China Renaissance Announces 2019 Annual Results
Resilient Performance and Improved Revenue Mix Demonstrate Continued Success of Business Diversification
Declared First Dividend Payment to Shareholders of RMB15 Cents Per Share
HONG KONG, March 25, 2020 /PRNewswire/ -- China Renaissance Holdings Limited ("China Renaissance" or the "Company"; stock code: 1911.HK) today reported its financial results for the fiscal year ended 31 December 2019.
Fiscal 2019 Results Highlights (all growth rates reflect year-over-year growth):
- Total revenue and net investment gains increased 2.4% to RMB1,494.5 million;
- Improved revenue mix across four business segments: Investment Banking (45.7%), Investment Management (31.8%), Huajing Securities (17.5%) and New Business (5.0%);
- Investment Management segment revenue up 51.5% to RMB475.8 million;
- Huajing Securities achieved profitability, recording RMB65.1 million in operating profit;
- Newly launched businesses, including wealth management and structured financing, had a strong start delivering RMB73.9 million in revenue and net investment gains;
- Total operating profit increased 26.1% to RMB336.1 million;
- Total assets increased 30.0% to RMB9,510.4 million; and
- Cash position1 increased 4.3% to RMB5,010.2 million.
Commenting on the Company's financial results, Fan Bao, Chairman and Chief Executive Officer of China Renaissance, stated: "2019 marked a year of transformation and continued development for China Renaissance. Despite challenging global market conditions, we delivered solid financial results and improved our revenue mix across our four business segments, reflecting the success of our business diversification strategy. We are pleased with the strong growth of our Investment Management business, as well as Huajing Securities' performance in achieving profitability earlier than previously expected. Our New Business segment is accelerating and creating synergies that allow us to deepen client relationships across our existing businesses. Our Investment Banking segment maintained its leading market share in private placements and financial advisory, while navigating the expected decreased activities in these areas -- this is a testament to the trusted partnerships we have with China's new economy champions."
"Looking ahead, we will continue to optimize our business model to make China Renaissance more resilient to the economic and industry headwinds and emerge from this crisis as a stronger competitor with a more diversified business and the ability to help our clients at every stage of their financial lifecycle," added Mr. Bao. "We continue to believe that China's New Economy will play a major role in driving global economic growth and wealth creation, which will create long-term opportunities for our clients and our company. Our Board and management team remain focused on delivering shareholder value and believe that the declaration of our RMB15 cents per share dividend reflects that commitment."
2019 Annual Results Overview (for the year ended 31 December 2019)
Total revenue and net investment gains were RMB1,494.5 million, an increase of 2.4% from RMB1,460.1 million in fiscal 2018. Transaction and advisory fees were RMB760.4 million, a decrease of 24.8% from the prior year. Management fees increased to RMB436.1 million, an increase of 38.9% from the prior year. Interest income was RMB65.5 million, a decrease of 11.1% from fiscal 2018.
Operating profit was RMB336.1 million, an increase of 26.1% from RMB266.6 million in fiscal year end 2018. Adjusted net profit attributable to owners of the Company with unrealized net carried interest increased to RMB463.3 million from RMB446.5 million for fiscal 2018. The Company's cash position was RMB5,010.2 million at the end of December 31, 2019, a 4.3% increase from the prior year. China Renaissance's gearing ratio remained stable at 10.4%, compared to 9.5% as of December 31, 2018.
Total assets were RMB9,510.4 million, representing a 30.0% increase from RMB7,315.8 million as of December 31, 2018.
Business Segment Results
In addition to providing consolidated financial results, China Renaissance reported the following results for its four business segments: Investment Banking, Investment Management, Huajing Securities and New Business.
Investment Banking: For fiscal 2019, the Investment Banking segment reported revenues of RMB682.5 million and an operating profit of RMB67.1 million, compared to revenues of RMB979.9 million and operating profit of RMB247.7 million in the prior year. This decline was primarily due to a decrease in private placement advisory fees and mergers and acquisitions advisory revenue resulting from changes in the macro environment. This was partially offset by 43.5% growth in sales, trading, and brokerage fees. Despite the market uncertainty, China Renaissance continued to demonstrate success in the healthcare and telecommunications, media & entertainment (TME) sectors, and maintained the largest market share in the private placement financial advisory market. The Company has also amplified presence in the secondary market, with significant progress in its equities research business.
