\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 878 Zheshang Securities Co.Ltd(601878) )
Event: Zheshang Securities Co.Ltd(601878) released the 2021 annual report. In 2021, the company achieved a revenue of 16.418 billion yuan, a year-on-year increase of + 54.36%, and a net profit attributable to the parent company of 2.196 billion yuan, a year-on-year increase of + 34.94%, with an average weighted roe of 9.9% 90%, with a year-on-year increase of 0.12 percentage points, and the basic earnings per share was 0.58 yuan, with a year-on-year increase of + 23.40%.
Comments:
The construction of the “number one project” in 2021 has achieved remarkable results, and the wealth management performance has doubled again under the high base. The average daily trading volume of 2021 market was 1058.2 billion yuan, with a year-on-year increase of 24.76%. The company realized a brokerage service fee income of 2.084 billion yuan, with a year-on-year increase of + 41.90%, which was much higher than the average daily trading volume of the whole market. Mainly due to the outstanding contribution of the company’s wealth management business, the sales volume of financial products in 2021 was 50.6 billion yuan, with a year-on-year increase of + 45.4%, the holding volume of financial products was 44.5 billion yuan, with a year-on-year increase of + 32.4%. The company realized a year-on-year income of 477 million, The proportion of brokerage fee income increased from 15.73% in 2020 to 22.89% in 2021. Although the issuance of public funds was cold in the first quarter of 2022, since the company’s public offering holding scale (4q21 was 10.5 billion) accounted for only 23.6% of the total holding scale of financial products, most of the remaining holding scale were private funds. The income from private placement on commission sales consisted of 1% of subscription fee + management fee share 0.75% and part of performance commission (about 20% of carry), and the part of performance commission was included in the income from commission sales in accounting treatment, It is the main reason that the year-on-year growth of sales revenue of 77% in 2021 is much higher than the year-on-year growth of sales and ownership of financial products of 45.4% / 32.4%. In 2022, the revenue of private placement closed product management fee sharing and carry Commission will make up for the performance decline of the year-on-year decline of some subscription fees, and the advantages of characteristic private placement consignment mode wealth management are expected to further appear in 2022. As the company has a high-quality investment advisory team, strong ability to control customer assets, and a professional selection system of financial products, the customer investment experience and management realize a virtuous cycle of the growth of customer assets. The high net worth population in Zhejiang Province is gathered. The company has regional and professional advantages in the field of private fund consignment. The profitability of the company will continue to improve with the growth of private fund ownership.
The investment and credit business will achieve steady development and supplement working capital through multiple channels to support business development. In 2021, the company achieved investment business income of 1.841 billion yuan, a year-on-year increase of 24.10%, net interest income of 674 million yuan, a year-on-year increase of + 12.30%. The balance of margin trading and securities lending of the company increased from 14.852 billion yuan in 2020 to 19.085 billion yuan, a year-on-year increase of 28.50%, and the market share increased from 0.92% in 2020 to 1.02%. The company supplemented working capital through multiple channels to support the development of heavy capital business. The company completed fixed increase in May 2021 for investment trading, research, information system construction and debt repayment; At the end of the third quarter, the company issued a plan for convertible bonds of 7 billion yuan, of which 3.5 billion yuan was used for investment and trading business and 3 billion yuan was used for capital intermediary business. The company’s heavy capital business is expected to benefit from capital replenishment and achieve steady development.
The bond underwriting business is bright and looks forward to the large-scale performance of investment banks in 2022. In 2021, the company achieved an investment banking revenue of 10.83 yuan, a year-on-year increase of + 5.6%. The advantages of corporate bond underwriting business were expanded, and the underwriting amount and odd number of corporate bonds and corporate bonds remained the first in the province. In 2021, the scale of bond underwriting was 122714 billion yuan, a year-on-year increase of + 27.5, and the share of bond underwriting market increased from 1.07% in the same period last year to 1.16%. Zhejiang Province is rich in enterprise resources, and the capital market financing demand of small and medium-sized enterprises that the company has long served is strong. The corporate bond commitment team has been highly recognized by the provincial mainland municipal government and enterprise customers in terms of service awareness and professionalism. The advantages of the company’s investment bank in the Province are expected to further expand, and the company’s investment bank performance is expected to achieve rapid growth in 2022.
The risk of asset management business is cleared, and active management accounts for more than 80%. The “No. 1 project” in 2022 is expected to achieve a leap. In 2021, the company realized an asset management business income of 394 million yuan, a year-on-year increase of 16.2%. In 2018 and 2019, some of the company’s non-standard asset management businesses defaulted due to maturity. The disposal of risky assets forced the company to strengthen risk control, actively respond to the de channel supervision policy and improve the active management ability. The total scale of asset management decreased from 139.5 billion yuan in 2019 to 107 billion yuan at the end of 2021, and the active management scale increased by 3.06% year-on-year from 83.921 billion yuan in 2020 to 86.488 billion yuan in 2021, The proportion of active management scale increased from 63.8% in 2020 to 80.84% in 2021. The company sets the asset management business as the “No. 1 project” in 2022, takes building innovative products and improving the investment income of stock products as the business goal, and firmly adheres to the development orientation of “building an industry-class asset management company with equity characteristics”. The significant improvement of asset allocation ability and active management ability is expected to be fully reflected in the asset management performance in 2022.
Profit forecast and investment rating: Zhejiang Province has a developed economy and rich resources of listed companies and high net worth people. The company’s investment banking, wealth management and other businesses have good location support. The wealth management advantages of private placement are expected to be further highlighted. The company’s profitability will achieve a qualitative leap with the increase of the contribution of wealth management business income. Based on the decline of the market in the first quarter of 2022 and the cold issuance of public funds, we lowered the company’s profit forecast for 2022 and 2023. We expect the company’s net profit attributable to the parent company from 2022e to 2024e to be 2.827 billion yuan / 4.045 billion yuan / 5.493 billion yuan, a year-on-year increase of + 28.75% / 43.06% / 35.81%, corresponding to eps0.01% 73 yuan / 1.04 yuan / 1.42 yuan, roe11 06%/13.90%/16.46%。 We use the sotp valuation method to value the company, and give a PE valuation of 20 times to the wealth management business, investment banking business and asset management business dominated by handling fees and commission income (the average valuation of asset management business listed on the standard international market is about 20 times), and give a Pb valuation of 1.5 times to other businesses (the average Pb in the securities industry in recent month is 1.54 times). According to sotp valuation results, the target market value of the company in 2022 is 60.801 billion yuan, which is rated as “buy”.
Risk factors: the tightening of monetary policy led to a sharp decline in the trading volume of the stock market; The reform of capital market is not as expected; The self operated performance caused by the sharp fluctuation of the stock market is lower than expected.
