Core ideas:
Start as an investment bank and expand asset management and wealth management, which has significant advantages in the field of new economy. The business is mainly divided into four parts: investment banking, investment management, Huaxing Securities and new businesses including structured finance and wealth management. (1) the company has the first-mover advantage in FA business, and extensive business contacts and entrepreneur networks have been established in the field of new economy. In recent years, the company has made great efforts to develop its ECM business, and the Hong Kong market is among the top 20 underwriters. (2) the advantage of the new economy extends to the fund management business, and the asset management scale of private equity funds increases to 57.4 billion yuan by the end of 2020.
Core competence analysis: investment banking + investment coordination, deep binding and full life cycle services. (1) use FA and investment banking business to deeply connect the customer coverage of early entrepreneurs and adopt the "funnel" model to provide start-up enterprises with full life cycle services from seed wheel financing to post-IPO consultants. (2) the tripartite business of investment banking, asset management and wealth management forms a good synergy effect to realize the comprehensive excavation of diversion and customer demand. (3) the company has securities business licenses in China, Hong Kong and the United States, and serves both domestic and foreign capital markets.
Overseas boutique investment banks learn from: light capital, high income, strong competitiveness. American boutique investment banks mainly focus on FA and M & A market, and their market share is comparable to that of comprehensive established investment banks. Features include: light capital attribute, dominated by consulting fee income, small asset scale; pay attention to business quality, single business income can match the established investment bank; founder strong resource-driven, team streamlined, per capita income generation ability is strong. Boutique investment banks such as Lazard, Evercore and Greenhill have developed rapidly. ROE, the three boutique investment banks, has surpassed the institutional client division of Morgan Stanley, a traditional investment bank.
Investment advice: policy support to increase the proportion of direct financing, investment bank capitalization and wealth management are the general trend, which is expected to bring rich business opportunities for the company. The company is expected to achieve a net profit of 1.259 billion yuan in 2021, an increase of 21.3% over the same period last year. Based on the segment valuation method, the reasonable value of the company is HK $41.86 per share, corresponding to 2021E, which is approximately 14.7xPE valuation. Coverage for the first time, giving a "overweight" rating.
Risk tips: market fluctuations lead to a decline in asset valuation, project exit progress is not as expected, and so on.
Unless otherwise specified, the currency is RMB.