Profits rose sharply in the first half of the year, business continued to expand, new products were launched, and buy ratings were maintained.
The consolidated net profit in the first half of the year was 446 million, up 217% from the same period last year: the group recorded a net profit of 446 million belonging to shareholders in the first half of 2015, up 217% from the same period last year, and its core profit (operating profit excluding other income and losses) was 362 million, up 127% from 159 million last year. Revenue in the first half of the year was 925 million, up 109% from a year earlier, mainly due to a 61% year-on-year increase in management fees to 549 million and a 9.5-fold increase in performance fees to 229 million. The sharp increase in performance fees comes from the settlement of some Chinese management accounts by the end of June. The cost is well controlled, and the fixed fee (including fixed salary, employee benefits, etc.) increased by 34%, which is lower than the income growth rate, resulting in a substantial increase in core profits. In addition, due to the good performance of the fund in the first half of the year, the net profit rose even faster due to the substantial increase in the fair value income and realized income of its initial capital and investment funds.
Total assets under management (AUM) hit a new high: total assets under management reached $17.8 billion by the end of July 2015, an increase of 38% over the beginning of the year and an all-time high. In the first half of 2015, Merchandise's funds recorded a purchase of US $7.654 billion, redemption of US $4.462 billion, an increase of US $1.816 billion in fund performance and a dividend of US $137 million, indicating a good operating record. However, since the beginning of the second half of the year, the Hong Kong stock market has experienced large fluctuations due to the expected increase in US interest rates, Greek debt problems, fluctuations in the A-share market and the devaluation of the RMB, so AUM growth in the second half of the year was not expected in the first half of the year. However, at present, Hong Kong stocks are undervalued and have great upward potential, so we expect AUM to maintain steady growth.
Deepen channels, seize opportunities and enrich products: in the first half of the year, the Group will strengthen cooperation with mainland financial institutions to expand domestic and cross-border business opportunities; at the same time, actively prepare to participate in the mutual recognition arrangement between China and Hong Kong funds, the existing flagship products will be introduced to the mainland in the future. On the product side, five new funds, including active A-share ETF and UCITS products, were set up from January to July to attract new customers and expand the market.
Raise the target price to HK $11.27, buy rating: we still value the company in accordance with the P/AUM approach, giving the company 0.15 times P/AUM estimates, corresponding to the target price of HK $11.27 and the price-to-earnings ratio of 14.6 times 2016, with 32.4% room for improvement from the previous day's closing price, maintaining the buy rating.