HONG KONG, March 31, 2022 /PRNewswire/ -- China Renaissance Holdings Limited ("China Renaissance" or the "Company"; stock code: 1911.HK) today reported its audited consolidated financial results for the fiscal year ended December 31, 2021.
2021 Annual Results Highlights (all growth rates reflect year-over-year growth):
Commenting on the Company's financial results, Fan Bao, Chairman and Chief Executive Officer of China Renaissance, stated:
"China Renaissance's solid 2021 performance is a testament to our resilient and highly complementary businesses, which enabled us to successfully navigate another year of global market uncertainties. Our ability to deliver 56.5% profitability growth reflects the unmatched underwriting capabilities of our Investment Banking segment, the turnaround of CR Securities, and our strategic portfolio company exists. Looking ahead, we will continue to utilize the Company's robust balance sheet, including our sufficient liquidity, to offer strong support against future market volatility."
"We are confident the synergies that we have created across our organization position us well for continued growth in 2022 and beyond. Smart Economy champions and their innovative entrepreneurs are looking for trusted counsel and financial services at every stage of their lifecycle, and our deep relationships, proven track record and increased product offerings have consistently made us their go-to partners. These hallmarks of China Renaissance underpin our ability to create lasting value for our clients, employees and shareholders."
2021 Annual Results Overview
Total revenue and net investment gains were RMB2.5 billion. Transaction and advisory fees were RMB1.2 billion, an increase of 14.9% from the prior year. Management fees were RMB442.1 million, a slight decrease of 0.3% from the prior year. Interest income was RMB75.0 million, and net investment gains were RMB759.5. million.
Net profit attributable to owners of the Company increased by 56.5% to RMB1.6 billion from the prior year. Operating profit was RMB862.8 million.
Total assets were RMB14.2 billion, representing an increase of 13% from RMB12.5 billion at fiscal year-end 2020.
Business Segment Results
In addition to providing consolidated financial results, China Renaissance reports separate financial information for its four business segments: Investment Banking, Investment Management, CR Securities and Others.
Investment Banking:
The Investment Banking segment reported revenue and net investment gains of RMB1.1 billion and an operating profit of RMB309.3 million, which represent increases of 9.7% and 6.6%, respectively, compared to the prior year. Segment operating margin remained stable at 28.1% compared to 28.9% in 2020.
China Renaissance maintained its leadership position in the private placement market for the 17th consecutive year and advised leading companies across the technology, medical, enterprise services and other high growth sectors, including the funding rounds of Xiaodu Technology, Newlink Group, Beisen, Keenon Robotics and Weigao Group, as well as TenxCloud in its sale to 21 Vianet, Xiao Lu Chinese Medicine in its sale to Ali Health, and Improve-Quality in its sale to Clin-nov Medical, a wholly-owned subsidiary of Asymchem.
Despite the capital markets downturn in the second half of 2021, China Renaissance's robust initial public offering ("IPO") pipeline contributed to the segment's growth. In 2021, China Renaissance completed 16 IPO projects, including 10 US IPOs, such as Full Truck Alliance and Boss Zhipin. The Company also supported 6 Hong Kong IPOs, including high-profile listings such as Kuaishou, JD Logistics, Baidu and Linklogis. The Company expects stronger revenue momentum from its Investment Banking business in 2022.
Investment Management:
The Investment Management segment reported revenue and net investment gains of RMB910.5 million and an operating profit of RMB540.2 million. Segment operating margin was 59.3% in 2021 compared to 69.3% in 2020. The declines were primarily resulting from the depreciation in the value of portfolio company investments in its private equity ("PE") funds.
Despite the challenging market conditions, China Renaissance managed to achieve stable net investment gains with active exits in selective portfolio companies via primary and secondary markets, realizing a multiple on invested capital ("MOIC") at 3.6x and recording RMB474 million in net investments gains, of which 90% were realized gains, whilst in previous years the majority of net investment gains were unrealized fair value changes. A majority of Huaxing Growth Capital's current portfolio companies are focused on high-growth sectors, including healthcare, technology and advanced manufacturing. Furthermore, 14 portfolio companies of Huaxing Growth Capital successfully completed their IPOs in 2021, including Li Auto, SenseTime, Bairong, Cardioflow Medtech, Nanomicro Technology, Chemclin Diagnostics, Zhihu and Missfresh.
