\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 030 Citic Securities Company Limited(600030) )
Event: the company released its 2021 annual report, realizing operating revenue of 76.5 billion yuan (YoY + 40.7%), net profit attributable to parent company of 23.1 billion yuan (YoY + 55.0%), and weighted average roe12.0% 07%（YoY+3.64pct），EPS1. 77 yuan (YoY + 52.6%).
We believe that the core points include: 1) the performance of the whole business line of the company is excellent, and the performance growth rate, roe level and growth rate, leverage level and growth rate are significantly better than those of the industry; 2) The company’s wealth management transformation has achieved remarkable results. While the market share of traditional brokerage business has increased, the income structure has been further optimized and the scale of customers has increased significantly; 3) The IPO, refinancing and debt market share of investment banking business rank first in the industry. It is expected that it will significantly benefit from the implementation of the comprehensive registration system reform in the future; 4) The financing cost of the company has further decreased, the two financial institutions and self operated investment have achieved a good rate of return, and the development space of capital intermediary business will be opened after the allotment funds are in place; 5) The company’s provision for goodwill impairment of RMB 2.1 billion is mainly due to the provision after the goodwill of CITIC Lyon and South China company is apportioned to each asset portfolio.
Overall: 1) roe hit a new high since 2016, reaching 12.07% (YoY + 3.6pct), while the securities industry reached 7.83% (YoY + 0.6pct) in the same period. 2) The leverage ratio of the company further increased to 4.94 times compared with 4.59 times at the end of last year, which is better than that of the industry (3.38 times). 3) From the perspective of investment / management business, the growth rate of investment / management business was the highest of + 39% / + 15%, and the growth rate of investment / management business was the highest of + 15% / + 15%, respectively. 4) The financing cost is down and the rate of return on capital business is up. It is estimated that the average debt cost of the company is 3.14% (yoy-0.1pct), and the annualized rate of return of capital business is 4.3% (YoY + 0.5pct).
Asset light business – the transformation of wealth management has achieved remarkable results, the asset management of securities companies has grown steadily, and the investment bank market accounts for the first place in the industry
(1) brokerage business income was 14 billion yuan, a year-on-year increase of + 24%, contributing 18% of revenue. In 2021, the transformation of the company’s brokerage business to wealth management achieved remarkable results. On the one hand, the market share of the traditional securities trading business was further increased, realizing a stock based transaction volume of 38.4 trillion yuan (YoY + 34%) and a market share of 6.95% (YoY + 0.5pct); On the other hand, the company achieved a revenue of 2.7 billion yuan (YoY + 35%) from selling financial products on a commission basis, increased its contribution to the brokerage business revenue from 17% to 19%, and the holding scale of public and private funds exceeded 380 billion yuan (YoY + 26%). By the end of 2021, the number of wealth management customers of the company had exceeded 12 million, and the asset scale of custody customers was 11 trillion yuan (YoY + 29%), of which the number of high net worth customers and asset scale were 35000 (YoY + 29%) and 1.5 trillion yuan (YoY + 19%) respectively, double that at the end of 2018.
(2) the revenue from asset management business was 11.7 billion yuan, a year-on-year increase of + 46%, contributing 15% of revenue. In terms of asset management of securities companies, by the end of 2021, the company’s assets under management were 1625.7 billion yuan (YoY + 18%), of which the scale of collective asset management plan was 660.5 billion yuan (YoY + 154%), and the management fee income was 3.4 billion yuan (YoY + 42%). The company’s private asset management business accounted for 15.9% of the market, ranking first in the industry. The subsequent asset management company will actively apply for public offering license, which is expected to further strengthen its leading advantage. In addition, its Huaxia Fund realized a net profit of 2.3 billion yuan (YoY + 45%), with a net profit contribution of 6.2% (6.7% in 2020).
(3) investment banking business income was 8.2 billion yuan, a year-on-year increase of + 19%, contributing 11% of revenue. Domestically, the IPO scale of the company in 2021 was 85.9 billion yuan (YoY + 97%), accounting for 15.8% (YoY + 6.8pct); The refinancing scale is 246 billion yuan (yoy-9%), accounting for 19.3% (yoy-3.2pct); The debt commitment scale is 1564.1 billion yuan (YoY + 20%), accounting for 13.7% (YoY + 0.7pct). The company’s IPO, refinancing and debt commitment market share rank first in the industry, and is expected to significantly benefit from the dividends of the comprehensive registration system reform. Overseas, the company completed overseas equity projects of US $7.9 billion, including US $4.2 billion in the Hong Kong market, ranking second among Chinese securities companies.
Heavy asset business – the volume and price of two financial businesses increased simultaneously, and the rate of return on self operated investment increased year-on-year
(1) the revenue from credit business was 5.3 billion yuan, a year-on-year increase of + 106%, contributing 7% to the revenue. By the end of 2021, the two financing scale of the company was 126.5 billion yuan (YoY + 12%), accounting for 6.9% (yoy-0.1pct). It is estimated that the interest margin between the two financial institutions of the company is 5.42% (YoY + 1.1pct). The company continued to reduce the scale of stock pledge business to 22 billion yuan (yoy-31%). The overall risk of the company’s credit business is controllable, and the provision for credit impairment loss is 900 million yuan (yoy-86%), a significant decrease year-on-year.
(2) self operated business income was 22.7 billion yuan, a year-on-year increase of + 27%, contributing 30% of revenue. By the end of 2021, the company’s financial assets were 614.5 billion yuan (YoY + 26%), accounting for 58% of its total assets (YoY + 1.2pct), including 270.3 billion yuan of fixed income assets (YoY + 42%) and 211.7 billion yuan of equity assets (YoY + 13%). The estimated return on investment is 4.7% (YoY + 0.1pct).
Investment suggestion: buy – a investment rating. The company’s comprehensive strength leads the industry. Recently, it has completed a allotment and raised 22.4 billion yuan to further consolidate its capital, which is expected to open up business development space such as capital intermediary. Investment banks will also enjoy the dividends of comprehensive registration system reform. We are optimistic that the company will consolidate its competitive advantage and improve its profitability in the future. At the current time point, the company’s valuation is at a historically low level and the allocation value is prominent. We expect the company to realize net profit attributable to the parent company of 26.1 billion yuan, 30.9 billion yuan and 38.4 billion yuan respectively from 2022 to 2024, with a year-on-year increase of + 13%, + 18% and + 24% respectively. Give the company a target price of 27.4 yuan, corresponding to 2x2022epb
Risk warning: macroeconomic downturn / sharp market fluctuation / policy change risk
