[event] Annual performance in 2021: the total income was 1.744 billion yuan, + 9.8% compared with the same period last year; the net profit returned to the mother was 1.62 billion yuan, + 56.5% compared with the same period last year; corresponding to EPS 3.09 yuan, ROE 25.5%. The total income in the second half of 2021 was 700 million yuan,-33.6% compared with the same period last year. The net profit returned to the mother was 400 million yuan,-37.2% compared with the same period last year.

Investment banking business: investment bank underwriting and distribution is rising steadily, and the linkage effect of the primary and secondary market is remarkable. 1) the income of the investment bank branch is 1.1 billion yuan, + 9.7% compared with the same period last year, accounting for 44% of the company's total revenue, and + 7.2pct compared with the same period last year. Among them, the substantial increase in the company's stock underwriting services contributed to the growth of investment banking revenue for the whole year. 2) the income from stock underwriting was 350 million yuan, but it was negatively affected by the Hong Kong-US stock market and policies in the second half of the year, which was + 34.5% compared with the same period last year. In the whole year, six Hong Kong stock IPO projects were completed, raising more than HK $115 billion, ranking third among Chinese investment banks. 3) sales, trading and brokerage income of 190 million yuan, + 47.1% compared with the same period last year. The brokerage business ranks among the top 16 in the Hong Kong market and the third among Chinese securities firms. 4) nearly 100 private equity financing projects have been completed, with the transaction size exceeding 36 billion RMB, of which the private equity financing market has ranked first for 17 years in a row. 5) We believe that with the gradual strengthening of the distribution capacity of investment banks, the company's secondary market position will increase steadily.

Asset management business: investment fund-raising ready to start, steady progress and orderly exit. 1) the total AUM is 48.85 billion yuan,-15.0% compared with the same period last year, of which the assets that generate management fees are about 23.76 billion yuan, + 8.6% compared with the same period last year. Fund raising promotes a substantial increase in the scale of charged assets. 2) in 2021, the fund withdrew 24 projects, with a total fair value of 8.6 billion yuan and a return multiple of 3.6 x. The group's own funds have achieved an investment income of 400 million yuan in the asset management business. 3) the net investment income is 470 million yuan,-49.2% compared with the same period last year, and the realized income accounts for 90% of the net investment income. The contributed capital and asset management scale of private equity funds are 32.7 billion yuan and 48.9 billion yuan respectively, + 18.80% year-on-year and-15.0% year-on-year.

Huaxing Securities: make efforts in all aspects of the business, and turn operating profits into profits. 1) the income and net investment income of Huaxing Securities was 410 million yuan, which was + 61.1% compared with the same period last year. The increase is mainly due to the appreciation of the investment value of Science and Technology Innovation Board's two listed shares on the Shanghai Stock Exchange and the increase in stock underwriting income due to the IPO and supporting financing transactions on the gem of the Shenzhen Stock Exchange. 2) there are 5 tutoring projects and 30 projects in this year, which is rich in project reserves. 3) the operating profit is 80 million yuan, and the operating profit of the division turns into a profit. 4) the scale of asset management exceeded 2 billion yuan, a three-fold increase over 2020, and the net investment income was + 56% compared with the same period last year. 5) We believe that Huaxing Securities will provide a new engine for segment revenue growth by enabling technology to build a wealth management platform that serves a new generation of young customers.

Financial management: wealth management develops steadily, and the territory of the group is becoming more and more perfect. 1) 9.4 billion yuan for AUM, which is + 147% compared with the same period last year. Wealth management business has a total of 313 customers, a stock of 185customers, per capita persistent assets of about 40 million yuan. 2) successfully get through the precipitation and transformation of KA customers in various departments of the group, and obtain 109 valid KA data and 63 accounts. 3) domestic active management of Huaxing multi-strategy FOF leads the industry, with AUM of about 100 million yuan; overseas active management of FOF Huaxing alliance parent fund, AUM of more than 200 million yuan.

Investment advice: we believe that with the steady rise of investment banking underwriting business and accelerated breakthroughs in asset management business, Huaxing Securities seizes the dividend opportunity of the times and expects the company's operating performance to achieve steady growth in the future. The current stock price is only 3.16x for 2022E PE, which is undervalued. We use the segment valuation method to value China Renaissance Holdings Ltd.. The reasonable market capitalization range of China Renaissance Holdings Ltd. is 97.9-11.7 billion yuan, and the reference exchange rate is HK $1. 83.The reasonable value range of China Renaissance Holdings Ltd. is 21.44-25.62 Hong Kong dollars, corresponding to 5.98-7.15x in 2022.

Risk hint: the continued downturn in the market leads to a decline in the scale of business, and market supervision is further strengthened.