Core view: from the data of public fund holdings released by China Foundation Association, Tiantian Fund ranked third over ICBC for the first time, and 46 brokerage channels entered the top 100, continuing to expand its leading edge. 18 securities companies issued performance forecasts. 70% of the profits increased by more than 20%, and still recorded a high increase under the high base in 2020, laying a solid foundation for the rise. At the same time, the improvement of liquidity margin and the stabilization of economic margin are the two prerequisites for the excess return of securities companies, and policy support is the catalyst. The current environment has provided conditions for the rise of securities companies. Dongcai, which focuses on the resonance between individual stock lows and market lows, as well as Gf Securities Co.Ltd(000776) revalued as “shadow stocks” of fund companies under the background of resident asset transfer, and Zheshang Securities Co.Ltd(601878) emerging from the fund consignment. The reform of the insurance industry is under way, and the mismatch between supply and demand is still the main contradiction in the current premium growth. From the annual premium data, with the increase of closing efforts, the liability side has improved, and the life insurance revenue is positive. However, looking forward to 2022, the agent quality improvement and premium sales are still under pressure, and the elasticity is still on the investment side.
Core targets: China stock market news, Zheshang Securities Co.Ltd(601878) , Citic Securities Company Limited(600030) , Gf Securities Co.Ltd(000776) , China Greatwall Securities Co.Ltd(002939) , China Pacific Insurance (Group) Co.Ltd(601601) , Ping An Insurance (Group) Company Of China Ltd(601318) , etc.
Market review: from January 24 to January 28, the main indexes fell, and the Shanghai composite index reported 3361.44 points, – 4.57%; Shenzhen stock index reported 13328.06 points, -5.00%; The CSI 300 index reported 4563.77, – 4.51%; Gem 2908.94, – 4.14%; The China Securities composite bond (net price) index was reported at 100.43, + 3bp. The average daily turnover of A-Shares in Shanghai and Shenzhen stock markets was 847.411 billion yuan, a month on month ratio of – 22.88%, and the average daily turnover rate was 1.14%, a month on month ratio of – 29.47bp; The balance of the two financial institutions was 1743.672 billion yuan, down – 2.14% from last week. As of January 31, 2022, the scale of equity + hybrid funds was 8.63 trillion yuan, a month on month increase of + 3.32%. This week, the scale of newly issued equity funds was 6.513 billion yuan, a month on month increase of – 59.89%. In terms of individual stocks, securities companies: Citic Securities Company Limited(600030) + 1.53%, Caida Securities Co.Ltd(600906) + 1.15%, Chinalin Securities Co.Ltd(002945) – 1.41%; Insurance: The People’S Insurance Company (Group) Of China Limited(601319) – 3.60%, New China Life Insurance Company Ltd(601336) – 6.30%, Ping An Insurance (Group) Company Of China Ltd(601318) – 6.69%; Diversified Finance: Kunwu Jiuding Investment Holdings Co.Ltd(600053) + 2.81%, Luxin Venture Capital Group Co.Ltd(600783) + 2.46%, Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) – 1.34%.
View of the securities industry: in the fourth quarter, the number of public offerings held by securities companies was dominant, and the growth rate of scale was differentiated. Dongcai maintained a chain growth rate of 10% for the third consecutive quarter. On January 28, CCBA released the top 100 list of public fund sales in the fourth quarter of 2021. A total of 46 securities companies entered the top 100 list, and the number of channels of securities companies continued to dominate. The scale of stock + mixed public offering of 24 securities companies increased positively month on month, of which Zheshang Securities Co.Ltd(601878) 16.1 billion yuan, with a month on month increase of 106%, ranking the top in the industry. In addition, 10 securities companies such as Guolian Securities Co.Ltd(601456) , Guotai Junan Securities Co.Ltd(601211) , China International Capital Corporation Limited(601995) increased by more than 10% month on month. In terms of scale and market share, the total holding scale of stock + mixed public offering funds was 946.6 billion yuan, accounting for 11.08% of the market, with a month on month ratio of – 0.63%. The total holding scale of non commodity basic insurance was 1024.8 billion yuan, accounting for 6.40% of the market, with a month on month ratio of – 0.54%, mainly due to the further expansion of the third-party sales market share represented by ant fund and Tiantian fund. In the fourth quarter, Tiantian fund held 537.1 billion yuan of stock + mixed public offering, surpassing ICBC for the first time, second only to China Merchants Bank and ant fund, ranking third in the top 100, with a year-on-year increase of 10.95%, a month on month increase of 0.29%, a year-on-year increase of 16.53% and a month on month increase of 0.23%. Tiantian fund maintained a growth rate of 10% for the third consecutive quarter and is expected to continue to maintain a high growth.
