Core view: the current economic environment is still in the stage of wide currency to wide credit transmission. From the historical market review, in addition to the bull market brought about by the split share structure reform in November 2006, there are several securities companies: RMB 4 trillion at the end of 2008, correcting the “money shortage” by “three-phase superposition” in the second half of 2014, comprehensively reducing interest rates and reserve requirements, financing difficulties of small and medium-sized enterprises, credit expansion at the end of 2018 After the social finance exceeded expectations in April 2020, the “rumors of mixed banking and securities industry” led to the fermentation of the market, which were all the products of the effective economic stimulus. Despite the current changes in the positioning of real estate in stabilizing the economy, the “flood irrigation” before 2018 is also different from the “precision drip irrigation” in China’s economic transformation process. The current time point comparison is stronger than the steady growth in the early stage of the epidemic in 2020 and weaker than the overall loose liquidity in 2014. We still recommend the brokerage sector on the left. There are two main lines of wealth management. First, as a shadow stock of public funds, there is still a lot of room for holding securities companies if compared with the ten to twenty times increase of many mutual funds in the United States in the 1980s; Second, on the channel side, the cold issuance of short-term popular track funds can not stop the flood of funds entering the market. At the same time, under the comprehensive registration system, investment banks will also contribute considerable performance. The premium data came out in January. Due to the high base brought by the good start of last year and the suspension of speculation, the growth rate of premium was much lower than that in the same period last year. In January, the original premium growth rate of life insurance companies was PICC (30.2%) > Xinhua (3.6%) > Ping An (- 0.6%) > CPIC (- 1.1%) > Guoshou (- 5.3%), respectively + 26.2pct, – 9.2pct, + 4.5pct, – 9.9pct and – 18.4pct compared with the same period in 2021. We believe that the sector can be concerned in the short term. The main logic of the rise is the increase of agent activity rate and the short-term rise of interest rate. The liability side cannot be falsified in the short term, but there is still pressure in the long term. It is suggested to pay attention to: Citic Securities Company Limited(600030) , China stock market news, Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) , China Greatwall Securities Co.Ltd(002939) , Zheshang Securities Co.Ltd(601878) , China Pacific Insurance (Group) Co.Ltd(601601) , New China Life Insurance Company Ltd(601336) .
Market review: the main indexes rose this week, and the Shanghai composite index reported 3490.76 points, + 0.80%; Shenzhen stock index reported 13459.68 points, + 1.78%; The CSI 300 index reported 4651.24, + 1.08%; Gem 2826.81, + 2.93%; The China Securities composite bond (net price) index was reported at 100.11, – 10bp. The average daily turnover of A-Shares in Shanghai and Shenzhen stock markets was 842.664 billion yuan, a month on month ratio of – 7.63%, and the average daily turnover rate was 1.15%, a month on month ratio of – 13.16bp; The balance of the two financial institutions was 172.182 billion yuan, down from – 4.15% last week. As of February 18, 2022, the scale of equity + hybrid funds was 8.65 trillion yuan, a month on month increase of + 0.12%, and the scale of newly issued equity funds this week was 2.033 billion yuan, a month on month increase of + 38.39%. In terms of individual stocks, securities companies: Sinolink Securities Co.Ltd(600109) – 0.28%, Shanxi Securities Co.Ltd(002500) – 0.65%, Sealand Securities Co.Ltd(000750) – 0.73%; Insurance: The People’S Insurance Company (Group) Of China Limited(601319) – 1.44%, Ping An Insurance (Group) Company Of China Ltd(601318) – 1.96%, New China Life Insurance Company Ltd(601336) – 2.25%; Diversified Finance: Sunny Loan Top Co.Ltd(600830) + 9.83%, Anhui Xinli Finance Co.Ltd(600318) + 4.95%, Nanhua Futures Co.Ltd(603093) + 2.30%.
View of the securities industry: the performance of the securities industry will grow steadily on the high base in 2020, laying the foundation for the rise of the sector. As of February 18, 2022, a total of 18 listed securities companies have issued pre increase announcements / performance letters for 2021, among 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, with a year-on-year increase of 66.90%, Founder Securities Co.Ltd(601901) , Orient Securities Company Limited(600958) Central China Securities Co.Ltd(601375) it is expected to achieve a year-on-year increase of 50% – 70%, 87% – 107% and 360% – 437% in net profit 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 62 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.
