A leading financial platform dedicated to China's new economy
China Renaissance Capital Investment Holdings has built a "investment banking + investment" dual-engine business model to serve the life-cycle financial needs of new economy enterprises. We believe that China Renaissance Capital Investment's focus on the new economy, investment income-driven profit growth and the improvement of the scale of asset management will push the company into a new stage of growth. We estimate that the EPS in 2021-23 will be 2.51 yuan for 2.98 Universe, and the corresponding PE will be 3.91 times as much as that of 6-5-4. We use the segment valuation method (SOTP) to calculate the valuation of Huaxing. We estimate that the three major business valuations of investment bank, investment management and Huaxing Securities are 37,86,900 million yuan respectively, with a total valuation of 13.2 billion yuan, corresponding to 10.1 times 2021 PE. The forecast target price is HK $30.25, covering a "buy" rating for the first time.
Benefiting from the new economic growth, the development momentum of China's new economic industry continues to improve by building a full life cycle service ecological chain. Since its establishment in 2005, China Renaissance Capital Investment Holdings has long focused on China's leading new economy and unicorn companies, building a solid moat that can fully cover multiple economic sectors and diversified potential enterprises. its whole life cycle and one-stop service help to enhance customer stickiness. In the future, wealth management is expected to become its third growth engine. At the same time, the company can carry out investment banking and brokerage services in Hong Kong, the United States and mainland China to meet the diversified needs of clients in the global capital markets. At this stage, Huaxing continues to maintain its leading position in the investment banking service of clients in the new economy, and the investment management business has entered the harvest period. In addition, Huaxing's "investment banking + investment management + wealth management" business model builds a light asset ecological chain, which helps to thicken the group's ROE.
Investment banking + investment management + Huaxing securities + wealth management to form a closed-loop service model investment banking business includes early service, advisory services, stock underwriting, sales trading and brokerage and research.
In 2020, the total income of Huaxing Investment Bank increased by 44% compared with the same period last year, the financial advisory business continued to take the lead, and equity underwriting achieved a breakthrough. The investment management business focuses on private equity funds. Driven by the growth of asset management scale, the encashment of unrealized carried interest and the improvement of principal investment return, Huaxing investment management business has entered the harvest period and will provide continuous support for future performance growth. At the same time, the layout of the company's new economy enterprises will also help it to obtain the investment share of excellent projects. Huaxing Securities, as a subsidiary of the company carrying out brokerage business in Chinese mainland, will further develop business coordination with the Group. The layout of the company's wealth management continues to advance, and the scale of wealth management has reached 6 billion yuan by the end of March 2021.
For the first time, the coverage gives a "buy" rating, with a target price of HK $30.25, taking into account Huaxing's strong earnings growth potential, we expect 2021 and 2022 EPS to be RMB 2.51 and 3.91 in 2023, corresponding to a multiple of PE in 6-5-4. We use the segment valuation method (SOTP) to calculate Huaxing's valuation, which is estimated to be 13.2 billion yuan, corresponding to 10.1 times the forecast PE for 2021. As a result, our target price is HK $30.25, covering the "buy" rating for the first time.
Risk tips: policy restrictions, investment value fluctuations, fierce market competition.