Core ideas:
The company announced its 2021 results, with total revenue of HK $5.985 billion, an increase of 7% over the same period last year, and a net profit of HK $2.573 billion, an increase of 14% over the same period last year.
The scale of fund management maintained a net growth. The size of asset management at the end of the period rose 11 per cent year-on-year to HK $203.1 billion. (1) the size of secondary market funds increased by HK $17.8 billion, with fixed income products accounting for 86 per cent. (2) among the primary market funds, the proportion of RMB funds at the end of the period has increased to 83%. Everbright Anshi has a management size of HK $56.9 billion, unchanged at the beginning of the period. During the year, the company completed the issuance of the first S fund, with an initial size of 400 million yuan. (3) the scale of the parent fund is the same at the beginning of the period. However, affected by the change in the way individual parent fund management fees are collected, the overall income from earned management fees has dropped by 3.5% compared with the same period last year. Among the invested projects, the increase in the valuation of overseas investment projects and the hard technology sector led to a sharp increase in unrealized income by HK $1.658 billion compared with the same period last year, but at the exit end, affected by market fluctuations, the number of withdrawal projects shrank during the year, and investment income decreased by HK $1.634 billion compared with the same period last year. The company's fund management business sector withdrew 42 projects in 2021 (70 in 2020) and returned about HK $3.8 billion in cash (HK $12.4 billion in 2020).
The income from the investment business of own funds fell 44% compared with the same period last year, of which the cornerstone investment income of holding shares in Everbright Bank and Everbright Securities increased by 8% to HK $1.278 billion, accounting for 21% of the company's total revenue. However, the changes in the valuation of financial investment projects and risk provision have dragged down the negative returns, and the profits of important investment enterprises (Zhongfei Rent, Teslian, Everbright) are not as high as last year's high level (Teslian completed financing in 2020 to achieve higher valuation, with a higher base).
Profit forecast and investment advice: the steady growth of capital management scale can support the continuous growth of management fee income, and some funds enter the withdrawal period. Market valuation repair will help the company to achieve good investment returns. The company's dividend is stable, with a dividend rate of 36% MUE 38% in 2019-2021. The company is expected to make a net profit of HK $3.007 billion in 2022, an increase of 17% over the same period last year. In recent years, the company's PE hub is 6-8x, with steady performance growth, giving the company 2022E a valuation of about 7x PE, with a reasonable value of HK $12.46 per share. With the improvement of the primary market environment, there is still room for valuation improvement. Maintain a "buy" rating.
Risk tips: market fluctuations lead to a decline in asset valuation, project exit progress is not as expected, and so on.