China Renaissance Announces 2020 Annual Results
Record Performance Demonstrates Strength of Highly Complementary Businesses
Investment Management and Investment Banking Segments Delivered Exceptional Results Despite Challenging Market Conditions and COVID-19
Durable Strategy,Deep Relationships Across the New Economy and Proven Track of Supporting the Full Life Cycle of Investment Needs Position the Company for Continued Growth
HONG KONG,March 25,2021 -- 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 31,2020.
2020 Annual Results Highlights(all growth rates reflect year-over-year growth):
Net profit attributable to owners of the Company increased by 320.5% to RMB1.04 billion,the highest level in China Renaissance's history;
Total revenue and net investment gains increased by 68.4% to RMB2.7 billion;
Total operating profit increased by 157% to RMB1.1billion;
Investment Management segment delivered outstanding growth,with revenue and investment gains up 128% to RMB1.4 billion,which accounted for 50% of the Company's revenue,with assets under management ("AUM") exceeding RMB57 billion;
Investment Banking segment delivered strong growth,with revenue and investment gains up 44.3% to a historical high of RMB1.0 billion,reflecting the unmatched strength of the Company's IPO underwriting capabilities for high-profile New Economy companies;
CR Securities' (formerly known as "Huajing") segment revenue and net investment gains were RMB254.2 million,contributed 9% of the Company's revenue;
Wealth Management business development stayed on track in 2020,with AUM reaching approximately RMB6 billionas of March 2021. It continues to gain traction amongst New Economy clients and is well-positioned to capturesynergies with the Investment Banking and Investment Management businesses;
Return on equity ("ROE") reached 18.8%;
Cash position was RMB4.3 billion and its gearing ratio at 24.8% as of December 31,2020; and
Declared a final dividend payout of RMB38 cents per share,representing a 20%dividendpayout ratio.
Commenting on the Company's financial results,Fan Bao,Chairman and Chief Executive Officer of China Renaissance,stated:
"2020 was a ground-breaking year for China Renaissance,with our net profit exceeding RMB1 billion for the first time in our history,the Investment Management segment delivering more than half of our revenues and Investment Banking playing leading roles in a rising number of the landmark listings and follow-on offerings for Chinese New Economy champions around the world. Our strategy to build complementary Investment Management and Investment Banking businesses has enabled us to deepen our relationships with our clients as both a world-class advisor and investor. Our ability to deliver record profitability and dramatically accelerate our growth despite the challenging global market conditions and COVID-19 is a testament to our proven strategy,the trust that we have established with our clients,and our talented team of professionals."
"China Renaissance's long-term mission remains intact. We seek to partner with the New Economy champions of the future and will continue to support them in their value creation journey. Our ability to leverage a diversified product mix to provide one-stop financial services across our clients' financial life cycle has uniquely positioned China Renaissance as the partner of choice for the most innovative and disruptive companies in the world. We remain confident that the momentum we built in 2020 and the synergisticvalue we generate across our Investment Banking,Investment Management,CR Securities and Wealth Management businesses enable us to achieve sustained long-term growth."
2020 Annual Results Overview
Total revenue and net investment gains were RMB2.7 billion,a 68.4% increase from RMB1.6 billion in 2019. Transaction and advisory fees were RMB1.0 billion,an increase of 37.2% from the prior year. Management fees were RMB443.4 million,an increase of 1.7% from the prior year. Interest income was RMB81.7 million,an increase of 24.7% from the prior year. Net investment gains were RMB1.1 billion,a significant increase of 259.5% from the prior year.
Operating profit was RMB1.1 billion,a significant increase of 156.9% from RMB438 million in 2019. Net profit attributable to owners of the Company increased notably by 320.5% to RMB1.04 billion from the prior year. As of December 31,2020,the Company's cash position was RMB4.3 billion and its gearing ratio was 24.8%.
Total assets were RMB12.5 billion,representing an increase of 31.8% from RMB9.5 billion at fiscal year end 2019.
Business Segment Results
In addition to providing consolidated financial results,China Renaissance reports separate financial information for its four business segments: Investment Banking,CR Securities and Others.
