CICC: Maintaining Value Partners Group's (00806) “Outperform the Industry” rating and reducing the target price to HK$2.6

The Zhitong Finance App learned that CICC released a research report stating that it maintained Value Partners Group's (00806) “outperforming the industry” rating, raised the 2026e/2027e revenue forecast by 20%/4% to HK$94/840 million, and slightly lowered the 2026e/2027e net profit forecast by 3%/3% to HK$43/450 million, considering the increase in distribution expenses and the decline in investment income. The current stock price is trading at 2026e 6.6% P/AUM and 8.5 times P/E. Considering market fluctuations, the target price was lowered by 13% to HK$2.6, corresponding to 2026e 8.5% P/AUM and 11.0 times P/E, with 29% upside compared to the current stock price.

CICC's main views are as follows:

1H26's revenue was higher than that forecast, and profit was lower than that forecast

Value Partners Group's 1H26 revenue was +151% year-on-year to HK$560 million, and net revenue was +99% to HK$330 million, mainly due to AUM growth and good fund performance, driving significant increases in management fees and performance fees; net profit to mother was -25% to HK$190 million, mainly due to a decline in investment and exchange earnings.

AUM maintained an upward trend, and management fee and performance fee revenue increased dramatically

1) Management fees: 1H26 +49% YoY to HK$280 million, AUM +33% YoY/+15% YoY to US$7.06 billion, average AUM +33% YoY +24% to US$6.8 billion, net capital inflow of US$370 million during the reporting period (of which US$3.22 billion was subscribed - US$2.85 billion was redeemed), and the overall return of the fund on an AUM weighted basis was +10.0%. 2) Performance fee: 1H26 was +15.7 times the year on year to HK$97.52 million, mainly due to the outstanding returns of its actively managed funds during the reporting period.

Investment returns have declined, and the fixed cost side is effectively controlled

1) Investment income: Net income from 1H26 was -65% to HK$63.26 million, mainly due to market fluctuations and the 1H26 Hang Seng Index fell 9.9%; 2) Cost: 1H26 compensation and welfare expenses +27% to HK$160 million, mainly due to increased employee accrued bonus provisions, partly offset by a decrease in fixed remuneration. Fixed operating expenses were -14% to HK$130 million YoY. Cost control was strict, and overall operating expenses were +14% to HK$210 million YoY.

Diversified product layout, continuous expansion of distribution capacity

1) Products: Many products performed well. Value Partners Taiwan Fund/Value Partners Asia Innovation Opportunity Fund/Value Partners Asia Equity and Bond Yield Fund 1H26 had returns of +87.8%/+55.9%/+27.1% respectively; further improving the product layout, the Value Partners Hong Kong and US Dividend Low Wave ETF was successfully listed on the Hong Kong Stock Exchange. 2) Channel: In mainland China, the company signed a new distribution agreement in mainland China during the reporting period; in the Southeast Asia region, shares denominated in Malaysian ringgit were launched.

risk

Risk of market fluctuations; market competition exceeds expectations; business development falls short of expectations.