华兴资本控股(01911) - 2024 - 中期业绩

Financial Highlights Core Financial Performance In H1 2024, the Group's revenue declined, but net loss narrowed significantly due to effective cost control and a high prior-year base affected by non-cash items Summary of Condensed Consolidated Statement of Profit or Loss | Indicator | Six Months Ended June 30, 2024 (in thousands of RMB) | Six Months Ended June 30, 2023 (in thousands of RMB) | | :--- | :--- | :--- | | Total revenue | 328,921 | 536,575 | | Total revenue and net investment income | 359,527 | 584,406 | | Operating (loss) profit | (87,736) | 32,447 | | Loss before tax | (73,619) | (112,193) | | Loss for the period | (85,967) | (163,173) | | Loss for the period attributable to owners of the Company | (73,822) | (180,132) | Non-IFRS Measure: Adjusted Net Loss | Indicator | Six Months Ended June 30, 2024 (in thousands of RMB) | Six Months Ended June 30, 2023 (in thousands of RMB) | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company | (73,822) | (180,132) | | Add: Share-based compensation expenses | 28,308 | 41,280 | | Add: Fair value change of share options | — | 152,990 | | Add: Reversal of unrealized net carried interest | (72,382) | (175,367) | | Adjusted net loss attributable to owners of the Company | (117,896) | (161,229) | Management Discussion and Analysis Business Review Amid a sluggish market in H1 2024, the Group's revenue declined, leading to an 8% staff reduction, while focusing on investment exits and maintaining strengths in specific advisory areas - In H1 2024, total revenue and net investment income amounted to RMB 360 million, a 39% YoY decrease, with a net loss attributable to owners of RMB 74 million[8] - The Group proactively adjusted its workforce, reducing the number of employees to 521 by the end of the period, an 8% decrease from the end of 2023[8] - The investment management business focused on exits and post-investment management, achieving RMB 893 million in fund distributions, with AUM at RMB 34.8 billion by period-end[8] - Huaxing Securities remained stable, with its institutional research and retail business revenues growing by 63% and 117% YoY, respectively[9] Business Outlook The company will continue to serve new economy enterprises by focusing on its core investment management and investment banking businesses, preparing for future growth despite challenges - The company initiated a new chapter with a board transition in early 2024, and its overall business and operations remain stable[10] - Future focus will remain on the core businesses of investment management and investment banking, leveraging its expertise in valuing new economy assets to identify promising projects[10] Segment Performance All business segments experienced a decline in revenue and net investment income, with the investment management segment being the most significantly impacted Revenue and Net Investment Income by Segment (in thousands of RMB) | Business Segment | H1 2024 | H1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Investment Banking | 97,570 | 112,770 | -13.5% | | Investment Management | 131,366 | 306,468 | -57.1% | | Huaxing Securities | 103,466 | 119,685 | -13.6% | | Others | 27,125 | 45,483 | -40.4% | | Total | 359,527 | 584,406 | -38.5% | Operating (Loss) Profit by Segment (in thousands of RMB) | Business Segment | H1 2024 | H1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Investment Banking | (61,548) | (27,624) | 122.8% | | Investment Management | 39,531 | 126,247 | -68.7% | | Huaxing Securities | (42,494) | (41,865) | 1.5% | | Others | (23,225) | (24,311) | -4.5% | | Total | (87,736) | 32,447 | N/A | Investment Banking Segment The investment banking segment's revenue decreased by 13.5% to RMB 97.6 million, and its operating loss widened to RMB 61.5 million despite a significant rise in equity underwriting income Investment Banking Segment Performance (in thousands of RMB) | Indicator | H1 2024 | H1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Advisory services revenue | 37,873 | 54,295 | -30.2% | | Equity underwriting revenue | 32,164 | 3,744 | 759.1% | | Sales, trading and brokerage revenue | 27,533 | 54,466 | -49.4% | | Segment total revenue and net investment income | 97,570 | 112,770 | -13.5% | | Segment operating loss | (61,548) | (27,624) | 122.8% | - Despite the revenue decline, segment