from superior brand recognition, broader client bases, and greater financial resources. These competitors can offer a wider range of services and may leverage lower brokerage commissions, potentially impacting GSIW's market share and profit margins.

A significant risk is customer concentration, with the top five customers accounting for 88% of total revenues in FY2025, and the largest customer alone contributing 54%. This reliance on a limited number of clients, particularly for project-based services like placing and underwriting, introduces volatility and uncertainty to future revenue. The underwriting business also carries market risk; if underwritten securities are undersubscribed, I Win Securities is obligated to purchase them, potentially affecting liquidity and financial results. Operational risks, such as trading errors and cybersecurity threats, also pose a continuous challenge, with potential for financial losses and reputational damage.

Furthermore, GSIW faces unique geopolitical and regulatory risks. While its operations are exclusively in Hong Kong, there is an inherent uncertainty regarding the potential for Mainland China's laws and regulations to extend their reach to Hong Kong, particularly concerning cybersecurity, data privacy, and oversight of overseas listings. [cite: 28-30, 75, 78-81] Such intervention could materially alter GSIW's operations and the value of its shares. The company also received a Nasdaq notification in September 2025 regarding non-compliance with the minimum bid price requirement, necessitating a remedy by March 2026 to avoid delisting. [cite: "Garden Stage Limited - Announces Receipt of Nasdaq Notification Letter Regarding Minimum Bid Price Deficiency"] While its current auditor, JS Associate PLT, is subject to PCAOB inspections, any future inability of the PCAOB to conduct such inspections could lead to trading prohibitions under the HFCAA.

Conclusion

Garden Stage Limited stands at a pivotal juncture, demonstrating impressive revenue growth in FY2025, largely propelled by its introducing and referral services. The company's strategic focus on strengthening core brokerage and underwriting, expanding into U.S. markets, developing margin financing, and enhancing asset management, all underpinned by significant IT investments, outlines a clear path for future development. These initiatives, coupled with an experienced management team and established client relationships, form the bedrock of its investment thesis.

However, investors must weigh these growth prospects against the backdrop of intense competition, significant customer concentration, and the evolving regulatory landscape in Hong Kong and Mainland China. The immediate challenge of regaining Nasdaq (NDAQ) compliance also underscores the inherent volatility. GSIW's ability to successfully execute its strategic expansions, effectively manage its customer relationships, and adapt to regulatory shifts while leveraging its technological enhancements will be critical in translating its operational momentum into sustained profitability and long-term shareholder value in the dynamic financial services sector.