\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 958 Orient Securities Company Limited(600958) )
Key investment points:
Event: Orient Securities Company Limited(600958) disclosed that in the annual report of 2021, the company achieved an operating revenue of 24.370 billion yuan, a year-on-year increase of 5.34%, the net profit attributable to the parent company was 5.371 billion yuan, a year-on-year increase of 97.26%, the basic EPS was 0.73 yuan, a year-on-year increase of 92.11%, the weighted average roe was 9.02%, a year-on-year increase of 4.17 percentage points. In a single quarter, the company realized an operating revenue of 5.530 billion yuan in 2021q4 and a net profit attributable to the parent company of 1.051 billion yuan (a year-on-year turnaround, a loss in 2020q4, down 35.12% month on month). The performance is in line with the previous performance express data and basically in line with our expectations.
Capital intermediary, asset management and brokerage are growing rapidly, and self operated business still needs to be reoriented and transformed. From the performance of 2021, the growth of the company's performance mainly benefited from the stability and strength of China's macro policies, the continuous recovery of the economy, the active market trading, and the significant increase in the income of the company's main business sectors such as asset management, brokerage and capital intermediary; On the other hand, the company's credit impairment loss decreased significantly year-on-year. Specifically, the income and year-on-year growth rate of the company's asset management business, brokerage, investment banking and capital intermediary were 3.622 billion yuan (+ 46.94%), 3.617 billion yuan (+ 38.00%), 1.705 billion yuan (+ 7.77%) and 1.464 billion yuan (+ 87.96%) respectively. The company's self operated income fell sharply year-on-year, and the self operated business income was 3.301 billion yuan, down 36.21% year-on-year, mainly due to the drag of self operated business income in the first and third quarters. It is estimated that the annualized returns of Q1, Q2, Q3 and Q4 self operated businesses of the company in 2021 are 0.95%, 4.05%, 0.94% and 2.52% respectively. The company's proprietary business income is still unstable, and the company's proprietary business sector still needs to go in the direction, reduce volatility and transform to sales and trading business. On the one hand, the substantial growth of capital intermediary business is due to the significant growth of interest income of Liangrong. In 2021, the company's interest income of Liangrong was 1.437 billion yuan, a year-on-year increase of 30.7%. On the other hand, the company further optimized its debt structure and reduced financing costs. The company's interest expenditure decreased by 242 million yuan. In 2021, the company's interest expenditure on short-term financing bonds was 224 million yuan, a year-on-year decrease of 55.8%. In terms of credit impairment, the company's provision for credit impairment is 1.314 billion yuan, mainly the provision for credit impairment of stock pledge, which is 66.18% lower than that in 2020, including 1.058 billion yuan in Q4. At present, the company's stock pledge balance is 12.651 billion yuan, and 5.382 billion yuan of credit impairment reserves have been withdrawn, accounting for 42.54%.
Asset management business is firmly at the forefront of the industry, and huitianfu fund continues to contribute incremental performance. The company's asset management business maintains the leading position in the industry, and the net income of asset management business ranks first in the industry. The company takes closed products as its customers' long-term investment tools, and the long-term investment performance of asset management remains at the forefront of the industry. According to the information of the company's annual report, by the end of 2021, the active management return rate of stock investment of Dongzheng asset management in recent seven years was 294.35%, ranking first in the industry, and the absolute return rate of fixed income funds in recent five years was 30.82%, Top 20% in the industry. The annual management business scale of the company in 2021 maintained the growth trend, and the substantial increase of the company's public fund management scale was the main driving force for the growth of the company's asset management scale. At the end of 2021, the company's public fund management scale was 269622 billion yuan, accounting for 74%, with a year-on-year increase of 35.06%. We believe that under the environment of increasing residents' wealth and the state's emphasis on increasing the proportion of direct financing, with excellent asset management talents and the advantages of active asset management brand established over the years, Dongzheng asset management is facing greater development space. Huitianfu, the company's equity participation fund, is in the forefront of the industry. In 2021, the company achieved a long-term equity investment income (mainly huitianfu investment income) of 1.444 billion yuan, a year-on-year increase of 19.10%. According to the annual report, at the end of 2021, the total scale of huitianfu's year-end management exceeded 1.2 trillion yuan, and the scale of non monetary financial public funds exceeded 610 billion yuan, ranking in the forefront of the industry. Under the trend of public fund expansion, huitianfu fund is expected to continue to contribute to the performance increment of the company.
Investment suggestion: the company is based in Shanghai. With the support of location advantages and Shanghai's policy of building an international financial center and a global asset management center, the company's businesses are expected to develop rapidly. The company's a + H share allotment has been approved by the CSRC, and the allotment is about to be implemented. The allotment will further consolidate the company's capital strength and improve the company's core competitiveness in investment banking, wealth management and securities finance, sales and trading, and the company's performance conference mentioned that the company has a clear roe oriented assessment system. In 2021, the competitiveness of the company's investment banking business will be greatly improved, and the index of equity financing scale will enter the top ten in the industry. Under the dividend that the registration system will be fully implemented, the company's investment banking business is expected to develop rapidly. According to the market situation and the company's annual report, we updated the company's profit level forecast and rating. Assuming that the company's share allotment was implemented as planned and raised 16.8 billion yuan in 2022, 2023 and 2024, the operating revenue is expected to be 28.611/32.183/36.409 billion yuan, and the net profit attributable to the parent company is 6.622/87.07/10.853 billion yuan respectively (originally 6.751/86.24 / - billion yuan), with the corresponding growth rate of 23.29% / 31.48% / 24.66% respectively, EPS in 2022, 2023 and 2024 calculated based on the latest share capital is 0.95/1.24/1.55 yuan / share respectively, and BPS is 9.17/12.29/13.25 yuan / share respectively. We estimate that the roe level of the company from 2022 to 2024 is 8.83% / 9.75% / 10.93% respectively. According to the average valuation level of the industry and comprehensively considering the future roe level and performance growth of the company, we give the company 1.1-1.3 times Pb in 2022, corresponding to a reasonable market value of 94.5-111.7 billion yuan, with an upward space of 23% - 45%, maintaining the "recommended" rating of the company.
Risk warning: the decline of market trading activity has dragged down the brokerage business; Policy tightening led to the development of investment banking business less than expected; Intensified market fluctuations drag down asset management and proprietary investment business; The reform of capital market is not as expected; Stricter financial supervision; The progress of share allotment is less than expected; Credit risk faced by financing business.