operating expenses decreased by 22.8% YoY after excluding the impact of bonus reversals and credit loss provisions, reflecting effective cost optimization[17] Investment Management Segment The investment management segment's revenue and net investment loss totaled RMB 131.4 million, a sharp 57.1% YoY decrease, driven by lower management fees and realized carried interest Investment Management Segment Performance (in thousands of RMB) | Indicator | H1 2024 | H1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Management fees | 154,704 | 227,544 | -32.0% | | Realized carried interest income | 10,107 | 94,218 | -89.3% | | Segment revenue and net investment loss | 131,366 | 306,468 | -57.1% | | Segment operating profit | 39,531 | 126,247 | -68.7% | | Segment operating profit margin | 30.1% | 41.2% | - | - Fee-earning AUM decreased from RMB 22.9 billion at the end of 2023 to RMB 17.4 billion by the end of June 2024, which was the primary reason for the decline in management fee income[21][24] - As of June 30, 2024, total AUM was RMB 34.8 billion, down from RMB 36.7 billion at the end of 2023[21] Huaxing Securities Segment Huaxing Securities' revenue and net investment income was RMB 103.5 million, down 13.6% YoY, while its operating loss remained stable due to reduced compensation expenses Huaxing Securities Segment Performance (in thousands of RMB) | Indicator | H1 2024 | H1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Segment revenue and net investment income | 103,466 | 119,685 | -13.6% | | Segment operating expenses | (145,960) | (161,550) | -9.7% | | Segment operating loss | (42,494) | (41,865) | 1.5% | - The revenue decline was mainly due to reduced investment income from co-investments in STAR Market IPOs, partially offset by increased gains from proprietary investments[28] Others Segment The Others segment's revenue decreased by 40.4%, but its operating loss narrowed slightly due to significant reductions in compensation and financing costs Others Segment Performance (in thousands of RMB) | Indicator | H1 2024 | H1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Segment revenue and net investment income | 27,125 | 45,483 | -40.4% | | Segment operating expenses | (50,350) | (69,794) | -27.9% | | Segment operating loss | (23,225) | (24,311) | -4.5% | Overall Operating Performance Analysis The Group's total revenue and net investment income fell 38.5% to RMB 360 million, leading to an operating loss, though net loss narrowed due to a large non-cash expense in the prior year Revenue and Net Investment Income Total revenue and net investment income decreased by 38.5% to RMB 360 million, with realized carried interest income experiencing the largest decline of 89.3% Breakdown of Revenue and Net Investment Income (in thousands of RMB) | Type | H1 2024 | H1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Transaction and advisory fees | 136,063 | 153,175 | -11.2% | | Management fees | 159,859 | 239,380 | -33.2% | | Interest income | 22,892 | 49,802 | -54.0% | | Realized carried interest income | 10,107 | 94,218 | -89.3% | | Total revenue | 328,921 | 536,575 | -38.7% | | Net investment income | 30,606 | 47,831 | -36.0% | | Total revenue and net investment income | 359,527 | 584,406 | -38.5% | Operating Expenses Total operating expenses decreased by 19.0% to RMB 447 million, driven by lower staff costs, financing costs, and accrued carried interest expenses - Staff costs and benefits decreased by 12.0% YoY to RMB 282 million[35] - Finance costs significantly decreased by 81.5% YoY to RMB 7.7 million[35] - Expected credit losses shifted from a reversal of RMB 33.6 million in the prior period to a provision of RMB 5.9 million in the current period[35] Operating (Loss) Profit The Group shifted from an operating profit of RMB 32.4 million to an operating loss of RMB 87.7 million as the revenue decline outpaced cost savings - The operating loss for the six months ended June 30, 2024 was RMB 87.7 million, compared to an operating profit of RMB 32.4 million in the same period last year[36] Net Loss Analysis Net loss attributable to owners narrowed significantly to RMB 73.8 million from RMB 180.1 million, primarily due to the absence of a large, non-cash share option expense recorded in the prior year Comparison of Loss Indicators (in millions of RMB) | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Loss