Under the background of market recovery, the performance of securities companies in 2021 is generally good. As of the closing on the 1st, 36 securities companies have disclosed their performance in 2021 in the form of express, advance notice and single release of the parent company. Zhongxin Jingwei found that the business performance of 31 securities companies generally rose in 2021, but at the same time, five securities companies such as Zhongshan securities and Guodu securities obviously fell behind.
five securities companies’ net profits fell, with a maximum decline of 151%
2021 is undoubtedly a bumper year for securities companies. According to the data recently disclosed by China Securities Association, in 2021, 140 securities companies achieved operating revenue and net profit attributable to parent company of 502.41 billion yuan and 191119 billion yuan respectively, with a year-on-year increase of 12.03% and 21.3% respectively. The industry as a whole achieved steady growth.
After combing the unaudited performance of the above 36 securities companies, Zhongxin Jingwei found that nearly 90% of the securities companies achieved profit growth. Among them, based on the year-on-year increase of net profit (the upper limit of the predicted net profit range is taken), Central China Securities Co.Ltd(601375) , The Pacific Securities Co.Ltd(601099) securities, Guosheng securities and Jianghai securities led the rise with an increase of more than 100% Six securities companies, including Citic Securities Company Limited(600030) , Orient Securities Company Limited(600958) , Founder Securities Co.Ltd(601901) and others, account for 50% – 100% Guotai Junan Securities Co.Ltd(601211) , China Merchants Securities Co.Ltd(600999) and other 15 securities companies increased by 20% – 50%, and the other 6 increased by 3% – 20%.
However, there are still “double declines” in the operating revenue and net profit of Zhongshan securities, Guodu securities and Donghai securities, while the net profit of YueKai securities and Minmetals securities fell year-on-year.
In 2021, the operating revenue and net profit of Zhongshan securities decreased significantly year-on-year, 48.58% and 151.45% respectively, becoming the only securities firm with a loss in net profit. Its parent company Guangdong Golden Dragon Development Inc(000712) said that due to the administrative supervision letter received from the regulatory department in August 2020, the new capital consuming business was suspended, resulting in a large decline in operating income. In addition, the valuation of some bonds held by Zhongshan securities fell, resulting in losses from changes in fair value.
The unaudited financial statements of 2021 disclosed by Guodu securities and Donghai securities, two other small and medium-sized securities companies, show that the growth rate of their operating revenue and net profit is negative, but the decline of Donghai securities is more obvious, 48.98% and 56.92% respectively, while that of Guodu securities is 1.44% and 7.09%.
According to the income statement disclosed by Donghai securities, its investment income loss in associates and joint ventures was 11 million yuan and the income loss from changes in fair value was 487 million yuan, but its operating expenses increased by 708 million yuan. Zhongxin Jingwei noted that in 2020, the net profit attributable to the shareholders of the listed company of Donghai securities increased by 788.26% year-on-year. Wind shows that it has issued several litigation announcements in the past year, among which, in the case of “Blu ray debt”, Donghai securities has recovered nearly 120 million yuan of principal and interest from Sichuan Languang Development Co.Ltd(600466) without a court session.
The operating revenue of Minmetals securities in 2021 was 1.837 billion yuan, a year-on-year increase of 2.24%, but the net profit decreased by 11.72% year-on-year. Unaudited financial statements showed that its self operated business income fell by 47.47% year-on-year, or the main reason.
The operating revenue of YueKai securities, a securities company listed on the new third board, increased by 26.84% year-on-year in 2021, but the net profit attributable to listed shareholders decreased by 30.54% year-on-year. According to the 2021 annual report of YueKai securities, non operating expenses increased by 168387% year-on-year, mainly due to the expected increase in losses in civil litigation. After deducting non recurring profits and losses, the net profit attributable to the shareholders of the listed company increased by 59.59% year-on-year.
In addition, in terms of changes in operating income in 2021, Anxin securities and Jianghai securities declined, but the increase in net profit was positive.
sector valuation is at a low level
In recent years, the industry has called for the arrival of the “great era of wealth management”, and securities companies are considered to be the financial institutions that benefit the most from the vigorous development of equity wealth management. From the report card of 2021 alone, the securities industry has made great strides forward. The scale of asset management business is 10.88 trillion yuan, an increase of 3.53% year-on-year. In particular, the scale of collective asset management represented by active management has increased significantly by 112.52% to 3.28 trillion yuan.
The overall performance of the securities industry “made great progress” in 2021, but it was reflected that the secondary market did not rise in response. Shenwan secondary industry index securities II has fallen by 12.89% since the beginning of the year, and only Chinalin Securities Co.Ltd(002945) , Guolian Securities Co.Ltd(601456) achieved cumulative increase.
In this wave of market, Gf Securities Co.Ltd(000776) , China Industrial Securities Co.Ltd(601377) and Orient Securities Company Limited(600958) known as the “three swordsmen of wealth management” in the industry have not escaped the “general decline”, and the share price has fallen by 22.73%, 16.7% and 16.35% since the beginning of the year.
Zhongxin Jingwei noted that institutions are generally optimistic about the future market of securities companies.
Soochow Securities Co.Ltd(601555) analyst Hu Xiang and others said that at present, there is a great contrast between the fundamentals and policies of securities companies and the valuation, the profits of securities companies continue to reach a new high, and the relative roe is close to the level of the previous bull market (20152016), but its valuation is still at the bottom 1 / 4 of the historical valuation, which is optimistic about the long-term allocation value of securities companies.
Central China Securities Co.Ltd(601375) analyst Zhang Yang believes that in a short cycle, the brokerage sector is expected to repair the market, but the overall trend of weak shock consolidation will remain. It is expected that the brokerage sector will still focus on the structural market, and the scope and strength depend on the overall performance of the sector.
Wang Fangchao of Cinda securities holds a similar view, “the performance of securities business in 2021 will grow steadily under the high base of 2020, and the net profit growth of most listed securities companies is expected to exceed 30%, laying a solid foundation for the rise of the sector. At present, the valuation of securities companies still does not match the performance and asset quality, and there is still a large space from the pb2.61x valuation center.”
Xu Kang team of Huachuang Securities believes that the securities sector has high beta attribute. When the market goes down sharply, the securities sector is prone to a sharp decline. Affected by the cold of new development funds and the lower than expected growth of fund scale, the market’s growth expectation of the wealth management industry has been reduced, and the securities companies with wealth management characteristics have been significantly adjusted. Traditional securities companies have declined in more than 21 years. This round of correction has a relatively weak impact on traditional securities companies, and some securities companies with strong growth expectations have risen.
Xu Kang said that the market needs to be corrected in the short term, but the market needs to be corrected in the short term.
