The company announced its 2020 results, with a total operating income of 5.592 billion yuan, an increase of 1.3% over the same period last year, and a net profit of HK $2.264 billion, an increase of 1.2% over the same period last year. The annual dividend is 36.5%. The company has entered the project maturity and withdrawal cycle. In 2020, the company partially / completely withdrew 70 projects, achieving a capital return of HK $12.4 billion, with an average project exit IRR of 15%. With the withdrawal of the project, the performance fee, consulting fee and investment income increase significantly. In 2020, investment income reached HK $2.013 billion, an increase of 47 per cent over the same period last year. The capital market for unwithdrawn projects benefited from a higher valuation, with an unrealized income of HK $823 million, an increase of 191 per cent over the same period last year. However, due to the fund entering the withdrawal period to reduce the collection of management fees and the reduction of the current management scale, the actual collection of management fees decreased, achieving a management fee income of 296 million yuan, a decrease of 20% over the same period last year.
Business outlook: (1) strong growth in the scale of fund management, providing the basis for the improvement of main business income.
At the end of 2020, the amount of entrusted management was HK $182.8 billion, an increase of 16% over the same period last year, of which primary market funds were the core business and strong growth driver. (2) Investment projects have entered the mature and withdrawal period one after another, and fund management business and self-owned capital investment business are expected to achieve sustained investment returns. (3) Strategic investment business layout high-quality track. Investment incubation Teslian is a unicorn in China's artificial intelligence Internet of things industry, Everbright is a leading high-end old-age health service company in China, and China's aircraft leasing ranks at the forefront of the industry, which is expected to benefit from shipping recovery under economic recovery. (4) the cooperation within the beneficiary group is expected to peel off the bedrock investment and withdraw the funds.
Investment advice: valuation depression, the future is expected to usher in value repair. The company is expected to achieve a net profit of 30.7 and 3.48 billion Hong Kong dollars from 2021 to 2022, an increase of 35.5% and 13.4% over the same period last year.
According to the segment valuation method, the reasonable value of the company is HK $27.6 billion, corresponding to 2021E is about 9.1xPE valuation, the reasonable value is HK $16.52 per share. With the improvement of the primary market environment, there is still room for valuation improvement. Maintain a "buy" rating.
Risk tips: market fluctuations lead to a decline in asset valuation, project exit progress is not as expected, and so on.