Legend Holdings (3396.HK) Announced 2021 Annual Results
Mr. Li Peng, CEO of Legend Holdings stated: “the company strengthened its foothold in its industries of focus, proactively responded to the impact of the pandemic and various external environmental changes, dynamically modified business strategies and increased investment in technology and innovation. Legend Holdings realized a revenue of RMB489.872 billion, an increase of 17% year-on-year, and a net profit attributable to equity holders of the Company of RMB5.755 billion, an increase of 49% year-on-year. Both revenue and profit hit new high.”
Continuous Growth Momentum of Industrial Operations Segment, Business Foundation Further Consolidated
Legend Holdings’ sound performance is mainly due to the continuous growth momentum of industrial operations segment, pillar companies in this segment consolidate existing advantages and deepen innovation in all aspects, namely Lenovo, Levima Advanced Materials, Joyvio Group and Banque Internationale a Luxembourg S. A (BIL).
In 2021, Lenovo seized the opportunities of global digitalization and intelligent transformation, the three core businesses achieved record-high results and further improvement of profitability, resulting in a net profit attributable to equity holders of Legend Holdings amounted to RMB4.019 billion, an increase of 92% year-on-year. Lenovo has always attached importance to investment in science and technology, and in 2021, it set a goal of “investing an annual average of RMB20 billion in R&D in the next three years and doubling its R&D personnel to no less than 24,000”. At present, relevant work is progressing steadily. In the fourth quarter of 2021, it invested RMB3.5 billion, representing a year-on-year increase of 38%.
Levima Advanced Materials adhered to its innovation-driven strategy with a 60% year-on-year increase in R&D investment and planned to invest RMB10 billion in the fields of new energy materials and biodegradable materials, some projects have already started. Benefiting from factors such as strong demand for new energy products, improved operational efficiency, and high-end differentiated product strategies, it realized a net profit attributable to equity holders of Legend Holdings of RMB565 million, an increase of 70% year-on-year.
Joyvio Group continued to focus on its two main business lines, namely high-end fruit and premium animal protein and turned loss into profit through a series of initiatives during the reporting period. BIL constantly upgraded its business models and in 2021, all of its key business indicators recorded year-on-year growth, CET-1 ratio up to 14.15%, net profit attributable to equity holders of Legend Holdings amounted to RMB873 million, an increase of 35% year-on-year (excluding exchange rate differences).
Through the above companies’ performance, we can find that in 2021, Legend Holdings has not only solidified the foundation of industrial operations, but also increased investment in technology innovation in line with national strategies, and the future development of the company is expected to be worth looking forward to. Legend Holdings has a tradition of deep involvement in the field of technology and innovation, and this tradition is also fully demonstrated in its industries incubations and investments segment.
Growing Industrial Incubations and Investments, Greater Support for Technology Start-ups
Legend Holdings has deployed technology start-ups for a long time, and in 2021, Legend Holdings continued to redouble its efforts in investment and financial support regarding scientific and technological innovation.
With the background of the government attaching great importance to the development of the semiconductor industry, Legend Holdings has earlier made a strategic investment in the high-tech company Fullhan Microelectronics, which specialized in the design and development of chips, and further increased its holding shares to 15.90% in 2021. Fullhan Microelectronics maintained a high proportion of R&D investment and promoted the improvement and upgrade of product lines. It has developed a complete product line from simulation to digitization and from front end to back end, with its R&D expenditure up by more than 100% over the previous year. In 2021, Legend Holdings and Fullhan Microelectronics jointly founded Hanlian Semiconductor Industry Fund for greater cooperation in the semiconductor industry.
Through Legend Capital and Legend Star, Legend Holdings invested in more than 100 new innovative technological projects, covering advanced technology, biomedicine, advanced manufacturing, TMT, and other fields, with 21 of its investee companies entering domestic and overseas capital markets. As of the end of 2021, there were 39 companies invested by Legend Holdings have been selected into the list of national-level Specialized, Fined, Peculiar, and Innovative (SFPI) enterprises. In addition, Legend Holdings and its subsidiaries’ businesses have also supported the growth of nearly 200 Chinese SFPI enterprises through supply chain procurement, financial support and professional services.
The Legend Holdings’ long-term investment in companies with high technological potential shows the insight to future. These actions would provide abundant financial returns and long-term development and will further nurture or establish a range of enterprises to take up leading positions while having excellent profitability in multiple industries and fields, meanwhile make more contributions to the development of innovative technological industries of China in the next step.
Comprehensively Strengthening ESG-related Initiatives
In recent years, global warming has led to a variety of environmental problems such as melting glaciers and rising sea levels, which has also aroused the concern of various countries. With the introduction of China’s “carbon peaking and neutrality” target last year and the unanimous decision to “accelerate climate action” at the 26th United Nations Climate Change Conference, Environmental, Social and Governance (ESG) has been elevated to a new level, and the capital market is paying more attention to corporate ESG initiatives, which can also highlight corporate values.
In 2021, Legend Holdings strengthened and implemented its ESG-related initiatives into daily running continually. Lenovo reduced carbon emissions by 92% over the past decade, selected as a UN Advanced Business Practices case for low carbon practices. In 2021, It also set a goal of achieving net zero carbon emissions by 2050 and actively exports products, services and solutions to help various industries achieve carbon neutrality. Levima Advanced Materials also protected the environment in its business, put vigorous efforts to develop new energy and biodegradable materials, and effectively achieved the objectives of lower energy consumption and greenhouse gas emissions through different initiatives.
In terms of ESG investments that have emerged in recent years, Legend Holdings’ subsidiaries are also at the forefront. BIL formally became a signature-recognized bank of the United Nations Global Compact and the United Nations Principles for Responsible Banking (UN PRBs) and helped Chinese-invested enterprises successfully issue green bonds. Legend Capital, as the first leading VC/PE institution in China joining United Nations Organization for Responsible Investment, has invested in over 20 “dual-carbon” technology-based enterprises.
Looking into future, Mr. Ning Min, chairman of Legend Holdings said: “We have never forgotten our mission of promoting technological innovation, assisting industrial development, and our social responsibility as an international enterprise rooted in China. Facing the future, we will always keep an open mind, a pragmatic style, uphold the entrepreneurial spirit, move forward with courage, and make more positive contributions to the new era with solid achievements on the new journey in the future.”
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