In 2021, the trading of China’s capital market was active, the multi-level capital market was further improved, the establishment and registration system of the Beijing stock exchange was accelerated, and a number of market indicators reached a record high. As a closely linked broker to the capital market, the 2021 performance is also “awesome”.
As of March 15, a total of 24 listed securities companies have issued 2021 annual performance express, performance forecast or voluntary announcement of operating performance. It is reported that the revenue and net profit of these 24 listed securities companies have all achieved positive growth. Last year, the net profit of Citic Securities Company Limited(600030) , Guotai Junan Securities Co.Ltd(601211) , China Merchants Securities Co.Ltd(600999) , China Galaxy Securities Co.Ltd(601881) exceeded 10 billion yuan, with a total net profit of about 60 billion yuan. In addition, the upper limit of Guosen Securities Co.Ltd(002736) estimated net profit also exceeds 10 billion yuan, which is expected to join the “army of 10 billion yuan”.
In terms of business, investment banking, institutional business, asset management business and other businesses became the main driving force for the high growth of securities companies last year. Many other securities companies said that the asset impairment loss in 2021 was significantly reduced compared with that in 2020, and the net profit was also thickened.
performance express and forecast of 24 listed securities companies
As of March 15, a total of 24 listed securities companies have disclosed the performance of 2021. Among them, 20 are performance letters and 3 are performance forecasts. In addition, Everbright Securities Company Limited(601788) due to the recent fluctuations in the share price of the secondary market, it has also issued a voluntary announcement on the operating performance.
It is worth mentioning that the 24 listed securities companies that have announced the performance forecast / express have achieved year-on-year growth in revenue and net profit last year.
Specifically, Citic Securities Company Limited(600030) The net profit attributable to shareholders of listed companies was 22.979 billion yuan, a year-on-year increase of 54.20%.
Guotai Junan Securities Co.Ltd(601211) temporarily ranked second. Last year, the total revenue and net profit were 42.669 billion yuan and 15.013 billion yuan respectively, with a year-on-year increase of 21.22% and 34.98% respectively China Merchants Securities Co.Ltd(600999) , China Galaxy Securities Co.Ltd(601881) securities last year’s net profit attributable to the parent company also exceeded 10 billion yuan, Orient Securities Company Limited(600958) last year’s net profit attributable to the parent company exceeded 5 billion yuan.
From the perspective of the growth of net profit attributable to parent company, Central China Securities Co.Ltd(601375) due to the low base in 2020, the net profit in 2021 increased by more than 385% year-on-year to 506 million yuan Central China Securities Co.Ltd(601375) said that the growth was mainly due to the year-on-year growth in the income of investment banking, primary and secondary market investment business and brokerage business.
Among the large and medium-sized securities companies, Orient Securities Company Limited(600958) 2021 net profit attributable to the parent company increased by 97.27% year-on-year to reach 5.372 billion yuan Founder Securities Co.Ltd(601901) , Citic Securities Company Limited(600030) , Everbright Securities Company Limited(601788) , the net profit attributable to parent company also increased rapidly year-on-year, reaching more than 50%.
In addition, three listed securities companies issued performance forecasts. Among them, Guosen Securities Co.Ltd(002736) it is estimated that the net profit attributable to the parent company will reach 9 billion yuan to 10.5 billion yuan in 2021, with a year-on-year increase of 36% to 59% Caitong Securities Co.Ltd(601108) is expected to make a profit of 2.407 billion yuan to 2.636 billion yuan in 2021, with a year-on-year increase of 5% to 15%, The Pacific Securities Co.Ltd(601099) securities is also expected to turn losses into profits in 2021.
main business fully blossomed and asset impairment loss decreased
In 2021, the trading of China’s capital market was active, the multi-level capital market was further improved, the establishment and registration system of the Beijing stock exchange was accelerated, and a number of market indicators reached a record high. According to the data, in 2021, the Shanghai stock index rose by 4.80%, and the total net price (gross value) index of China bonds rose by 2.23%; The trading volume of stock funds in Shanghai and Shenzhen increased by 25.33% year-on-year, and the IPO underwriting volume in A-share market increased by 25.48% year-on-year.
As a securities firm most closely connected with the capital market, its revenue and performance also achieved rapid growth in 2021.
In terms of business, investment banking, institutional business, asset management business and other businesses became the main driving force for the high growth of revenue and net profit of many securities companies last year. In addition, many securities companies said that the asset impairment loss in 2021 was significantly reduced compared with that in 2020, thickening the net profit.
“First brother” Citic Securities Company Limited(600030) maintained high growth despite the high base. In 2021, the net profit attributable to shareholders of listed companies was 22.979 billion yuan, an increase of 54.20% year-on-year Citic Securities Company Limited(600030) said that the company’s investment banking, asset management and other businesses developed in a balanced and steady manner in 2021.
Citic Securities Company Limited(600030) previously announced the 2021 performance express of Huaxia Fund, a non wholly owned subsidiary. As of December 31, 2021, the total assets of Huaxia Fund were 16.295 billion yuan and the total liabilities were 5.007 billion yuan; In 2021, the company achieved an operating revenue of 8.015 billion yuan, a net profit of 2.312 billion yuan and a total comprehensive income of 2.287 billion yuan. By the end of 2021, the assets under management of the parent company of Huaxia Fund was RMB 1661607 billion.
In 2021, Orient Securities Company Limited(600958) with a year-on-year increase of more than 97% in net profit attributable to the parent company, said that the main reasons for the performance growth were: the net income from business fees such as asset management, brokerage and investment banking of the company and the investment income of associated enterprises increased year-on-year; Meanwhile, the provision for credit impairment decreased year-on-year.
