Futures companies are the connectors between futures investors and futures markets. They meet three types of needs of investors through three major businesses: futures brokerage business, asset management business and risk management business to meet customers’ trading needs, asset allocation needs and risk management needs. The main customers they serve can be divided into individual, institutional and industrial customers.
The revenue of the futures industry grew rapidly and the profit continued to improve: in terms of revenue, 1) in the first three quarters of 2021, the industry revenue was 35.51 billion yuan, a year-on-year increase of + 45.8%. Futures brokerage business is the main engine of industry growth. In 2020, the revenue was 19.23 billion yuan, a year-on-year increase of + 49.1%, which contributed to the main increment of revenue growth, mainly benefiting from the expansion of trading varieties and the improvement of trading activity in the futures market under the support of policies; 2) The revenue growth of asset management business was accelerated, and the de channelization of asset management business was basically completed. The asset management scale of active management products continued to grow. As of September 2021, the industry asset management scale was 317.349 billion yuan, up + 45.5% from the beginning of the year, including 231.81 billion yuan of active management products, accounting for 75.0%. The unique value of futures assets in wealth management and the “money making effect” of CTA strategy products are the key to promote the scale of actively managed assets; 3) The steady growth of risk management business income, the continuous growth of business scale and the continuous enhancement of profitability are an important direction for the industry to increase leverage. In terms of profit, in the first three quarters of 2021, the industry’s net profit was 9.95 billion yuan, a year-on-year increase of + 67.6%, and the industry’s profitability hit the bottom, mainly due to the clearing of industry risks and the improvement of industry operating capacity. In 2020, the industry roe was 6.7%, an increase of 1.5pct compared with 2019. In the first three quarters of 2021, the industry roe continued to increase to 9.2%. The introduction of the measures for the management of Futures Intermediaries is expected to further support the reduction of industry management costs and improve the profitability of the industry.
The futures industry presents two characteristics: high concentration and high degree of investor Institutionalization: the futures market has a high concentration, forming a pattern of one super and many strong. Most of the leading companies in the industry are securities companies. The brand advantages and customer advantages of the parent company in the capital market bring certain business resource advantages to the securities futures companies; In addition, with the gradual liberalization of financial institutions’ participation in the futures market, institutional investors have occupied the dominant position in the futures market. We expect that in the future, the futures market will better match the needs of enterprise customers and financial institutions, the degree of market institutionalization will be further deepened, and individual customers will be relatively reduced.
In the future, the scale of the industry will continue to grow, the concentration will be further improved, and the two types of futures companies will benefit more: looking forward to the future, the scale of the futures market is expected to continue to expand due to the continuous commodity market, the improvement of the richness of futures varieties, the increment brought by the Canton stock exchange and other factors, The role of futures assets as a source of investment channels and property income for residents is expected to be continuously explored by the market; The industry concentration is expected to be further improved. The “catfish effect” brought by the relaxation of industry access and the institutional investors put forward diversified and professional business needs for futures companies, which will exacerbate the competition in talent, capital and service ability of the futures industry. Under the performance differentiation, institutions with single business and insufficient profitability will expose their weaknesses, and the industry concentration will be further promoted. We judge that companies with both advantages in capital and talents or outstanding advantages in wealth management ability will benefit the most.
In terms of listed companies, the business of the three A-share listed futures companies has expanded rapidly in recent years. Yong’an futures, Ruida Futures Co.Ltd(002961) , Nanhua Futures Co.Ltd(603093) seize the market opportunities and listing opportunities and accelerate their development. The operating revenues of the three companies from January to September 2021 were RMB 27.37 billion, RMB 1.65 billion and RMB 6.88 billion respectively, with a year-on-year increase of 47.4%, 116.0% and – 12.1%; The net profit was RMB 880 million, RMB 370 million and RMB 170 million respectively, with a year-on-year increase of 14.2%, 181.2% and 156.2%; The net assets attributable to the parent company were 8.66 billion yuan, 2.23 billion yuan and 2.98 billion yuan respectively, an increase of 11.1%, 12.6% and 12.6% over the beginning of the year; The annual roe was 13.6%, 22.8% and 10.5% respectively.
We expect that the profitability of the industry will be further improved, and the two types of companies have investment opportunities. We expect the net profit of the industry to be 13.03 billion yuan in 2021, with a year-on-year increase of 61% and roe of 8.8%. We judge that the investment opportunities in the futures industry come from 1) head companies with advantages in capital and talent strength; 2) companies with outstanding wealth management ability, three abilities of reaching customers, product consultants and investment consultants, and can grasp the market demand for futures asset allocation. We suggest paying attention to Yong’an futures and Ruida Futures Co.Ltd(002961) .
Risk tips: fluctuation risk of futures market, fluctuation risk of fee reduction, downward risk of interest rate, risk of intensified industry competition and credit risk
（ Tianfeng Securities Co.Ltd(601162) ）
