Core ideas:
The company's parent net profit decreased by 11.5%, mainly due to the impact of changes in the fair value of investment.
The company's total revenue rose 27.4% in the first half of 2018 compared with the same period last year, and its net profit was HK $194 million, down 11.5% from a year earlier, mainly due to a loss of HK $67 million in the fair value of the investment. At the end of June 2018, the company's total assets under management increased to $17.192 billion, an increase of about 11% from $16.594 billion at the end of 2017.
The proportion of fixed income products continues to rise, and alternative investment may accelerate.
The company continues to strengthen the distribution of fixed income products, with the proportion of assets rising from 30% in 2017 to 35% at the end of June 2018. According to the company's semi-annual report, the company's further product plans include: Asia-Pacific real estate private equity funds are expected to acquire two more assets in the second half of the year; a new private equity fund of a certain size will be added in the coming year; and a second real estate private equity fund will be launched.
The proportion of Chinese customers is increasing, and MRF is expected to be approved this year.
The proportion of customers in China continued to rise to 6%, mainly due to the company actively promoting the issuance of private equity products in the mainland in 2018. At the end of June, the company had more than $1 billion in assets under management in mainland China, an increase of about 30 per cent from the end of 2017. According to the semi-annual report, the company expects that the benefit value fund is expected to be approved in the short term, and the benefit high-interest equity fund is also in the application state.
The valuation center moves down, waiting for catalysis.
The adjustment of the company's product line has led to a decline in the proportion of partial stock funds with the highest comprehensive rates, while the progress of regional expansion in China is subject to regulation that is slower than expected, and the superimposed equity market fell sharply in 2018, leading to a downward shift in the valuation center of the company as a whole. The company is currently valued at HK $5.36, corresponding to a P/AUM valuation of about 8%, which is below the lower end of the historical valuation range. Based on the company's low valuation and the growth prospects of the mainland market, we maintain a cautious overweight rating, but we need to keep an eye on the progress of the approval of the flagship fund MRF and the changes in the performance of its major funds.
Risk hint
The stock market has fallen sharply, unable to qualify for MRF, and the core research team has left.