Event:
On March 16, the brokerage index rose 6.39%, ahead of the Shanghai Stock Index (+ 3.48%) and the CSI 300 index (+ 4.32%), among which Chinalin Securities Co.Ltd(002945) , Boc International (China) Co.Ltd(601696) and Gf Securities Co.Ltd(000776) and other stocks rose by the limit.
Comments:
Policies catalysed the rebound of a shares, and the short-term securities industry reflected the high beta attribute
On March 16, affected by the special meeting held by the financial stability and Development Commission of the State Council, the A-share market rose sharply, and the brokerage index rose 6.39%. From the perspective of the policy catalyzed A-share rebound, we take October 19, 2018 (Vice Premier Liu he interviewed on the hot issues of economy and finance at that time) – February 22, 2019 (the market rebounded to a phased high) as an example. During this period, the brokerage index rose 58%, the Shanghai and Shenzhen index rose 15.6%, and the valuation of the securities industry (Pb (LF)) rose from 1.06 times to 1.70 times. The excess return of the securities industry was obvious in the rebound market. Similar to the targeted solutions for leveraged financing and equity pledge financing concerned by the capital market in 2018, this special meeting also includes a series of issues concerned by the capital market, such as the supervision of China concept shares, the supervision of platform economy and the disposal of real estate risks. It is expected that supporting policies will be issued in the follow-up, and the securities industry will continue to benefit from the improvement of market risk preference and is expected to obtain excess returns.
In the long run, marginal changes in the securities industry will bring long-term alpha income
We believe that there are three important changes in the policy, fundamentals and competition pattern of the securities industry in 2022, which will bring more stable growth and long-term alpha income to the industry. From the perspective of policy, the reform of capital market has entered an accelerated period, and the expansion of equity market and the construction of multi-level capital market are important long-term reform themes. The policy dividend of the capital market has three functions: first, open up the development space of the industry and bring new growth points such as derivatives business and interconnection business to securities companies; Second, the policy is favorable and catalyzes the valuation and repair of the sector; Third, the comprehensive advantages of head securities companies will be more prominent during the reform period. From a fundamental point of view, benefiting from the stabilization of income structure, the roe of securities companies is moving from a historical height to a channel of steady rise. In terms of industry competition pattern, the share of leading cities has gradually increased and has a trend of further improvement. The capital, resources, cost, brand and talent advantages of head securities companies are more prominent.
The valuation of the industry is at the bottom of history, and the resonance between fundamentals and policies is expected to bring about the continuous repair of valuation
Since the beginning of the year, the brokerage sector has continued to adjust. As of March 16, the Pb valuation of the industry was only 1.49x, which is located at the bottom of history. According to the data of China Securities Association, in 2021, 140 securities companies in the securities industry realized an operating revenue of 502.41 billion yuan and a net profit of 191119 billion yuan, with a year-on-year growth rate of 12% and 21.3% respectively. In recent three years, the industry’s revenue and net profit have maintained double-digit growth, and the overall operation of the industry is steadily improving. From the perspective of main benefit indicators, the industry’s annual roe of 21 years is 8 31%, the net profit margin was 38%, and the profitability of the industry was significantly improved. Looking forward to 2022, we believe that due to the development of the equity market, the comprehensive promotion of the registration system and classified supervision, the securities industry is expected to maintain a steady and upward development trend. The resonance between fundamentals and capital market policies is expected to bring about the continuous repair of sector valuation.
Investment suggestions:
In the context of the active and deep reform of the capital market, we are still optimistic about the performance of the securities industry. At the same time, considering the positive factors such as business transformation, we believe that the profitability of the securities industry will rise. At present, the valuation is low and has configuration value, so we maintain the industry’s “overweight” investment rating. From the perspective of the company, “differentiation” will be the key word deduced by the industry in 2022. In the process of “differentiation”, the leading securities companies and some securities companies with differentiated competitiveness are expected to obtain excess returns. It is suggested to pay attention to two main lines: 1) the opportunities for the replenishment of leading securities companies with outstanding comprehensive strength and gradually increasing market share in the securities sector, and recommend Citic Securities Company Limited(600030) (a + H), Huatai Securities Co.Ltd(601688) (a + H); 2) In the era of wealth management, China stock market news, which has differentiated competitiveness in the field of Internet wealth management, and Gf Securities Co.Ltd(000776) , which benefits from the rapid development of fund subsidiaries, are recommended.
Risk tip: the economic recovery is less than expected; Policy reform lags behind.
