Securities industry: continuous release of policy dividends and acceleration of comprehensive registration system

The asset scale of the securities industry has broken the 10 trillion mark, and the prosperity has continued to rise. As of September 30, 2021, the total asset scale of securities companies has reached 10.31 trillion yuan, an increase of 15.84% over the end of the previous year; The scale of net assets reached 2.49 trillion yuan, an increase of 7.79% over the end of the previous year; The net capital reached 1.94 trillion yuan, an increase of 6.59% over the end of the previous year; The balance of customer transaction settlement funds (including credit transaction funds) reached 1.94 trillion yuan, an increase of 16.87% over the end of last year. The fundamentals of the securities industry continued to improve and its profitability improved. In the first three quarters of 2021, 140 securities companies achieved a revenue of 366.357 billion yuan, a year-on-year increase of 7%; The net profit was 143.979 billion yuan, a year-on-year increase of 8.51%. The net profit margin, leverage and roe of the industry have improved. In the first three quarters of 2021, the net profit margin of the securities industry reached 39.3%, an increase of 4.17 percentage points compared with 2020; The leverage ratio of the industry reached 3.36 times, an increase of 7.25% compared with 2020; The industry's annual roe reached 8%, an increase of 0.84 percentage points compared with 2020.

The market trading was active, and the commission rate continued to decline. In the first three quarters of 2021, the industry realized a revenue of 100.079 billion yuan from agency trading of securities, a year-on-year increase of 11.19%; Revenue accounted for 27.32%, up 1.03 percentage points year-on-year. By the end of November 2021, the daily average stock based trading volume of the whole market was 1128.694 billion yuan, a year-on-year increase of 24.12%. The commission rate of the securities industry continued to decline. Due to the decline of commission rate, the contribution of channel brokerage business to revenue is weakened, securities companies accelerate the transformation of wealth management, and the rapid growth of income from consignment financial products smoothes the impact of the decline of commission rate to a certain extent. According to relevant data, the commission rate of the securities industry will drop to 0.245 ‰ in the first three quarters of 2021.

The incremental space for investment banking business can be expected in the future, the scale of asset management business has stabilized and rebounded, the comprehensive registration system has accelerated, and the investment banking business has significantly benefited from the release of institutional dividends. In the first three quarters of 2021, the securities industry realized an investment banking revenue of 46.312 billion yuan, a year-on-year decrease of 3.96%; Revenue accounted for 12.64%, down 1.44 percentage points year-on-year. In November, the equity financing scale of the whole market was 259.298 billion yuan, a year-on-year increase of 54.57%; The IPO Financing scale was 39.568 billion yuan, a year-on-year increase of 35.47%. The asset management scale of securities companies showed a trend of stabilization and recovery. In the first three quarters of 2021, the securities industry realized an asset management business revenue of 21.962 billion yuan, a year-on-year increase of 3.28%; Revenue accounted for 5.99%, down 0.22 percentage points year-on-year. At the end of the third quarter of 2021, the asset management scale of securities companies reached 8.64 trillion yuan, an increase of 1.06% over the beginning of the year. In the future, with the deepening of active transformation and the expansion of wealth management market, the asset management scale of securities companies is expected to continue to rise.

The contribution of self operated business ranks first, and the securities lending business has become a new focus for the development of the industry. In the first three quarters of 2021, the securities industry achieved a self operated business income of 106.404 billion yuan, a year-on-year increase of 4.97%, accounting for 29.04% of revenue, a year-on-year decrease of 0.56 percentage points. The scale of the two securities lending businesses remained high, and the securities lending business developed rapidly. Since the second half of 2020, the scale and proportion of securities lending have increased rapidly. On September 10, 2021, the balance of securities lending reached the peak of 173.744 billion yuan in the investigation period, accounting for 9.07%. Although the current scale and proportion have declined, they still exceed 100 billion yuan.

On December 8, 2021, the central economic work conference called for the full implementation of the stock issuance registration system. The full registration system has a high probability of landing in 2022, the efficiency of factor allocation in the capital market has been improved, and the IPO business space of securities companies has been further expanded. On December 3, the CBRC issued the notice on matters related to insurance funds participating in securities lending business, liberalizing the qualification of insurance funds participating in securities lending, enriching the supply of securities sources, optimizing the market supply and demand structure, improving market liquidity and promoting the development of securities lending business.

Investment suggestion: with the change of residents' asset allocation structure and the increase of equity asset allocation demand, the era of great development of equity market is coming. With the institutionalization of investors, professional institutional investors have grown rapidly, and the pricing power of the market has gradually shifted to institutional investors. The growth space of wealth management business and institutional business lines of securities companies is opened, and it is easier for securities companies with advantages in wealth management and institutional business to obtain valuation premium. Considering the business environment of the securities industry, under the pessimistic, neutral and optimistic assumptions, we calculate that the year-on-year growth rate of net profit of the securities industry in 2022 is - 3.29% / 9.76% / 20.44% respectively. The current sector is 1.59x Pb, in the 15% quantile since 2010, maintaining the "recommended" rating. In terms of individual stocks, securities companies with obvious advantages in wealth management and institutional business East Money Information Co.Ltd(300059) (300059. SZ), Orient Securities Company Limited(600958) (600958. SH), as well as China International Capital Corporation Limited(601995) (601995. SH), Huatai Securities Co.Ltd(601688) (601688. SH) are recommended.

Risk warning: the risk of tightening regulatory policies; Risk that the performance is greatly affected by market fluctuations

( China Galaxy Securities Co.Ltd(601881) securities)

 

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