before tax | (73.6) | (112.2) | | Loss for the period | (86.0) | (163.2) | | Loss attributable to owners of the Company | (73.8) | (180.1) | - The H1 2023 results included a RMB 153 million loss from the fair value change of share options, a non-cash, non-operating item that significantly inflated the prior-year loss base[40][57] Capital and Liquidity The Group maintained a solid capital structure and sufficient liquidity, with over RMB 4 billion in cash and highly liquid assets and a low gearing ratio of 12.9% - As of June 30, 2024, the Group held RMB 1.765 billion in cash, term deposits, and highly liquid wealth management products, plus RMB 2.330 billion in highly liquid financial assets[44] - The gearing ratio (total liabilities to total assets, with exclusions) was 12.9%, remaining stable compared to 12.6% at the end of 2023, indicating low financial leverage[45] - In March 2024, the company entered into a settlement agreement to acquire certain equity investment interests from Huaxing New Economy Fund IV for approximately RMB 791 million[47] Human Resources As of June 30, 2024, the Group had 521 full-time employees, an 8% decrease from year-end 2023, with total staff costs declining by 12.0% YoY Employee Headcount by Function (as of June 30, 2024) | Function | Number of Employees | Percentage | | :--- | :--- | :--- | | Investment Banking | 122 | 23% | | Investment Management | 51 | 10% | | Huaxing Securities | 263 | 51% | | Others | 12 | 2% | | Group Middle and Back Office | 73 | 14% | | Total | 521 | 100% | - Total staff costs (including share-based compensation) for H1 2024 were RMB 282 million, a 12.0% decrease from the same period last year[50] Dividend, Corporate Governance, and Subsequent Events The Board did not recommend an interim dividend, a deviation from the corporate governance code exists, and a post-period exit agreement was reached - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2024[52] - The company deviates from the Corporate Governance Code provision separating the roles of chairman and chief executive, with Mr. XIE Yijing currently holding both positions[54] - On August 30, 2024, a subsidiary entered into an exit agreement involving the sale of a 10% stake in Xuntou for RMB 202 million and the purchase of a stake in another company[56] Condensed Consolidated Financial Statements and Notes Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This section presents the Group's unaudited consolidated income statement, showing a loss attributable to owners of RMB 73.8 million and a basic loss per share of RMB 0.15 Loss Per Share | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company (in thousands of RMB) | (73,822) | (180,132) | | Weighted average number of ordinary shares | 506,507,683 | 502,642,560 | | Basic and diluted loss per share (RMB) | (0.15) | (0.36) | Condensed Consolidated Statement of Financial Position This section provides the Group's detailed balance sheet, showing total assets of RMB 9.36 billion and net assets of RMB 7.13 billion as of June 30, 2024 Key Balance Sheet Items (in thousands of RMB) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Non-current assets | 2,981,262 | 3,192,831 | | Current assets | 6,375,598 | 6,147,529 | | Total assets | 9,356,860 | 9,340,360 | | Current liabilities | 2,158,348 | 2,085,055 | | Non-current liabilities | 65,444 | 78,362 | | Net assets | 7,133,068 | 7,176,943 | | Equity attributable to owners of the Company | 6,108,383 | 6,139,409 | Notes to the Condensed Consolidated Financial Statements The notes detail segment performance, related party transactions, and a contingent liability related to the investigation involving the former chairman, Mr. Bao Fan - The segment information note explains that unrealized carried interest is included in the investment management segment's results for internal reporting but not recognized in the consolidated income statement[67][68] - The related party transactions note shows the largest receivable is RMB 904 million from Huaxing New Economy Fund IV, related to management fees and portfolio transfers[92][93] - The contingent liabilities note discloses that approximately RMB 78.13 million in restricted funds have been paid in connection with the investigation involving Mr. Bao Fan, with no provision made due to uncertainty[106]