Key points:
2021 review: the market trading is active, the performance growth is stable, and the securities companies’ stocks are showing α attribute
Since the beginning of this year, the market trading has continued to be active, the average daily trillion transactions have been normalized, the performance of listed securities companies has been excellent, the revenue and net profit in the first three quarters have increased by more than 20%, and the roe has also increased steadily. Different from the past, this year’s market performance of the brokerage sector was depressed, and the valuation of the brokerage index Pb fell to a historical low, which was significantly deviated from the performance. It is worth noting that securities companies with good performance in wealth management business have stepped out of the independent market, Gf Securities Co.Ltd(000776) , East Money Information Co.Ltd(300059) and Orient Securities Company Limited(600958) have increased by more than 20% year to date.
2022 Outlook: the capital market will continue to expand and strengthen the investment main line of wealth management transformation
First of all, fully implementing the stock issuance registration system and increasing the proportion of direct financing is an important task during the 14th Five Year Plan period. It was mentioned again at the central economic work conference in December, and securities companies will benefit from the continuous expansion of the capital market. Secondly, the income elasticity of traditional brokerage business of securities companies has decreased, and the wealth management business has better stability and growth. With the continuous accumulation of wealth and the awakening of investment awareness of Chinese residents, the superposition of policies such as “no speculation in housing and housing” and new asset management regulations limit the traditional investment channels of residents, there is a large room for optimization of residents’ asset allocation, equity risk assets are favored, and open the space of wealth management market. In the past two years, the brokerage business of financial products sold on a commission basis by securities companies has increased rapidly, accounting for a significant increase in the proportion of brokerage business. At the same time, the scale of public funds has increased rapidly, thickening the performance of securities companies. In addition, securities companies occupy the first mover advantage under the fund investment advisory mode, which is expected to deepen the transformation of wealth management business.
OTC derivatives business has become the next direction of table expansion, and the head securities companies have significant advantages
Due to the traditional capital intermediary business (Liangrong and stock pledge) have a high correlation with the market situation, the customer demand changes significantly with the market cycle, and the leverage ratio is difficult to maintain stability. In contrast, the customers of OTC derivatives business are mainly institutional investors, and the business demand is more stable and diversified. In addition, the entry of resident wealth into the market through professional institutions has given birth to the interest of institutional investors in investment tools and risk management There is a need for diversity. Since 2018, the OTC derivatives market has expanded rapidly and the industry leverage ratio has increased steadily. However, as the OTC derivatives business has higher requirements on the entry qualification, pricing ability, capital strength and risk control ability of securities companies, the main participants in the OTC derivatives market are head securities companies, with high market concentration and obvious competitive advantage.
Investment advice
The capital market continued to expand, residents’ wealth was transferred to equity assets, the transformation of wealth management of securities companies was accelerated, and the stability of brokerage business was enhanced. OTC derivatives business will become the main direction for securities companies to expand their statements. The head securities companies have obvious competitive advantages, and the leverage ratio is expected to increase steadily. From the perspective of valuation, the current Pb valuation of the brokerage sector is 1.7x, which is still below the historical valuation center. Compared with the current roe level, there is room for repair, and the safety margin of the sector is high. It is suggested to pay attention to the head securities companies with advantages in wealth management business and obvious competitive advantages in off-site derivatives business. Maintain the “overweight” rating of the industry.
Risk statement
Macroeconomic downside risk; The risk of sharp decline in the secondary market; Industry competition intensifies; Policy changes.