Investment Management:
The Investment Management segment reported revenue and net investment gains of RMB1.4 billion and an operating profit of RMB952.3 million,which represent significant increases of 128% and 218.4%,respectively,compared to the prior year. Segment operating margin improved from 49.6% in 2019 to 69.3% in 2020. The profitability improvement of this segment was mainly driven by the strong investment performance of the Company's private equity ("PE") funds. In 2020,Huaxing Growth Capital invested in a number of high growth companies,including MGI Tech,Pop Mart,Jiangxiaobai,AFIONA,Helios,HiRain Technologies and Insgeek. In addition,a number of portfolio companies of Huaxing Growth Capital successfully completed their IPOs over the past year,including Kuaishou Technology,Beike Zhaofang,Li Auto,MicroPort,CardioFlow Medtech,17 Education and Technology,Dada Group and UCloud.The strong performance of China Renaissance's previous funds has paved the way for future fundraising. In 2021 and 2022,the Company will be raising its Huaxing Growth Capital RMB Fund IV with a target of RMB10 billion,in addition to Huaxing Growth Capital USD Fund IV that is seeking to raise US$1.0 billion.
The committed capital and AUM of our PE funds were RMB27.5 billion and RMB57.4 billion as of December 31,representing increases of 5.7% and of 67.8%,compared to the prior year. As of December 31,the average internal rate of return ("IRR") in our PE funds was 45%.
Investment Banking:
The Investment Banking segment reported revenue and net investment gains of RMB1.0 billion and an operating profit of RMB290.3 million,which represent increases of 44.3% and 259.4%,compared to the prior year. Segment operating margin improved from 11.6% to 28.9% in 2020.
China Renaissance is well-positioned to support Chinese New Economy companies looking to explore potential listing options by holding relevant listing licenses in mainland China,Hong Kong and the US,which were obtained between 2013 to 2016. Over the past several years,China Renaissance has devoted resources to building up its underwriting capabilities and this is reflected in the leading roles the Company played in a number of high-profile Hong Kong and US IPOs,such as KE Holdings and JD Health in 2020,as well as Kuaishou Technology in 2021. In addition,China Renaissance is committed to mainland China's A-share market and Hong Kong's H-share market by supporting the secondary listings of JD.com,ZTO Express and Baidu. In 2020,revenue generated from equity underwriting increased significantly by 476.7% to RMB259.3 million. In 2020,China Renaissance supported 16 overseas IPOs and follow-on offering transactions for Chinese New Economy companies,with an underwriting value exceeding US$25.0 billion. The Company expects stronger revenue momentum from its investment banking pipelines in the coming year.
At the same time,China Renaissance strengthened its leading position in the private placement sector and advised on a number of private placement and M&A transactions for leading New Economy players across the TMT,consumer and healthcare sectors,such as MGI Tech,NIO,MiningLamp Technology,Gome,Sohu,MissFresh,Zhenkunhang,XtalPi,Changyou and Sogou.
CR Securities:
In 2020,Huajing Securities,our A-share focused securities company was rebranded to CR Securities to further integrate with the Company's Investment Banking business. We expect this integration to help us further capitalize on our prominent market position and client relationships to grow our private placement business.With CR Securities having obtained principal investment and financial product distribution licenses in November 2020,it stands as an important part of our domestic operations. CR Securities' segment revenue and net investment gains were RMB254.2 million,compared to RMB262.2 million in the prior year. The slight decrease in revenue and net investment gains was primary due to a decline in equity underwriting revenue resulting from the challenging economic environment and delays in execution due to the impact of COVID-19,which was partially offset by an increase in interest income and net investment gains generated from bank deposits,term deposits,investments in listed equities in the STAR market and other cash management products.
Others:
The Others segment mainly comprises our Wealth Management business,and investment and management of China Renaissance's own funds. Revenue and net investment gains totaled RMB99.6 million,up 63% compared to the prior year. Growth of this segment was primarily driven by the expansion of our Wealth Management business,as well as an increase in returns generated from cash management products. Our Wealth Management business performed in-line with our expectations for 2020 and we remain confident about its future growth potential. The business,which had AUM of approximately RMB6 billion as of March 2021,continue to gain traction amongst new economy clients and is poised to benefit from the synergies with our Investment Banking and Investment Management businesses.
RMB38 CentsPer 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 beforethe close of business on July 9,2021,pending shareholder approval at the Company's Annual General Meeting ("AGM") on June 30,2021. The dividend will be paid in Hong Kong dollars within two months following the AGM.
China Renaissance's 2020 Annual Results Announcement,which was filed with the Hong Kong Stock Exchange,is available at https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0325/2021032500925.pdf
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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 new economy entrepreneurs and investors globally.
China Renaissance has offices in Beijing,Shanghai,Hong Kong and New York,with over 600 employees. As of December 31,China Renaissance had advised on approximately 1050 transactions worth over USD$176 billion since its inception,and the company's private equity funds had AUM of approximately RMB57.4 billion in new economy investments.
CR Securities(formerly known as "Huajing 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,CR Securities has assembled strong investment banking,fixed income,wealth management,securities brokerage,and research teams to serve existing and new clients.
Visit the company website for more information http://www.huaxing.com/