The Company's flagship investment management fund Huaxing Growth Capital successfully completed two fundraising rounds in September 2021 and February 2022, respectively, securing approximately US$800 million. This will add to its fee-earning AUM base and management fee income in 2022 and enable the Company to invest in suitable opportunities with sufficient dry powder amidst the ongoing valuation corrections in the primary market.
The committed capital and AUM of the Company's PE funds were RMB32.7 billion and RMB48.9 billion as of December 31, 2021. As of December 31, 2021, the average internal rate of return ("IRR") in our PE funds was 37%. Despite short-term market volatilities, we expect our investment income will boost our ROE in the longer term. Apart from China Renaissance's PE funds, the Company continued to diversify its portfolio of investment products and strategies and launched new fund types in 2021, including private credit fund and FoHF.
CR Securities:
In 2021, CR Securities reached a record high in revenue and achieved a turnaround from loss to profit. It reported revenue and net investment gains of RMB409.6 million, representing a significant increase of 61.1% compared to RMB254.2 million in the prior year. Operating profit was RMB78 million, compared to a loss of RMB73.6 million in 2020.
The profitability improvement was supported by stronger revenue from CR Securities' investment banking business in mainland China as a result of closer integration with China Renaissance's Investment Banking Business, which enabled CR Securities to further capitalize on the Group's market-leading private placement business and deep client relationships. In 2021, CR Securities served as the sole sponsor and underwriter in the STAR market listing of Suzhou UIGreen Micro & Nano Technologies, as well as advised on the restructuring of Hunan Huakai Cultural and Creative.
In addition, CR Securities launched its retail and Internet-based brokerage business in April 2021, with the Duoduojin App released in early 2022, to capitalize on the opportunities arising from China's digital-first, millennial retail investors who are increasingly affluent and accounting for a majority of retail investor base in China's A-share market..
Others:
The others segment mainly comprises of the Company's Wealth Management business, and investment and management of our own funds. Revenue and net investment gains totaled RMB83.2 million, a decrease of 16.5% compared to the prior year, primarily due to the decline in investment gains generated from cash management products as a result of allocating more of the Group's capital to its private equity funds. However, the Wealth Management business continued to gain momentum, with segment AUM up 144% to RMB9.4 billion in 2021. The segment continues to gain traction from our Smart Economy clients, becoming a preferred platform for alternative investments and well-positioned to benefit from the synergies with our Investment Banking and Investment Management businesses.
RMB38 Cents Per Share Dividend
The Board declared a dividend of RMB38 cents per share, payable to shareholders whose names appear on the register of members of the Company on or before the close of business on July 11, 2022, pending shareholder approval at the Company's forthcoming Annual General Meeting ("AGM") on June 30, 2022. The dividend will be paid in Hong Kong dollars within two months following the AGM.
China Renaissance's 2021 Annual Results Announcement, which was filed with the Hong Kong Stock Exchange, is available at [https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0330/2022033001247.pdf].
Disclaimer
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About China Renaissance
Founded in 2005, China Renaissance ("CR") is a leading financial institution that provides private placement and M&A advisory, equity underwriting, sales & trading, research, investment management and other services. Over the past 16 years, CR has been dedicated to identifying companies with significant growth potential and serving as a trusted partner to support their value creation journey.
CR has offices in Beijing, Shanghai, Hong Kong, Singapore and New York, with more than 650 employees. As of June 30, 2021, China Renaissance has advised on and invested in over 1,125 transactions with a total value of over RMB 1.4 trillion(~US$220 billion ), and the company's private equity funds had an asset under management ("AUM") of over RMB 49 billion (~US$7.7 billion).
CR Securities (formerly known as "Huajing Securities") is one of the first securities firms set up in accordance with Supplement X to the "Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)". Since its establishment, CR Securities has assembled strong investment banking, fixed income, asset management, wealth management, securities brokerage, and research teams to serve existing and new clients.