Under the background of the comprehensive registration system and the great development of wealth management, securities companies with excellent investment banking ability and prominent wealth management business are expected to obtain value revaluation opportunities. It is suggested to make a positive layout. Under the registration system, the investment banking business scale and income are concentrated to the head. 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 to the head. Up to now, the number of registered IPOs Cr5 is 38.08%, the underwriting scale Cr5 is 56.25%, and the underwriting recommendation income Cr5 is 48.94%, Higher than 29% / 49% / 36% of the number, scale and income Cr5 of all A-share IPOs respectively. The central economic work conference will set the tone for the full implementation of the registration system in 2022, 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) . In the context of the great development of wealth management, 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.
Insurance industry view: listed insurance companies released January premium data this week. Life insurance: the start was weak as scheduled, the growth rate was generally lower than that in the same period last year, and the original premiums of the three companies decreased year-on-year. It is estimated that the new premium is still under pressure due to the high base in the same period last year, the delay of a good start, the decline in the number of teams, the advance of the Spring Festival and the downturn in consumption. The growth rate of renewal premium is difficult to make up for the decline of new premium. In January, the original premium growth rate of life insurance companies was PICC (30.2%) > Xinhua (3.6%) > Ping An (- 0.6%) > CPIC (- 1.1%) > Guoshou (- 5.3%), respectively + 26.2pct, – 9.2pct, + 4.5pct, – 9.9pct and – 18.4pct compared with the same period in 2021.
In addition, considering the low product value rate in January, it is expected that the value of new business will also decline significantly. Property insurance: the margin of auto insurance premium continues to improve, and property insurance has a good start. In January, the growth rate of original premiums of all property insurance companies was PICC Finance (13.8%) > CPIC Finance (13.3%) > Ping An Finance (8.2%), which were + 12.6pct, 13.8pct and 21.4pct respectively compared with the same period in 2021. In January, the premium of PICC auto insurance was + 14.5%, reversing the growth rate of the whole year last year (yoy-3.9% in 2021). Since the comprehensive reform of auto insurance in October last year, the year-on-year monthly growth rate continued to increase. After the comprehensive reform of auto insurance, pricing, claim settlement and service capacity will become the key to the competition of auto insurance, and the concentration of leading insurance enterprises is expected to increase. In terms of non auto insurance, PICC non auto insurance maintained a relatively strong growth in January, with a year-on-year increase of + 13.18%, mainly due to Italian health insurance (YoY + 15.1%), agricultural insurance (YoY + 16.8%) and liability insurance (YoY + 16.9%). Due to the low base of credit guarantee insurance last year, it increased by + 219.1% year-on-year.
Subject to the impact that the life insurance reform is still in a painful period, the increase of team capacity is less than the decline of manpower, and the continuous mismatch between supply and demand, the inflection point at the liability end is still difficult to appear in the short term. At present, the repair of insurance valuation still depends on the performance of the asset side. Policy regulation focuses on stability, and the orientation of active fiscal policy and broad monetary policy is clear. It is expected to underpin economic growth. Wide credit superimposes the expectation of US interest rate hike, and the long-term interest rate may usher in an inflection point, driving the valuation repair of insurance stocks. With the growth rate of social finance reaching a new high in January and steady growth driving the economy to continue to improve, the yield of 10-year Treasury bonds has rebounded slightly to 2.8% (as of February 18), which may continue to rise in the future. In addition, the adverse impact of real estate investment on insurance companies has been fully reflected, the resolution of real estate chain risk has been gradually promoted, and real estate financing has been continuously relaxed, so the real estate risk is controllable. In terms of equity, insurance stocks tend to underestimate the value of individual stocks with high dividends, which is in line with the style of this year’s equity market and is expected to achieve better investment returns. At present, the positions and valuations of insurance stock institutions are at historical lows. The PEV of Guoshou, Ping An, Taibao and Xinhua 2022e corresponding to the current stock price are 0.64x, 0.61x, 0.49x and 0.43x 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’s net return on the open market this week was 150 billion yuan, including 50 billion yuan for reverse repurchase and 300 billion yuan for return, 300 billion yuan for MLF and 200 billion yuan for return. 50 billion yuan of reverse repo will expire next week. In terms of price, the short-term capital interest rate rose this week. The weighted average inter-bank offered rate rose by 31bp to 2.18%, and the inter-bank pledged repo rate rose by 29BP to 2.16%. R001 goes up 31bp to 2.16%, R007 goes up 13bp to 2.15%, and dr007 goes up 11bp to 2.09%. Shibor’s overnight interest rate rose 30bp to 2.11%. The issuing interest rate of interbank certificates of deposit rose. The yield of one-year treasury bonds rose 5bp to 1.97%, the yield of 10-year Treasury bonds rose 1bp to 2.80%, and the term spread narrowed 4bp to 0.83%. In terms of policy, steady growth continued to make efforts, and the follow-up attention was focused on 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.
