HONG KONG, Aug. 24, 2021 /PRNewswire/ -- China Renaissance Holdings Limited ("China Renaissance" or the "Company"; stock code: 1911.HK) today reported its unaudited interim results for the six months ended June 30, 2021.
2021 Interim 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:
"We are pleased to have achieved record first-half 2021 results amid the unprecedented challenges that have arisen over the past year from the COVID-19 pandemic, geopolitical tensions and capital markets volatility. Specifically, the strong performance of our highly synergistic Investment Banking and Investment Management segments played a key role in driving China Renaissance's record profitability in the first half of 2021, a testament to the effectiveness of our highly diversified business model, which is operating at scale. The accelerated momentum we've seen across our four business segments reflects China Renaissance's broad-based strength, trusted partnerships with China's most innovative companies and continued resiliency.
Looking forward, we will remain focused on identifying, partnering and supporting the value creation journeys of the most innovative and disruptive enterprises, which will, in turn, fuel our continued growth and increase our market-leading position across China, Hong Kong and the U.S. The long-term macroeconomic trends supporting the gradual recovery of China's private and secondary markets are creating attractive opportunities, and we will capitalize on these tailwinds by allocating more capital to our Investment Management business, executing on our robust IPO pipeline, and leveraging our premium position to build on our Wealth Management business' early momentum."
2021 Interim Results Overview
Total revenue and net investment gains were RMB2.5 billion for the six months ended June 30, 2021, a 110.6% increase from RMB1.2 billion for the corresponding period in 2020. Transaction and advisory fees were RMB794.9 million, an increase of 185.3% from the prior period. Management fees increased to RMB207.8 million, an increase of 1.5% from the prior period. Interest income was RMB41.1 million, an increase of 16.1% from the prior period. Net investment gains were RMB1.4 billion, a significant increase of 124.7% from the prior period.
Operating profit was RMB1.4 billion, a significant 200.3% increase from RMB467.9 million in the same period last year. Net profit attributable to owners of the Company increased significantly by 201.6% to RMB1.2 billion from the same period last year. As of June 30, 2021, the Company's cash position[1] was RMB5.1 billion, compared to RMB4.3 billion on December 31, 2020 and RMB4.6 billion on June 30, 2020. China Renaissance's gearing ratio was 31.4% as of June 30, 2021.
Total assets were RMB15.1 billion, representing an increase of 20.6% from RMB12.5 billion at fiscal year-end 2020.
Business Segment Results (for the six months ended June 30, 2021)
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 Management:
The Investment Management segment reported solid revenue and net investment gains of RMB1.3 billion, accounting for 53.7% of total revenue and net investment gains during this period, and an operating profit of RMB994.8 million, which represent increases of 105.3% and 152.2%, respectively, compared to the prior-year period. Segment operating margin improved from 61.3% for the six months ended June 30, 2020 to 75.3% for the six months ended June 30, 2021. The growth of this segment was primarily related to the continued strong investment performance of the Company's own private equity funds, which have invested in sectors including healthcare, consumer, technological and industrial upgrading.
The committed capital and assets under management ("AUM") of the Company's private equity funds were RMB28.1 billion and RMB61.7 billion as of June 30, 2021, representing an increase of 1.9% and 7.5% from the end of 2020, respectively. As of June 30, 2021, the internal rate of return ("IRR") of investments in the Company's own private equity funds and third-party private equity funds was 46.8% and 36.8%, respectively. The Company also noted that its average multiple on invested capital ("MOIC") of its private equity funds with completed investment has reached 4.3x.
In addition, a number of portfolio companies successfully entered the secondary markets, and nearly 40.0% of investment gains were realized from the Company's funds as a result. The Company aims to accelerate its investment exits through the public markets. The Company has also made steady progress in fundraising for its Huaxing Growth Capital RMB Fund IV and USD Fund IV, which were launched at the beginning of this year.
Investment Banking:
The Investment Banking segment reported revenue and investment gains of RMB742.0 million and an operating profit of RMB284.4 million, compared to revenue and investment gains of RMB276.8 million and an operating profit of RMB39.1 million in the prior-year period. The segment operating margin was 38.3% for the six months ended June 30, 2021, compared to 14.1% for the six months ended June 30, 2020. The significant growth in revenues was driven by an increase in equity underwriting services as a result of an increase in initial public offerings ("IPOs"), private placement fees, and sales, trading and brokerage fees. Notably, the Company participated as a sponsor or an underwriter in a number of ongoing IPOs, with equity underwriting revenue reaching a record high of RMB321.9 million. China Renaissance also strengthened its leading position in the New Economy private placement sector, as evidenced by its continued high market share across the healthcare, industrial internet and consumer sectors, and steady progress in the Hard & Core technology sector.
Meanwhile, the Company continued to successfully integrate its Investment Banking business with CR Securities. In view of our strong IPO projects pipeline and the primary and secondary market recovery, we expect even greater momentum in the second half of 2021 for the Investment Banking business.
CR Securities:
CR Securities continued to achieve growth, with segment revenue and net investment gains of RMB352.3 million and operating profit of RMB162.3 million, compared to revenue and net investment gains of RMB194.2 million and an operating profit of RMB44.9 million in the prior-year period. This growth was primarily due to higher synergies with the Investment Banking business and CR Securities obtaining its principal investment and financial product distribution licenses, which drove 56.4% growth year-over-year in investment gains from principal investment.
Others:
The Others segment mainly comprises the Wealth Management business, and investment and management of our own funds. Revenue and net investment gains totaled RMB43.4 million, which decreased 18.3% compared to the year-ago period, primarily due to the decline in investment gains generated from cash management products resulting from allocating more of the Group's capital in the Company's private equity funds. This was partially offset by an increase in the Wealth Management business, the AUM of which significantly increased by RMB4.4 billion to RMB7 billion in the first half of 2021.
China Renaissance's 2021 Interim Results Announcement, which was filed with the Hong Kong Stock Exchange, is available at https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0823/2021082301147.pdf
[1] Including cash and cash equivalents, term deposits, and financial assets at fair value through profit or loss (current portion) |
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About China Renaissance Holdings Limited
China Renaissance Holdings Limited (stock code: 1911.HK) is a leading financial institution that combines private placement advisory, M&A advisory, direct investment, equity underwriting, sales, trading and brokerage, research, structured products, asset management, wealth management and other financial services. Providing one-stop financial services across mainland China, Hong Kong and the United States, China Renaissance operates a competitive and unique international network that connects China's capital markets with the rest of the world, serving entrepreneurs and investors globally.
China Renaissance has offices in Beijing, Shanghai, Hong Kong, New York and Singapore, with over 650 employees. As of Dec. 31, 2020, China Renaissance had advised on more than 1000 transactions worth over RMB1000 billion since its inception, and the company's private equity funds had AUM of over RMB57 billion in investments.
China Renaissance's subsidiary Huaxing Securities is one of the first securities firms set up in accordance with 10th Supplementary Agreement of "Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)". Since its establishment, Huaxing Securities has assembled strong investment banking, fixed income, asset management, wealth management, securities brokerage, and research teams to serve existing and new clients.
Visit the company website for more information http://www.huaxing.com/