Core ideas:
In 2021, the company realized total income and net investment income of 2.504 billion yuan (RMB, the same below),-8% year-on-year, and home net profit of 1.624 billion yuan, + 57% of the same period last year.
Both investment management and investment banking business are resilient under market fluctuations: the investment management division achieved income and net investment income of 911 million yuan,-34% year-on-year, accounting for 36% of the whole, of which net investment income was 474 million yuan,-49% of the same period last year. The average IRR of completed investment funds at the end of the period is 37 per cent. At the end of the period, the AUM was 48.9 billion yuan, of which the fee AUM increased by 9% to 23.7 billion yuan compared with the beginning of the year. Early fund exit excess income will be included in the table one after another. The investment bank branch achieved an income of 1.101 billion yuan, + 10% over the same period last year, of which the stock underwriting income was 349 million yuan, and the underwriting amount was 174.2 billion yuan.
The wealth management business has a high growth rate, with the management scale reaching 9.4 billion yuan at the end of the year, and the per capita remaining assets are about 40.87 million yuan. Huaxing Securities, a subsidiary, turned from losses to profits, and the appreciation of share options thickened the profits of the current period.
In August 21, Huaxing Financial, a subsidiary company, exercised its share options to transfer 15% of Huaxing Securities, and upon completion, its shareholding will be increased to 63.83%. After the exercise of the remaining options to benefit from the exercise date, Huaxing Securities valuation, exercise price and other changes, the net fair value increased by 844 million yuan, which was included in the group's current profit.
Profit forecast and investment advice: (1) the share of unrealized equity at the end of the period is about 1.3 billion yuan, half of which comes from funds that have been withdrawn from the late stage, which is expected to continue to increase profits. (2) the raising of the new fund is making good progress. By February 2022, the US dollar four-phase fund has raised US $800 million, and the RMB four-phase fund plan 22H1 has completed the first hurdle. (3) 93% of the projects already invested are planned to be listed in AH and only 7% in NASDAQ. The progress of listing withdrawal is expected to be less affected by geography. (4) there is still 5.3 billion yuan of quasi-cash in the balance sheet, and the return on investment of its own funds at the end of the period is in 1.0x-4.8x, and the return on funds is expected. The recovery of the market climate will help the company to release its performance flexibility and improve its valuation.
The company is expected to achieve a net profit of 1.278 billion yuan in 2022. The company's PE hub in 6x-10x in the past two years has moderately lowered the company's 2022EPE valuation to 6x, corresponding to the forecast of a reasonable value of HK $17.19 per share (HK $1 = RMB0.81). Maintain the "overweight" rating.
Risk tips: the tightening of listing channels hinders the withdrawal of funds and the prosperity of the primary market; large fluctuations in the capital market affect the value of the fund portfolio; the raising progress of new funds is not as expected.