Investment Management: For fiscal 2019, the Investment Management segment reported revenues of RMB475.8 million and an operating profit of RMB191.4 million, which represents a significant increase of 51.5% and 93.6%, respectively. Management fees increased by 38.2% to RMB433.8 million for fiscal 2019. The growth of this segment was primarily related to the increased capital commitment of Huaxing Growth Capital RMB Fund III and Huaxing Growth Capital USD Fund III after their first closings in November 2017 and August 2018, respectively, and the first closing of Huaxing Healthcare Capital RMB Fund II in April 2019. In June 2019, China Renaissance announced the closing of its Huaxing Growth Capital RMB Fund III raising over RMB6.5 billion, with an oversubscription of more than RMB1 billion. The committed capital and assets under management (AUM) of China Renaissance's private equity funds reached RMB26.1 billion and RMB34.2 billion, respectively, representing increases of 19.1% and 21.0% from fiscal 2018. The Company also noted that its average multiple on invested capital (MOIC) of our private equity funds has reached 2.1x. For the first time since commencing our private equity business in 2013, the Company paid a realized carried interest of RMB42.0 million in 2019. Available capital from the Company's Growth Capital RMB Fund III and USD Fund III stood at RMB7.2 billion as of the end of 2019, all set and ready for investing in potential desirable targets arising from the 2020 market.
Huajing Securities: For fiscal 2019, Huajing Securities reported revenue and net investment gains of RMB262.2 million, a 57.7% increase from the prior year period. Huajing also achieved profitability in fiscal 2019, reporting RMB65.1 million in operating profit, compared to an operating loss of RMB80.0 million in fiscal 2018. Revenue growth was primarily due to an increase in equity underwriting services for initial public offerings (IPOs) in the STAR market of the Shanghai Stock Exchange and interest income and net investment gains generated from bank deposit, term-deposit and other cash management products. Huajing Securities was one of the first underwriters and sponsors for listed companies on the STAR market.
New Business: For fiscal 2019, the New Business segment reported revenues and net investment gains of RMB73.9 million and an operating profit of RMB12.5 million. The gains were mainly derived from the Company's structured finance and wealth management related products. In 2019, the Company signed strategic cooperation agreements with LGT Bank and Aozora Bank respectively, making initial steps in setting up its private wealth management business. This segment is expected to serve as one of China Renaissance's revenue drivers over the long-term, further optimizing the Company's revenue mix and capturing growth opportunities.
RMB15 Cents Per Share Dividend
The Board declared a dividend of RMB15 cents per share, payable to China Renaissance common shareholders of record at the close of business on June 22, 2020, pending shareholder approval at the Company's June 11 Annual General Meeting (AGM). The dividend will be paid in Hong Kong dollars within two months following the AGM.
China Renaissance maintains its long-standing belief that China's New Economy is a long-term secular trend, which will drive economic growth and wealth creation for decades. The Company continues to align its strategy and business model and strengthen relationships with New Economy champions and entrepreneurs to capitalize on the tremendous potential in China's investment management and wealth management markets.
While China Renaissance believes it is well-positioned for the long-term, the Company recognizes that the global COVID-19 pandemic will likely continue to slow down investment banking revenues. However, the Company remains confident that its increasingly diversified business model will enable it to navigate these unprecedented and ongoing industry headwinds, as clients increasingly rely on China Renaissance's trusted advice in these challenging times. China Renaissance also expects to strategically deploy capital from its Growth Capital RMB Fund III and USD Fund III should attractive investment opportunities arise in this current environment.
China Renaissance has filed its full 2019 Annual Results Announcement with the Hong Kong Stock Exchange, which is available at https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0325/2020032501157.pdf.
1 Cash position: cash and cash equivalents, term deposits, and financial assets at fair value through profit or loss (current portion) and other financial assets (current portion) excluding cash and financial assets held under consolidated asset management schemes
This document is prepared by China Renaissance Holdings Limited (China Renaissance Holdings Limited and any of its subsidiaries, associated companies, and affiliates, or any of their directors, officers, agents, advisers or employees are together known as "China Renaissance"). This document has been prepared for the recipient's information purpose only. The recipient shall conduct its own investment review, evaluation and assessment.
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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, CR 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.
The Company has offices in Beijing, Shanghai, Hong Kong and New York, with approximately 600 employees. As of June 30, 2019, we had advised on approximately 990 transactions worth over US$146 billion since our inception. By end of 2019, the Company had AUM of approximately RMB34 billion in new economy investments.
The Company's subsidiary 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, Huajing 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/
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