Zhou viewpoint:
The central economic work conference clearly proposed to “fully implement the stock issuance registration system”, and it is expected that the registration system of Shanghai and Shenzhen main board can be implemented in 2022. Previously, the opening of the science and innovation board in July 19, the landing of the gem registration system in August 20, the merger of the Shenzhen main board and the small and medium-sized board in February 21, and the formal operation of the Beijing stock exchange last month have laid a solid foundation for the comprehensive registration system. The registration system is an important link in the high-quality development of multi-level capital market and the implementation of innovation driven development strategy. On the evening of the 10th, Shanghai and Shenzhen stock exchanges have simultaneously solicited opinions on the new stock listing rules, and strive to build a concise, clear and friendly self regulatory rule system.
Securities companies are the core carrier of the capital market and benefit most from the comprehensive promotion of the registration system. 1) With the emergence of IPO business increment, investment banking needs more capital strength, sales ability and pricing ability. It is expected that the concentration of business resources will be further improved. As the flow inlet of institutional business, investment banking will promote the strength of institutional business; 2) The supply side dividend continues to be released. It is expected that the transfer of residents’ asset allocation to equity assets will be accelerated, the securities companies deeply engaged in the equity fund industry chain will further cultivate advantages, and the wealth management + asset management business will promote the improvement of profitability and robustness.
The current Pb valuation of securities companies is 1.75 times, below the 60th percentile since 2016. Compared with the overall annualized roe of listed securities companies this year and the average annual roe of 7.6% since 2016, there is a large upward space for the valuation of securities companies.
Focus on recommending individual stocks: equity and institutionalization are the core main line of subsequent securities companies’ investment. The valuation premium space of advantageous securities companies in wealth management + large asset management + institutional business (derivatives, securities lending and capitalized investment banking) is significant. We firmly recommend Gf Securities Co.Ltd(000776) , Huatai Securities Co.Ltd(601688) , and suggest paying attention to China International Capital Corporation Limited(601995) H.
Core data tracking:
1) Brokerage business: this Sunday’s average share based turnover was 1298.5 billion yuan, a month on month increase of + 3.5%; From the beginning of the year to today, the average share based turnover was 1138 billion yuan, a year-on-year increase of + 25.1%.
2) Margin trading and securities lending: as of December 9 (the data on December 10 were not disclosed), the balance of the two cities and two financing was 1.84 trillion yuan, a year-on-year increase of + 16.3% and + 13.8% over the beginning of the year; at present, the balance of the two financing accounts for 2.45% of the circulating market value, which is the same as that at the beginning of the year.
3) Investment banking: as of December 10, the IPO and refinancing underwriting scale of this year were 477.7 billion yuan and 993.7 billion yuan respectively, with a year-on-year increase of + 6.3% and + 27.0%; The underwriting scale of corporate bonds, corporate bonds and ABS was 3219.2 billion yuan, 410.4 billion yuan and 1834.5 billion yuan respectively, with a year-on-year increase of – 0.6%, + 9.6% and – 4.4%.
4) Public funds: it is estimated that the average application redemption ratio of the fund this week is 1.25, and the overall fund market is expected to be a net inflow of funds; Since the third quarter, the average estimated fund application redemption ratio is 1.10. The scale of newly established equity funds was 33.7 billion yuan, a month on month increase of + 60.5%; Since the beginning of the year, the newly established equity fund has reached 199 million yuan, up + 6.3% from the same period last year.
5) OTC derivatives: in October, the nominal principal of OTC options increased by 250.6 billion yuan, a month on month increase of – 32.8%, and the nominal principal of income swaps increased by 359 billion yuan, a month on month increase of – 26.0%; At the end of the period, the outstanding initial nominal principal of OTC options + beneficial swaps was 1.96 trillion yuan, up + 49% from the beginning of the year.
Risk tip: the reform is not advancing as expected; Large fluctuations in the capital market; The transfer of residents’ asset allocation was less than expected.
