JD Capital Releases 2016 Annual Report, Announcing a Net Profit Growth of 119%
Kunwu Jiuding Investment Holdings Co., Ltd. (stock code: 600053, short for: JD Capital) released its 2016 annual report on April 29, 2017.
In 2016, the revenue and profit of JD Capital grew steadily. During the report period, JD Capital recorded a revenue of RMB 1.644 billion, registering an increase of 46.31% YoY; the private equity investment management business contributed RMB 1.255 billion to the revenue, which posted a YoY growth of 1,350.29%; its net profit, meanwhile, jumped 119% to RMB 628 million from the previous year.
The annual report included an open letter from president Cai Lei to JD Capital’s shareholders, which marked the first direct communication between the president and shareholders in this way. It introduces the company’s performance in 2016, and explains the company’s current business mode, future growth strategy, and managers’ opinions on its development and investment tendency.
Private equity business grows rapidly
In recent years, the PE industry has sustained rapid development in China. With further progress in the supply-side structural reform, PE and venture capital have been playing an increasingly remarkable role in adjustment of economic structure, transformation and upgrading of industries, and the building of new drivers for industrial development.
In 2016, the PE business in JD Capital registered impressive development, with its revenue growing by 1,350.3% YoY to RMB 1.255 billion. Moreover, as the company exited some investment projects in 2016, it earned huge returns for PE fund clients.
By the end of 2016, the company ran a total fund principal of RMB 27.334 billion, exited an RMB 2.771 billion worth of investment projects and recovered RMB 10.372 billion, realizing an investment return of 3.74 times and an IRR of 43.76%. Meanwhile, in 2016, eight portfolio companies of JD Capital got listed, accounting for 3.5% of the total number of A-share IPO enterprises. The records have secured a leading position in the market for JD Capital.
Over the past year, JD Capital dominated the top of the rankings of China’s PE firms designed by authoritative research institutes or mass media such as Zero2IPO Research and ChinaVenture Information.
“Consolidation-oriented investment” facilitates real economy upgrade
At present, the supply-side structural reform has been making further progress under the “new normal” of China’s economy, and critical reforms, such as those in the financial sector and state-owned enterprises, have entered a period when thorny issues have to be solved. At the macro level, the leadership has repeatedly stressed that the financial sector should serve for the real economy, so as to prevent investment from being diverted out.
In the future, speculations and arbitrages in the financial market will be restricted, and more capital will be pushed into equity investment, a sector that favors long-term and strategic value investment. Large financial agencies, along with industrial capital, will enter the sector of equity investment aggressively, making the competitions even fiercer.
Under new circumstances, PE in China is entering a new stage, in which the consolidation-oriented M&A investment will be the mainstream mode. The size of the PE sector will be further expanded, and the investment capacity will be the key for the future development of PE firms. Faced with such a market environment and competition trend, JD Capital, in 2016, proposed an investment strategy with “consolidation-oriented investment” as the core, aiming to promote in business transformation and upgrading.
According to the strategy of “consolidation-oriented investment”, JD Capital will select enterprises enjoying strong growth potentials, and conduct long-term strategic cooperation, help them with M&As in an ongoing manner, improve their comprehensive competence and market impact, and enable them to become industrial bellwethers in China and even worldwide. Meanwhile, as PE is both industrial capital and financial capital, JD Capital will make full use of its duality, practice that the financial sector should serve the real economy, and promote the development of China’s real economy.
Financial sector should serve real economy, and promote economic structure adjustment and upgrading
In 2017, the goal of JD Capital is to adapt to changes in China’s economic environment under the “new normal”, promote all-round transformation and upgrading of investment and financing businesses, expand the current size of fund management and investment businesses, and shore up its leading position in the industry. At the same time, JD Capital will serve the overall picture of supply-side structure reform, insist on the idea that financial sector should serve real economy, accelerate economic structure adjustment and industrial structure upgrading, and optimize social resource allocation.
During the process, JD Capital will fully implement the consolidation-oriented investment strategy, so as to achieve the further upgrading of PE model. We will strengthen our efforts to perform innovative businesses, such as public-private partnership, and help local governments to continue improving infrastructure development and public services while at the same time effectively controlling debt risks.
Meanwhile, JD Capital will continue adapting to the national strategic direction, actively respond to regional development strategies, such as the Belt and Road Initiative, Yangtze River Economic Belt, and the coordinated development of Beijing, Tianjin and Hebei, focus closely on such important policies as “Made in China 2025” initiative, and carry out equity investment businesses. By facilitating the development of relevant regions and sectors, it will help outstanding enterprises in these regions and sectors become “role models” and play a stronger leading role in transforming and upgrading the economic structure. Additionally, JD Capital will help portfolio companies to achieve exits via initial public offerings and enable the investors and shareholders to make positive returns.