As of January 31, 2022, a total of 18 listed securities companies have issued pre increase announcements / performance letters for 2021, of which China stock market news, Founder Securities Co.Ltd(601901) , Orient Securities Company Limited(600958) , Central China Securities Co.Ltd(601375) net profit growth ranks first. China stock market news is expected to realize a net profit attributable to the parent company of 4.825 billion yuan in 2021, a year-on-year increase of 66.90%, Founder Securities Co.Ltd(601901) , Orient Securities Company Limited(600958) , Central China Securities Co.Ltd(601375) are expected to achieve a year-on-year increase of 50% – 70%, 87% – 107% and 360% – 437% respectively in 2021; The net profit growth of Citic Securities Company Limited(600030) , Everbright Securities Company Limited(601788) exceeded 50%. In addition, the net profit of four securities companies, including Zheshang Securities Co.Ltd(601878) , Guotai Junan Securities Co.Ltd(601211) , exceeded 30%. In 2021, the performance of securities business grew steadily under the high base of 2020. It is expected that the net profit growth of most listed securities companies will exceed 30%, laying a solid foundation for the rise of the sector. The current valuation of securities companies is PB1 65 times, the valuation still does not match the performance and asset quality, which is 2.5 times away from PB2 There is still much room for 61x valuation center.
The comprehensive registration system is coming, and the valuation of securities companies with excellent investment banking ability is expected to improve. On January 28, the CSRC issued the guiding opinions on improving the quality of information disclosure of prospectus under the registration system. At the same time, the CSRC formulated the legislative work plan for 2022, and will formulate regulations such as the administrative measures for the registration of initial public offerings and the administrative measures for the registration of securities issuance of listed companies; During the year, measures for the administration of business qualifications of securities companies, measures for the administration of network security of securities and futures industry, measures for the administration of overseas issuance of securities and listing filing of domestic enterprises and other management measures will be issued, and measures for the administration of information technology of securities fund operating institutions will be revised. The CSRC formulated the relevant systems of the registration system to speed up, so as to provide a solid institutional guarantee for the full implementation of the registration system. The head securities companies have advantages in talent reserve, research ability, asset pricing ability and sales ability. The market share of the registration system is concentrated in the head. Up to now, the number of registered IPOs Cr5 is 38.08%, the underwriting scale Cr5 is 56.25%, and the underwriting sponsor income Cr5 is 48.94%, which is respectively higher than 29% / 49% / 36% of the number, scale and income Cr5 of all A-share IPOs. The comprehensive registration system is coming, which will bring performance increment to the head securities companies with stronger comprehensive strength. It is suggested to pay attention to: Citic Securities Company Limited(600030) , China International Capital Corporation Limited(601995) , China Securities Co.Ltd(601066) , Huatai Securities Co.Ltd(601688) , Haitong Securities Company Limited(600837) .
Under the background of the great development of wealth management, securities companies with outstanding wealth management business are expected to obtain value revaluation opportunities. The wealth management line suggests paying attention to the core targets benefiting from the expansion of the wealth management market: 1 Obvious advantages in products and investment advisers China International Capital Corporation Limited(601995) to promote the large-scale development of high-end wealth management; 2. Benefiting from residents’ wealth entering the market through institutions, double excellence in products and investment advisory services + high proportion of asset management income + high contribution of participating / holding public funds Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) , China Industrial Securities Co.Ltd(601377) etc; 3. The company attaches great importance to its strategy and has obvious characteristics of private placement and consignment sales, which is expected to realize Zheshang Securities Co.Ltd(601878) overtaking in curves.
View of the insurance industry: on January 28, the China Banking and Insurance Regulatory Commission issued the measures for the administration of insurance guarantee funds (Draft for comments), which ushered in an overhaul since the promulgation of the measures for the administration of insurance guarantee funds in 2008. There are three major revisions: 1) adjust the fixed rate to the benchmark rate plus risk differential rate, 3) establish a legal guarantee mechanism between the life insurance fund and the borrower’s liability insurance fund, and determine the interest rate of one-year life insurance loan. The borrower’s liability insurance fund can be included in the one-year life insurance loan, and the borrower’s liability insurance fund can be included in the legal guarantee mechanism. Shareholders, actual controllers, directors, supervisors and relevant management personnel of insurance enterprises have the obligation to report, explain and cooperate with the insurance guarantee fund company. If they fail to perform their obligations in accordance with the regulations, they will be punished. The new revision adheres to the problem orientation, enhances the rationality of the fund rate, and improves the sustainability of the guarantee fund. At the same time, strengthen management and enhance the efficiency of fund raising and use.
