[Sponsored Article] Wealth Management Business Added Momentum to the Company’s Long-term Revenue Growth China Renaissance Holdings Limited (Stock code: 1911.HK), a leading financial institution dedicated to China’s new economy sectors, reported a solid set of annual results for the year ended 31 December 2019 despite the ongoing headwinds in the financial industry. Driven by a more diversified revenue mix, total revenue and net investment gains increased to RMB1,494.5 million in 2019. Adjusted net profit attributable to owners of the Company with unrealized net carried interest (including the potential income tax effect) reached RMB463.3 million in 2019 . As Huajing Securities achieved profitability earlier than expected, coupled with remarkable growth of investment management segment and stellar performance of the newly-launched wealth management business, the company has further strengthened its business resilience to withstand the vicissitudes of market environment. The Company declared the first dividend payment since its IPO of RMB15 cents per share, demonstrating its commitment to creating value for shareholders. With a view to tapping into the tremendous potential of wealth market in China, China Renaissance made a significant breakthrough in its new business segment in 2019, which the company sees potential to become its major revenue driver in the longer term. In 2019, the company entered strategic agreements with LGT Bank and Aozora Bank, making initial steps in setting up its private wealth management business, where the company intends to amplify its presence. Built upon the comprehensive product offerings from the China Renaissance’s investment management business and trusted client base from its investment banking business, the wealth management business is shaped to create synergistic value with the existing businesses to further optimize the revenue mix and capture growth opportunities. The company also launched structured financing in 2019, providing non-equity financing solutions for new economy firms. The new business segment reported revenues and net investment gains of RMB73.9 million and operating profit of RMB12.5 million for the year ended 31 December 2019. 2019 was a gloomy year for the overall private equity fundraising market, affected by the new asset management rules, as well as macro uncertainties and difficulties exiting in a lukewarm secondary market. Defying the market downturn, China Renaissance’s investment management business saw a remarkable 51.5% year-on-year growth in revenue , and further increased its contribution to the company’s total revenue and net investment gains. The company’s total assets under management (AUM), including 9 primary funds and 17 project funds, exceeded RMB34.0 billion by end of 2019 , with the successfully closing of RMB6.5 billion fund-raising for its Growth Capital RMB Fund III, including National Social Security Fund as an important Limited Partner. Growth Capital USD Fund III also saw better-than-expected amounts of committed capital. By June 2019, The Growth Capital Fund has invested in more than 90 new economy companies, and 85% of them have completed subsequent rounds of financing. Over 20 of the Company’s portfolio companies have competed initial public offerings, including Meituan Dianping, Wuxi Apptec, Focus Media and Lexin Fintech. Robust growth in management fee and asset under management helped to secure higher stability in its overall profitability. The company’s commitment to Huajing Securities has turned out more fruitful than expected. Its revenue and net investment gains increased by 57.7% year-on-year to RMB262.2 million. This segment also realized an operating profit of RMB65.1 million for the first time since its establishment in 2016. As a go-to investment bank for entrepreneurs in China, Huajing Securities is committed to bridging the gap that traditional financial institutions have left open in new economy realm where traditional financial institutions may find them mismatched at providing services to entrepreneurial and high-growth companies. Huajing Securities was also among the first batch of underwriters for STAR Market IPOs, which established alternative investment subsidiary and participated in STAR project co-investment during the year. Huajing Securities has evolved into an important growth driver for China Renaissance in the future. China Renaissance’s strategic focus on top players paid off. The company completed a number of milestone transactions in 2019 against the overall downturn in private placement transaction activities, particularly in healthcare and technology-media-telecom (TMT) sectors, and maintained the largest market share in the realm of private placement financial advisory . Its equities revenue from sales, trading and brokerage, expanded 43.5% year-on-year, despite lower market trading volume in Hong Kong . Bao Fan, Chairman and CEO of China Renaissance , said, “We uphold our longstanding vision that China’s new economy is a long-term secular trend, driving economic growth and wealth creation for decades. The upside potential of new economy super-cycles and financial industry reform stands intact, and the opportunity arising from the intersection of both, i.e. new economy finance, is still a force to be reckoned with. We have been making assertive efforts in optimizing our business model, in order to capitalize the tremendous potential in China’s investment management and wealth management. Looking ahead, we will continue to optimize our business model and continue to create synergies across business segments in order to further enhance our core competitiveness and boost our long-term profitability. "
