\u3000\u3000 China Industrial Securities Co.Ltd(601377) (601377)
Core view:
The company is a high growth company in the industry. China Industrial Securities Co.Ltd(601377) in recent years, through the comprehensive promotion of the group's integration construction, it has been deeply bound with Industrial Bank Co.Ltd(601166) and other subordinate companies of the group to cooperate with the exhibition industry and broaden business channels. At the same time, it is backed by state-owned shareholders. After the performance hit the bottom in 2018, it rebounded rapidly and reached a new high. In 2020, the net profit attributable to the parent was 4 billion yuan, a year-on-year increase of 127%, and has a high growth position in the industry.
Wealth management business has become a performance growth point. In recent years, "financial content" has become the main performance growth point of the next securities industry. China Industrial Securities Co.Ltd(601377) actively promote the transformation of wealth management, and the proportion of income from selling financial products on a commission basis continues to expand. In the first half of 2021, it accounted for 18% of brokerage income, an increase of 4pct compared with 2020, and it is expected to continue to increase in the follow-up.
The large asset management business relies on public funds, and the performance is expected to be stable. Xingquan Fund (51% shares) controlled by China Industrial Securities Co.Ltd(601377) and South Fund (9.15% shares) contributed a great increment to the company's fund management business income. By the end of 2020, the fund management business income was 4.2 billion yuan, a year-on-year double increase. Xingzheng asset management scale stopped falling and maintained stability. The overall revenue of large asset management business is expected to achieve stable and high expected growth.
Profit forecast and investment suggestions
We expect that China Industrial Securities Co.Ltd(601377) from 2021 to 2023, the net profit attributable to the parent company will be 5.12 billion yuan, 6.23 billion yuan and 7.16 billion yuan respectively; The corresponding roe levels were 13.0%, 14.3% and 14.9% respectively. EPS is 0.76/0.93/1.07 yuan and BVPs is 6.17/6.80/7.50 yuan respectively. Considering that the company is a company with high growth in the front and middle of the industry, the company is given PB1 60x is the target valuation for 2022, corresponding to the share price of 10.88 yuan. For the first time, the company will be given a "recommended" rating.
Risk tip: the effect of policy implementation is less than expected or even tightened, liquidity is tightened, stock based turnover has fallen sharply, and the overall market downside risk.