On January 26, the CBRC released the insurance data for the whole year of 2021. In the whole year, the insurance industry achieved a total original premium income of 4.5 trillion yuan, with a year-on-year increase of – 0.79%, including life insurance yoy-0.3% (including life insurance, health insurance and accident insurance with growth rates of – 1.7%, + 3.36% and 3.07% respectively), property insurance yoy-2.16% (auto insurance yoy-5.72% and non auto insurance yoy + 10.56%). In a single month, the growth rate of life insurance changed from negative to positive in December due to the increased closing efforts. The original premium income of life insurance increased by 3.5% (former value – 2%) year-on-year, from negative to positive, including life insurance yoy + 3.6% (former value – 1%) and health insurance yoy + 3.82% (former value – 4.08%). In December, the growth rate of automobile insurance continued to pick up in a single month, driving the growth rate of property insurance to pick up. In December, the growth rate of property insurance premium in a single month was + 13.1% (the previous value was 5.7%), including vehicle insurance + 7.5% (the previous value was 6.6%). Non auto insurance single month year-on-year + 26.3% (previous value 3.9%).
Looking ahead to this year, the liability side: under the comprehensive influence of factors such as the lower than expected effective manpower growth of insurance enterprises in the post epidemic era, the mismatch between customer demand and agent quality, we expect that the pressure on the liability side will still exist this year, and NBV may continue to decline, but considering the lower base after the second quarter, the decline will be narrowed. Considering the lagging start, the increase in production capacity is difficult to offset the decline in the number of agents, and the impact of the high base in the same period last year, the performance of the first quarter may continue to be under pressure. On the asset side, the adverse impact of real estate investment on insurance enterprises has been fully reflected, and the relaxation of real estate policies is beneficial to the insurance investment side. In addition, the central economic work conference set the tone to stabilize growth, and the orientation of active fiscal policy and broad monetary policy is clear. It is expected to underpin economic growth. The long-term interest rate under the broad credit expectation superimposed on the expectation of US interest rate increase may usher in an inflection point, driving the valuation repair of insurance stocks. In addition, the increase in the proportion of long-term equity investment capital withdrawn by the second generation of compensation has aroused the concern of the market about the sale of equity assets by insurance companies. We believe that the implementation process will meet the policy requirements in 2025 according to the specific conditions of each company, and the actual impact is lower than the market expectation. The current share prices of Guoshou, Ping An, Taibao and Xinhua 2022epev are 0.57x, 0.56x, 0.46x and 0.40x respectively. It is suggested to pay attention to AIA led by high-quality agents and Ping An Insurance (Group) Company Of China Ltd(601318) and China Pacific Insurance (Group) Co.Ltd(601601) with more thorough life insurance reform.
Liquidity view: in terms of volume, the central bank has invested 600 billion yuan in the open market in recent two weeks, including 1100 billion yuan in reverse repurchase and 500 billion yuan in return. 900 billion yuan of reverse repo will expire next week. In terms of price, the short-term capital interest rate rose one week before the festival. The weighted average inter-bank offered rate rose 16bp to 2.32%, and the inter-bank pledged repo rate rose 14bp to 2.31%. R001 goes up 5bp to 2.19%, R007 goes down 3bp to 2.32%, and dr007 goes up 20bp to 2.31%. Shibor’s overnight interest rate rose 9bp to 2.16%. The issuing interest rate of interbank certificates of deposit was basically the same. The yield of one-year treasury bond decreased by 3bp to 1.97%, the yield of 10-year Treasury bond remained unchanged at 2.72%, and the term interest margin expanded by 3bp to 0.74%. The central bank cut the 1-year and 5-year LPR interest rates a year ago to maintain steady growth. In addition, the monetary policy requires “sufficient force, accurate force and forward force”. Superimposed on the gradual severe situation of the recent epidemic, it is expected that there will be further easing measures in the future. Follow up attention will be paid to the extension of credit and the drag on the bottom of long-term interest rates caused by the opening of the tightening cycle in the United States.
Diversified financial perspective: focus on the trust and financial holding sectors that benefit from stimulating economic policies.
Risk factors: the deterioration of covid-19 epidemic, the decline of China’s economy beyond expectations, the decline of long-term interest rate beyond expectations, the success of the start is less than expected, the tightening of financial regulatory policies, the risk of spread loss caused by low interest rate, the pressure of agent shedding, lower than expected insurance sales, the uncertainty of the impact of capital market fluctuations on performance, etc.
