Three main lines of the capital market: continuous capacity expansion, multi-level construction and strengthened supervision. In the period of economic transformation and reform, the capital market can play a more important role. We expect that driven by the momentum of the new economy, the volume and activity of China’s capital market will continue to improve. Represented by the rapid implementation of the Beijing stock exchange, the expansion of the equity market and the construction of multi-level capital market will become important long-term trend changes in the next few years. It is expected that China’s securitization rate will increase. From the perspective of policy, there are frequent favorable policies for promoting the development of direct financing and capital market reform. 22 years is a great year for deepening the reform of the capital market. Securities companies will directly benefit from the reform of the registration system, the construction of multi-level capital market and the expansion of main financing channels. Policies are conducive to the healthy and sustainable development of the industry. In addition, the regulatory requirements for capital, business function management and IPO audit of the securities industry are becoming stricter, and listed companies with stronger capital strength will benefit more. On the one hand, the policy dividend of the capital market will catalyze the repair of the valuation of the sector, on the other hand, it is conducive to the healthy development of the industry, especially the improvement of the market share of leading companies. At the same time, the CSRC supports the superior and limits the inferior to guide the compliant operation of the industry. Under the guidance of supervision, the differentiation of the industry pattern may further intensify.
Looking for securities industry α Earnings: the stabilization and differentiation of roe, prominent head advantages, revaluation of wealth management track value and accelerated investment in financial technology are the four core variables worthy of special attention at this stage. First, the industry’s roe is moving from historical high volatility to a channel of steady rise. Thanks to the continuous rise of net profit margin, the roe of securities companies also shows an upward trend, From 3.56% in 2018 to 7.82% in the first half of 2021 (annualized data). Among them, the performance of listed companies is better, and the roe of head securities companies is more than 10% on average, ranking the top; looking forward to the improvement of capital market activity in the future, the performance of the securities industry is expected to maintain a high growth. Second, the market leading advantages are further highlighted. According to the interim report, the proportion of net profit and revenue of the top five securities companies in the market has increased, and they are in the traditional brokerage business and investment banking business And follow-up investment or derivatives business, the market share of head securities companies is expected to continue; Third, the wealth management business has high growth and is a long-term layout track for securities companies. Benefiting from the performance of the equity market, the asset management business performance of securities companies represented by Orient Securities Company Limited(600958) has made a significant contribution. Looking forward to the future, fund sales will continue to maintain a high growth rate, and the high performance contribution of wealth management business is expected to continue; Fourth, the digital transformation of securities companies is accelerating, and the investment in financial technology is accelerating, which helps to improve business expansion, especially the rapid development of retail business.
From the perspective of fundamentals, the industry performance is expected to maintain steady growth in 22 years. In terms of business, in the first half of 2021, the revenue of asset management, investment banking, brokerage, capital intermediary and proprietary business of listed securities companies increased by 28.1% / 25.8% / 24.1% / 20.8% / 11.3% respectively year-on-year. We expect that under the background of continuous expansion of capital market, it will continue to maintain rapid growth in 22 years. In addition, the industrial leverage and capital strength are improved, driven by the good performance of the capital market, and it is expected that the two financing and financial investment assets will be the main allocation direction. The development of two financial services has also improved the leverage ratio of listed securities companies. At the same time, the growth of profits and the drive of refinancing have enhanced the capital strength of the securities industry, and the capital strength of the industry is expected to be further improved.
Investment suggestion: under the catalysis of capital market reform dividend, industry development space improvement and other factors, some securities companies are expected to realize α profit. Under the current industry background of undervalued and high performance growth, we believe that there is still a large development space for wealth management, investment business and institutional business in the securities industry, and the securities industry has a high allocation cost performance. We believe that the securities industry may have the expression of excess returns in 22 years, and give the securities industry a “overweight” rating. From the company level, “differentiation” is the key word deduced by the industry in 22 years. In the process of “differentiation”, the head securities companies and some securities companies with differentiated competitiveness are expected to obtain excess returns. It is suggested to focus on the main line: 1) for the leading securities companies benefiting from the increase of market share, the business barriers are further strengthened and the profit certainty is higher. 2) The broad track space and wealth management business that can contribute to excess returns are expected to open the upper limit space for the valuation of the securities industry. To sum up, we recommend Gf Securities Co.Ltd(000776) and China International Capital Corporation Limited(601995) and suggest paying attention to East Money Information Co.Ltd(300059) , Huatai Securities Co.Ltd(601688) and China Industrial Securities Co.Ltd(601377) .
Risk analysis: the promotion of capital market reform lags behind expectations; Credit risk in financial market; The secondary market adjusted the risk significantly.
