The sudden outbreak of the war between Russia and Ukraine caught A-Shares off guard. The securities companies that expected to have a rebound market were disappointing and became the vanguard of the decline.
According to statistics, over the past week (from February 21 to February 25), individual stocks in the securities sector fell across the board, Huatai Securities Co.Ltd(601688) share price fell 6%, ranking first, Central China Securities Co.Ltd(601375) and Guolian Securities Co.Ltd(601456) fell 5.9% and 5.4% respectively, ranking second and third Orient Securities Company Limited(600958) fell 0.8%, becoming the company with the smallest decline in the sector.
Many market analysts said in an interview with the reporter of Huaxia times that the arrival of the Russian Ukrainian war had a short-term impact on the market. As a sector closely connected with the market, securities companies naturally had a great impact. However, the impact is more emotional, because there is no problem with the fundamentals of the whole securities industry, the performance has increased steadily, and the early adjustment is relatively sufficient. In the medium and long term, the risk will not be great.
On February 25, the China Securities Association released official statistics. In 2021, 140 securities companies in the whole industry realized an operating revenue of 502.41 billion yuan and a net profit of 191119 billion yuan. By the end of 2021, the total assets of the securities industry were 10.59 trillion yuan and the net assets were 2.57 trillion yuan, an increase of 19.07% and 11.34% respectively over the end of the previous year.
performance improved significantly
It can be seen that in the published performance forecast and performance express, securities companies have become the most beautiful children in the whole market.
18 listed securities companies took the lead in issuing pre increase announcements and performance letters in 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 ranked first Founder Securities Co.Ltd(601901) , Orient Securities Company Limited(600958) , Central China Securities Co.Ltd(601375) it is estimated that the net profit will increase by 50% – 70%, 87% – 107% and 360% – 437% respectively in 2021 Citic Securities Company Limited(600030) , Everbright Securities Company Limited(601788) net profit growth exceeded 50%. In addition, the net profit of Zheshang Securities Co.Ltd(601878) , Guotai Junan Securities Co.Ltd(601211) and other four companies exceeded 30%.
Recently, the China Securities Association made statistics on the unaudited operation data of securities companies in 2021. In 2021, China’s securities industry actively served the reform and development of the capital market, continuously enhanced its ability to serve the real economy and residents’ wealth management, steadily increased its performance and continuously enhanced its capital strength.
At the same time, the level of compliance and risk control has been continuously improved. The securities industry has actively practiced the new development concept and achieved new results in serving the real economy.
In 2021, Chinese securities companies served 481 enterprises to complete domestic initial public offerings, with a financing amount of 535146 billion yuan, an increase of 87 and 13.87% respectively year-on-year.
Among them, there are 162 “hard technology” enterprises listed on the science and innovation board, with a financing of 202904 billion yuan; There are 199 growth innovation and entrepreneurship enterprises listed on the gem, with a financing of 147511 billion yuan. The number of initial public offerings on the two boards accounted for 75.05% of the number of IPOs in the whole year, and the financing amount accounted for 65.48% of the total IPO Financing in the whole year, guiding capital to effectively support scientific and technological innovation. In 2021, the securities industry realized a net income of 69.983 billion yuan from investment banking business, with a year-on-year increase of 4.12%. The overall operating results have made steady progress.
In addition, China’s securities industry has effectively prevented financial risks, and the overall level of compliance risk control is stable. At the end of 2021, the net capital of the securities industry was 2 trillion yuan, of which the core net capital was 1.72 trillion yuan. By the end of 2021, the average risk coverage rate of the industry was 249.87% (regulatory standard ≥ 100%), the average capital leverage rate was 20.90% (regulatory standard ≥ 8%), the average liquidity risk coverage rate was 233.95% (regulatory standard ≥ 100%), the average net stable capital rate was 149.64% (regulatory standard ≥ 100%), and the overall risk control index of the industry was better than the regulatory standard.
wealth management at the right time
In 2021, the securities industry continued to promote the transformation of wealth management and continuously improved its ability to serve residents’ wealth management. By the end of 2021, the securities industry had opened 298 million A-share capital accounts for customers, with a year-on-year increase of 14.89%. The ending balance of customer transaction settlement funds (including credit transaction funds) was 1.90 trillion yuan, an increase of 14.66% over the end of the previous year, and the customer base was expanding.
At the end of 2021, the scale of asset management business in the securities industry was 10.88 trillion yuan, an increase of 3.53% year-on-year. In particular, the scale of collective asset management represented by active management increased significantly by 112.52% to 3.28 trillion yuan. In the whole year, the net income from asset management business was 31.786 billion yuan, a year-on-year increase of 6.10%. In 2021, the net income from agency sales of financial products in the securities industry was 20.69 billion yuan, a year-on-year increase of 53.96%, accounting for 13.39% of the brokerage business income, with an increase of 3.02 percentage points. In 2021, the whole industry realized a net income of 5.457 billion yuan from investment consulting business, with a year-on-year increase of 13.61%.
According to Wang Fangchao, an analyst at Cinda securities, the current time point is stronger than the steady growth in the early stage of the epidemic in 2020 and weaker than the overall loose liquidity in 2014. It is still recommended to layout the brokerage sector on the left. There are two main lines of wealth management. First, as a shadow stock of public funds, if compared with the increase of many mutual funds in the United States in the 1980s, there is still a lot of room for holding securities companies at present; 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.
Wang Fangchao pointed out that 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 the 61 times 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.
Dongxing Securities Corporation Limited(601198) released report further shows that since the beginning of the year, under the comprehensive influence of internal and external factors, the core indicators such as trading volume and two financial balances have dropped significantly compared with the recent high, which directly suppresses the performance expectation of the sector, and then affects the valuation. In the trend of comprehensive registration system, the growth rate of supply is further accelerated. If the demand does not rise correspondingly, the problem of imbalance between supply and demand may continue to exist. Although securities companies directly benefit from the dividend of the registration system, they still need to focus on the marginal changes of the core indicators of the market. In the short term, it is suggested to pay attention to the impact of the success of Dongguan securities on Guangdong Golden Dragon Development Inc(000712) and even the sector.
In terms of investment targets, it is suggested to continue to focus on wealth management theme opportunities, and market stabilization is expected to re consolidate this logic. However, the investment banking “blowout” driven by the comprehensive registration system is expected to become the most deterministic growth opportunity for the securities sector. The project supply exceeds the carrying capacity of investment banks to a certain extent, which is expected to promote the improvement of the pricing ability of securities companies. Therefore, it is suggested to continue to pay attention to the “growth” opportunity of the resonance between big wealth management and “Pan investment bank” in the medium and long term.
The report also points out that, on the whole, the current business homogenization of the securities industry is still strong. Under the background of the continuous enhancement of Matthew effect, only the leading moat is expected to continue to exist and broaden, and the resource agglomeration effect is the most significant, so it has the opportunity to obtain a higher valuation premium.
