\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 030 Citic Securities Company Limited(600030) )
Key investment points:
Event: Citic Securities Company Limited(600030) ( Citic Securities Company Limited(600030) . SH) released the annual report of 2021. The company’s operating revenue in 2021 was 76.524 billion yuan, a year-on-year increase of 40.71%; The net profit attributable to the parent company was 23.1 billion yuan, a year-on-year increase of 55.01%; The basic earnings per share was 1.77 yuan, a year-on-year increase of 52.59%; The weighted return on net assets was 12.07%, with a year-on-year increase of 3.64 percentage points. In a single quarter, the company achieved a net profit of 5.454 billion yuan in the fourth quarter of 2021, with a year-on-year increase of 143%, basically unchanged month on month, with a slight increase of 0.13%. At the same time, the company announced the profit distribution plan for 2021. The company plans to distribute RMB 5.40 (including tax) to shareholders of A-Shares and H shares for every 10 shares, with a total cash dividend of RMB 8.003 billion (including tax).
The scale of the company increased steadily. At the end of 2021, the total assets of the company were 1278.7 billion yuan, a year-on-year increase of 21.44%, and the net assets attributable to the parent were 209.2 billion yuan, a year-on-year increase of 15.11%. The company’s financial leverage ratio increased slightly. After excluding customer assets, the leverage ratio was 4.91, a year-on-year increase of 5.03%.
In 2021, all businesses developed in a balanced manner, and capital intermediary and asset management businesses achieved rapid growth. On the whole, the company’s performance is basically consistent with the previous performance express and our expectations. In 2021, the net profit attributable to the parent company increased by 55.01% and roe increased rapidly to 12.07%, which is mainly due to the balanced development of all businesses of the company and the remarkable growth of capital intermediary business and asset management business. Specifically, the revenue and growth rate of the company’s brokerage, asset management, investment banking, self operation and capital intermediary businesses were 13.963 billion yuan / + 29.34%, 11.702 billion yuan / + 46.17%, 8.156 billion yuan / + 18.51%, 22.683 billion yuan / + 26.67% and 5.337 billion yuan / + 106.32% respectively. In terms of income structure, the proportion of the company’s capital intermediary and asset management business increased by 2.80 percentage points and 1.31 percentage points respectively. In 2021, the company’s self operated, brokerage, asset management, investment banking and capital intermediary accounted for 34.69%, 21.35%, 17.90%, 12.47% and 8.16% respectively.
The transformation of wealth management has been steadily promoted, and the brokerage business has moved towards high-quality development. In 2021, the company continued to deepen the transformation of wealth management and the brokerage business moved towards high-quality development. On the one hand, the market share of the company’s traditional brokerage business has maintained a steady growth. The annual trading volume of the company’s stock fund is 38.4 trillion yuan. It is estimated that the market share of 2021h1 and H2 stock based trading volume is 6.83% and 6.97% respectively (2020h1 and H2 are 6.34% and 6.60% respectively). It is estimated that the average commission rate of the company is about 0.3 ‰. On the other hand, the company’s wealth management transformation has achieved results, and the proportion of the income from selling financial products on a commission basis in the brokerage service fee income has increased rapidly. According to the historical disclosure data of the company, the proportion was 11.34%, 18.20% and 19.01% respectively from 2019 to 2021. In terms of the scale of financial products sold by the company on a commission basis, the scale of public and private funds exceeded 380 billion yuan, an increase of 26% over the end of 2020. In addition, the company was approved as a pilot broker for the second batch of fund investment advisory business, and the performance of fund investment advisory business came from behind. Since the launch of the investment consulting business of public funds on November 1, 2021, there have been more than 90000 contracted customers and more than 7 billion yuan of contracted customer assets in two months. The transformation of the company’s wealth management is accelerating. It is expected that the proportion of the company’s income from selling financial products on a commission basis in the brokerage business will continue to increase in the future, and the proportion is expected to reach about 30% in 2024.
The business of asset management institutions is leading, and the scale of Huaxia Fund has increased steadily. According to the company’s annual report and performance press conference information, the company’s asset management business continues to consolidate the leading position of institutional business. On the one hand, expand and strengthen social security, basic pension, enterprise annuity and other pension businesses, and seize new opportunities for the development of bank financial management business; On the other hand, provide diversified wealth management products for high net worth individuals. By the end of 2021, the total asset management scale of the company was RMB 1625735 billion, and the company seized the opportunity of large collective public offering and transformation, and the collective asset management scale reached RMB 660485 billion, an increase of 153.91% over 2020. In terms of Huaxia Fund, the holding subsidiary of the company, the active equity performance of Huaxia Fund continued to improve in 2021, made certain achievements in key ETF product marketing, new fund issuance and promoting pension strategic business, and the asset management scale of Huaxia Fund increased steadily. By the end of 2021, the asset management scale of Huaxia Fund headquarters was RMB 1661607 billion, a year-on-year increase of 13.72%, of which the management scale of public funds was RMB 1038375 billion, a year-on-year increase of 29.05%, and the asset management scale of institutions and international businesses was RMB 623232 billion, a year-on-year decrease of 5.07%. Under the trend of wealth management, the company’s asset management is expected to continue to contribute to the performance increment.
Investment suggestion: all businesses of the company are in a leading position in the market, the leading position of the company is stable, and the transformation of asset management, self support and wealth management has a leading advantage in the transformation of the industry, and the investment banking business has developed steadily. With the policy support of building an aircraft carrier class head brokerage, and with the company’s strong capital strength and leading business ability, we continue to be optimistic about the steady growth of the company’s future performance. At the beginning of 2022, the company completed the issuance of a + H shares, raising about 27.33 billion yuan, further consolidating the company’s capital strength and improving the company’s risk supervision indicators, which is conducive to the company’s expansion of business scale and optimization of business structure. According to the information in the annual report, we adjusted and updated the company’s profit forecast. It is estimated that the operating revenue in 2022 / 2023 / 2024 will be 78.632/88.541/97.527 billion yuan (formerly 76.082/84.188 / – billion yuan), and the net profit attributable to the owners of the parent company will be 265.21/303.87/34.225 billion yuan (formerly 24933 / 27764 / – billion yuan), with the corresponding growth rate of + 14.81% / + 14.58% / + 12.63% respectively, It is estimated that the roe of the company in 2022, 2023 and 2024 will be 11.43% / 11.25% / 11.12% respectively. Based on the latest share capital of 14.821 billion shares, the BPS of the company in 2022, 2023 and 2024 will be 17.21/19.26/22.29 yuan / share respectively. Referring to the historical trend of valuation of American investment banks and Chinese securities companies, with the promotion of heavy asset business model, the valuation center of securities companies shows a downward trend. We believe that the valuation center of the company will move down in the future. According to the estimated growth rate of the company’s future performance, assuming that the company’s medium and long-term roe level is stable at about 11%, we adjusted the company’s corresponding Pb valuation in 2022 to 1.3-1.5 times, and the corresponding reasonable range of stock price is 22.36-25.81 yuan, and lowered the company’s rating to “prudent recommendation”.
Risk warning: the decline of market trading activity has dragged down the brokerage business; The transformation of wealth management is less than expected; Intensified market fluctuations drag down asset management and proprietary investment business; The reform of capital market is not as expected; Financial supervision has become stricter.
