Happy and sad

In the evening of March 25, Huaxing Capital Holdings (1911.HK) disclosed its full-year results for 2019.

In 2019, Huaxing achieved total revenue and net investment income of 1.494 billion yuan and adjusted net profit of 463 million yuan. However, subject to the overall slump in the primary and IPO markets in the past one or two years, although Huaxing Capital’s total revenue has achieved an average annual growth of 26% in the past three years, it has changed little compared to 2018, which is basically the same Flat.

Located in the field of investment banking, especially the “Chuanjiang Plumbing Duck Prophet”, it is very lucky to be able to maintain income stability in 2019 with strong uncertainties. When talking about this issue, Huaxing attributed it to “ The more diversified business structure promotes the continuous optimization of Huaxing Capital’s overall income structure, which also significantly enhances its ability to resist risks “.

Huaxing refers to “diversification”, which means that compared with 2018, the proportion of investment banking revenues in the company’s revenue has dropped from 69.7% to 45.7%; on the contrary, the proportion of investment management revenues from 22.3 % Rose to 31.8%, and Huajing Securities’ revenue share rose from 7.6% to 17.5%. At the same time, Huaxing’s two new business segments: wealth management and structured finance have also contributed 5% of revenue.

Specifically, Huaxing’s investment banking business income reached 680 million yuan, a year-on-year increase of 43.5%. The representative projects it completed in this year included the completion of private equity financing for projects including VIPKID, JD.com, One Meter Tick, Minglue Technology, Zhihu, and Baibu. In terms of underwriting of Hong Kong and US stocks, Huaxing has successively completed star IPO projects such as Maoyan Entertainment and Canaan Technology. At the same time, it has made breakthroughs in the field of medical and health, assisting Via Bio, Yasheng Pharmaceutical, Dongying Pharmaceutical, Kanglong Chemical, and TCR2 Therapeutics to successfully complete a total of 5 projects.

In terms of asset management, Huaxing’s investment management business has an annual income of 476 million yuan, a year-on-year increase of 51.5%. It is worth mentioning that in July 2019, Huaxing Capital’s private equity fund Huaxing New Economic Fund completed the third phase of RMB fundraising, with a total of more than 6.5 billion yuan, exceeding 1 billion yuan and introducing the largest domestic LP nation Social security funds, as well as banks, insurance, market-based parent funds, university alumni funds, etc. Huaxing New Economic Fund’s heavy storage sector includes: technology and business services, consumer and Internet, and emerging tracks including new energy and advanced manufacturing. As of the end of 2019, Huaxing Capital’s asset management scale exceeded 34 billion yuan, and the average return on investment (MOIC) of completed investment funds was 2.1 times.

Huajing Securities, a multi-license securities company under Huaxing, also achieved a rapid growth of 57.7% with a revenue of 262 million yuan and net investment income. This is the first time Huajing Securities has turned a profit. This is due to its heavy bet on the science and technology board: As one of the first batch of sponsors after the official opening of the science and technology board, Huajing Securities also set up an alternative investment subsidiary to participate in the science and technology board and investment.

In addition to the above-mentioned sections, the wealth management and structured financial business regarded by the founder Bao Fan as one of the “three pillars” of Huaxing Capital in the future also made some progress. For the whole of 2019, the above two new businesses realized income and net investment income of 73.91 million yuan and operating profit of 12.47 million yuan. Of course, at the moment when many domestic securities firms’ investment banks are transforming wealth management, Huaxing’s new sector still needs more time to review.

Although the financial report data is remarkable, the share price of Huaxing Capital is mediocre. On March 25, Huaxing Capital closed at HK $ 11, with a current market value of HK $ 5.878 billion.

Huaxing Capital, known as the “China’s New Economy First Investment Bank,” is an important bridge to bridge China’s new economy companies and the global capital market. Therefore, its own market value also represents the warm and cold of the new economy industry to a certain extent. . Behind the decline of Huaxing’s stock price is also the extremely embarrassing Chinese new economy industry. In particular, with the spread of the new crown pneumonia epidemic, some data show that the average decline of China’s new economic companies reached 20%, and the largest decline was as high as 64%.

2020 will be a year in which the uncertainty of the new economic market will further increase. But Huaxing also pointed out from the other side: “Although the turbulent global situation and uncertain market environment will bring challenges to the company’s business development, such severe moments are often a good development of head institutions and head assets. Timing is also a huge investment window period. “