[event] China Renaissance Holdings Ltd. announced his mid-term results in 2022: total income in the first half of 2022 was 600 million yuan,-42.4% compared with the same period last year. Operating profit-70 million yuan, return to the mother net profit-154 million yuan, from profit to loss in the same period; corresponding to EPS-0.30 yuan.

Investment banking business: market issuance scale decreased, investment banking underwriting income decreased 1) investment banking division income 230 million yuan, year-on-year-68.6%, accounting for 45.4% of the company's total revenue, + 15.2% year-on-year. Mainly due to the sharp decline in the size of initial public offerings in the new economy in Hong Kong and the US stock market in 2022 compared with the same period in 2021, the activity of the Hong Kong and US stock market fell to the lowest level in five years, and the related underwriting income declined. 2) the stock underwriting income was 16 million yuan, which was-95.2% compared with the same period last year. In the first half of 2022, two Hong Kong stocks, Huitongda and Innovation Qizhi, were completed, and the total underwriting volume ranked fourth in the Hong Kong market. 3) sales, trading and brokerage income of 67 million yuan,-41.4% compared with the same period last year. 4) the net investment income is 1.36 million yuan,-86% compared with the same period last year, and the income mainly comes from structured finance-related products.

Asset management business: the total AUM is relatively stable, and operating expenses have dropped significantly. 1) the total AUM is 48.57 billion yuan,-21.3% compared with the same period last year, which remains relatively stable compared with the end of 2021, of which the assets that generate management fees are about 27.3 billion yuan, + 26.9% compared with the same period last year, mainly from the new fundraising of US dollar and RMB four-phase funds. 2) the operating expenditure of the segment was 110 million yuan, a decrease of 65.4% compared with the same period last year, mainly due to the reduction of financing costs related to bank credit and the investment loss attributable to comprehensive structured equity holders. The Group is actively withdrawing from the project to increase the capital dividend rate and accelerate the inclusion of carried interest in the statement. 3) net investment income-102 million yuan, from profit to loss in the same period, the contributed capital and asset management scale of private equity funds were 36 billion yuan and 48.6 billion yuan respectively, + 28.1% and-21.3% compared with the same period last year. 4) the accumulated unrealized net carried interest at the end of the reporting period is 1.2 billion yuan, and it is expected that net carried interest will make a more significant contribution to net profit in the second half of 2022.

Huaxing Securities: the epidemic affects the landing of the project, and the operating profit changes from profit to loss. 1) the income and net investment income of Huaxing Securities Division was 38 million yuan,-89.3% compared with the same period last year. It is mainly due to the pressure of proprietary investment and the decrease of investment income due to the negative impact of the fluctuation of the A stock market on the investment income of the underwriting project of the scientific and technological creation version of IPO. 2) in the first half of the year, the investment banking business completed a single start-up IPO, and two other IPO and one IPO were declared, and six projects were established at the same time. 3) operating profit-110 million yuan, from profit to loss in the same period. It is mainly due to the pressure on proprietary investment income and the pullback of scientific and technological innovation with investment income. Due to A-share fluctuations, proprietary investment income and science and technology innovation with investment returns have been adjusted, the company has adjusted its business strategy in a timely manner.

Wealth management: wealth management develops steadily, and synergy drives growth. 1) the total income and net investment income were 50 million yuan, an increase of 23.9% over the same period last year, mainly due to the increase in investment income from cash management products. 2) due to the fluctuation of the market environment in the first half of the year, the scale of wealth assets management decreased to 6.2 billion yuan, the scale of alternative assets continued to increase to 3.4 billion, and the comprehensive rate increased. 3) in the future, Wealth Business will further achieve synergy with the group's investment banking and investment management business, and become the third long-term growth engine driver of the business model.

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 share price is 12x to 2022e PE. We use the segment valuation method to value China Renaissance Holdings Ltd.. The reasonable market capitalization range of China Renaissance Holdings Ltd. is 47-5.4 billion yuan, and the exchange rate midpoint is HK $1 = 0.83 RMB. The reasonable value range of China Renaissance Holdings Ltd. is HK $9.96-11.36, corresponding to 14-16x 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.