1H21 performance is basically in line with our expectations.
1H21 results: total income from + 22% year-on-year to HK $710 million, total net income from + 25% to HK $440 million, and net profit from home + 67% to HK $210 million, basically in line with expectations.
Trend of development
The strong performance of equity funds partially offset the impact of net outflows. 1) Management fee: year-on-year income of-HK $3.496 to HK $502 million, corresponding to AUM of-US $8.396 to US $13 billion compared with the beginning of the year, net outflow of US $1.675 billion in the reporting period (subscription of US $2.74 billion + redemption of US $4.41 billion / mainly low profit and entrusted management product redemption), annualized management fee year-on-year 0.1ppt to 0.989% (the proportion of products with lower fees increased) The net management fee is basically unchanged at 0.59% (1H20 0.61%) 2) performance fee: year-on-year income from + 485.3% to HK $91 million, the corresponding fund is returning US $697 million, partially offsetting the impact of net outflow. During the reporting period, the overall fund performance was + 4.3%, including two flagship stock products with excellent performance-factoring value fund + 9.1% (vs. Hang Seng Index + 7.3962), Wellcome High interest Equity Fund + 9.6% (vs.MSCI AC Asia ex-Japan Index + 6.49%); 3) cost: fixed operating expenditure under rigorous cost management is-7.3% to HK $159 million year-on-year, and the corresponding fixed cost coverage (net management fee income / fixed operating expenditure) increases from 1.7x of 1H20 to 1.9x, driving the overall fee only slightly + 4.5% 6 year-on-year. 4) in addition, the company's balance sheet is sound (cash-rich and no borrowing).
Product richness and geographical / channel coverage continue to expand. 1) products: for example, the pharmaceutical industry theme fund has been pushed to Hong Kong retail channels with a size of + 3x to US $400 million, new fixed income products such as Asian strategic bonds and all-China bond strategies, and the first Chinese A-share ETF in Malaysia; the absolute return of AUM at the end of the reporting period is 68% 6 / 27% / alternative investment 39 / quantitative and ETF 2%. 2) region / channel: overseas market growth is strong, AUM contribution has steadily increased from 159 in 18 years to 32% of 1H21, its currency AUM is higher than Japan + 426% Europe + 164% / North America + 79% at the end of 1919, Japanese AUM contribution year-on-year + 3ppt to 6% (vs. Hong Kong-5ppt to 59% 6).
Institutional / private equity / retail efforts to seize business opportunities in the mainland. The company continues to strengthen cooperation with bank / insurance and other institutional customers, continue to open up distribution channels, steady capital inflows of two MRF products, and rely on mainland investment experience to enhance brand influence. As of 1H21, AUM from the mainland remained stable at US $1.2 billion, accounting for 9%. Looking forward, as a leading local asset management agency in Hong Kong, we expect the company to benefit more from the new business opportunities brought about by the cross-border LiCaiTong project in the Greater Bay area.
Profit forecast and valuation
We keep the company's 2021 Universe profit forecast unchanged for 2022. The company currently trades on 2021e/2022e7.496/7.0%P/AUM and 13x/11x Pamp E, maintaining a target price of HK $6.00, corresponding to 2021e 10% AUMMague 17.4x Phand E and 35% upside space; maintaining an outperform industry rating.
Risk.
The risk of market fluctuation; the market competition is higher than expected; the business expansion is not as expected.