China Galaxy Securities Co.Ltd(601881) securities last year’s performance reached the threshold of 10 billion yuan. In 2021, the net profit attributable to shareholders of listed companies reached 10.349 billion yuan, an increase of 42.87% year-on-year. In this regard, China Galaxy Securities Co.Ltd(601881) said that it was mainly due to the good development and steady growth of the company’s brokerage business, proprietary investment, international business and other businesses.
Guosen Securities Co.Ltd(002736) the net profit attributable to the parent company in 2021 is also expected to exceed 10 billion yuan. The net profit attributable to the parent company is expected to reach 9 billion yuan to 10.5 billion yuan in 2021, with a year-on-year increase of 36% to 59%.
According to Guosen Securities Co.Ltd(002736) announcement, during the reporting period, the company’s main business income such as self operated investment business income and brokerage service fee net income increased significantly compared with the same period of last year, and the provision for impairment of financial assets decreased during the reporting period.
China Industrial Securities Co.Ltd(601377) in 2021, the net profit attributable to the shareholders of the parent company was 4.743 billion yuan, an increase of 18.48% year-on-year China Industrial Securities Co.Ltd(601377) said that the main reasons for the change were: the company’s net fee income from fund management business and brokerage business, as well as the year-on-year growth of interest income from margin trading and customer margin; Meanwhile, the provision for credit impairment losses decreased year-on-year.
Zhongtai Securities Co.Ltd(600918) last year, the net profit attributable to the parent company was 3.2 billion yuan, an increase of 26.72% year-on-year Zhongtai Securities Co.Ltd(600918) said that in 2021, the company fully implemented the overall development idea of “one command, one center, four strategies and two supports”. The increase in performance was mainly due to the increase in business income such as brokerage, investment banking and asset management, as well as investment income (including profit and loss from changes in fair value).
Soochow Securities Co.Ltd(601555) last year’s net profit growth was also commendable. Last year, the net profit attributable to shareholders of listed companies was 2.392 billion yuan, an increase of 40.10% year-on-year. It is reported that the reason for the performance growth is that the company’s net brokerage fee income, net interest income, investment income and income from changes in fair value increased year-on-year; Meanwhile, the provision for credit impairment losses decreased year-on-year.
Everbright Securities Company Limited(601788) net profit attributable to parent company in 2021 also increased by 50% year-on-year to RMB 3.501 billion Everbright Securities Company Limited(601788) said that the company’s wealth management business income, institutional business income, bond underwriting and trading business income increased compared with the same period of the previous year, while asset impairment losses and estimated liabilities decreased significantly compared with the previous year.
Institution: undervalued value of securities companies shows configuration value
Recently, A-Shares fluctuated widely, but institutions are still firmly optimistic about the brokerage sector.
China Post Securities believes that the undervalued value of the securities sector shows the allocation value. Recently, the average daily turnover of the two cities has reached trillion, which has become the norm, and the pressure on short-term brokerage business and wealth management business has been relieved. At the same time, the reform and innovation of the securities industry in recent years, such as fund investment adviser, new regulations on asset management and the implementation of comprehensive registration system, will greatly stabilize the performance fluctuation of the securities industry, and the short-term market fluctuation will not change the good momentum of the medium and long-term performance of the securities industry.
In the long run, China Post Securities believes that the supporting logic of the performance growth of the securities industry lies in: first, the performance increment brought by the transformation of brokerage business to wealth management mode. 2、 The performance increment contributed by the new market places bred by innovative business, such as the expansion of securities lending scale, the strong demand for derivatives business inside and outside the market, the exploration of securities settlement fund model and the popularity of the business model driven by “investment bank + investment” will raise the performance level of securities companies.
Cinda Securities believes that securities companies have high rebound certainty. The performance of securities business is growing steadily, the asset quality is improved, and the steady growth target may bring loose liquidity, which together form the driving force for the rise of the sector. From the performance of listed securities companies that have disclosed the performance express, the growth rate of net profit attributable to parent companies of more than 70% of securities companies is more than 20%, and half of them is more than 30%. In 2021, the performance of securities business grew steadily under the high base of 2020, laying a solid foundation for the rise of the sector. At present, the valuation of securities companies still does not match the performance and asset quality, which is 2.5% away from PB2 61x valuation center still has a large space, so it is recommended to actively layout.
Cinda securities also said that when the issuance of new funds is cold, it will not change the sustainable development trend of wealth management, and grasp the main investment opportunities of investment banks under the comprehensive registration system. Since the beginning of 2022, the growth expectation of wealth management business has decreased due to the cold of new funds. In fact, although the scale of new funds has declined year-on-year, the total scale of public funds has increased by 3.74% compared with the end of 2022 and 16.32% compared with the same period last year. The management fee income based on AUM has maintained a continuous growth trend. After a significant adjustment of wealth management characteristic securities companies, Cost performance is gradually emerging.
Huaxi Securities Co.Ltd(002926) non bank team believes that when the main line of wealth management encounters twists and turns, it will not change the certainty of growth. The overall price to book ratio of securities companies is 1.42 times, lower than the average level in 2020 and 2021. At the same time, the roe level of securities companies has increased steadily. The mismatch between sector valuation and performance growth brings left configuration opportunities.
Huaxi Securities Co.Ltd(002926) also said that the brokerage sector has strong beta attributes, so the liquidity, transaction activity and market sentiment of A-Shares will be magnified on the market of the sector. It is expected to be in the stage of wide liquidity to wide credit in the next 2-3 quarters. For investors who pay attention to the layout signal on the right side of the securities business sector, they can pay attention to 1) the transaction volume of Shanghai and Shenzhen stock markets has been enlarged to more than 1.4 trillion yuan, 2) the daily transaction volume of the securities business sector (801193. SI) has been enlarged to 100 billion yuan, and 3) the securities lending scale of listed securities companies has shrunk rapidly.
