Summary of the securities industry in 2021: the reform of the capital market has been deepened and the overall stability has made progress: 1) the performance of the securities industry has increased steadily and the capital strength has been continuously strengthened: in 2021, a total of 140 securities companies in the whole industry achieved an operating revenue of 502.4 billion yuan (year-on-year + 12.0%) and a net profit of 191.1 billion yuan (year-on-year + 21.3%). By the end of 2021, the total assets of the securities industry were 10.59 trillion yuan (year-on-year + 19.1%), the net assets were 2.57 trillion yuan (year-on-year + 11.3%), the roe of the securities industry rose to 7.83% (compared with last year + 0.56pct), and the industry leverage ratio was 3.38 (3.13 in 2020). 2) Strengthening market financing capacity + increasing market activity: the establishment of the Beijing stock exchange, steady progress in the reform of the registration system, and the improvement of the multi-level capital market system have promoted the continuous strengthening of the direct financing capacity of the market; In 2021, the turnover of Shanghai and Shenzhen stocks was 276 trillion yuan (year-on-year + 26.0%), 22.31 million individual investors (year-on-year + 24.1%) and 52300 institutional investors (year-on-year + 41%). 3) The income structure of the industry has been continuously balanced and optimized, with investment and brokerage as the main sources, and the transformation of wealth management has achieved results: in 2021, the income from light asset business in the securities industry accounted for a balanced proportion (51% light asset business and 49% heavy asset business), and the income from brokerage business in light asset business increased by 33.1% year-on-year to 154.5 billion yuan. 4) The income source of head securities companies tends to be stable, and the transformation speed of wealth management is significantly faster than that of the industry. We selected the top 9 leading securities companies in terms of net assets as representative companies for analysis. The highest proportion of income is self operated investment (accounting for 27% / year-on-year + 10%) and brokerage (24% / year-on-year + 22%), while the year-on-year growth of net income from asset management and interest is faster (respectively + 34% / + 28%).
In 2021, the wealth management transformation of head securities firms accelerated, and investment transactions tended to be stable: 1) in 2021, the operating revenue of CITIC, CICC, Guojun, Huatai and GF were 76.5/410428/379/34.3 billion yuan, the net profit attributable to the parent was 231 / 108 / 150 / 133 / 109 billion yuan, the roe was 11.8% / 13.8% / 10.6% / 9.6% / 10.6%, and the leverage ratio was 4.91/6.59/4.72/4.44/3.84 respectively; 2) Big wealth management line: the head company has obvious transformation advantages, such as China International Capital Corporation Limited(601995) product ownership + 90% to 300 billion yuan year-on-year, and wealth management buyer’s charged assets + 180% to 80 billion yuan year-on-year. The head securities companies actively managed and transformed rapidly. In 2021, the scale of collective asset management of Dongfang and GF accounted for 69% / 71% respectively, while the scale of collective asset management of CICC and CITIC also accounted for more than 40%; 3) Investment banking: high industry concentration and obvious advantages of leading securities companies. In 2021, CITIC, CICC, China Securities Co.Ltd(601066) , Haitong and Huatai ranked among the top five in terms of investment banking revenue. In 2021, the total market share of IPO fund-raising scale, bond fund-raising scale and refinancing fund-raising scale of the five leading securities companies were 53%, 45% and 59% respectively; 4) Investment Trading: OTC derivatives have developed rapidly, and leading securities companies have benefited deeply. The natural high leverage attribute and risk aversion attribute of derivatives help to stabilize the roe of securities companies. The market concentration of OTC derivatives business is often high (swap Cr5 remains above 85% and option Cr5 remains above 60%).
Looking forward to the first quarterly report of listed securities companies: the market fluctuates and is optimistic about the toughness of leading securities companies. 1) Residents’ wealth has gradually migrated to the financial market, and the transformation of wealth management business continues to accelerate: we expect that the net income of brokerage business in 2022q1 will be + 18.9% to 37.3 billion yuan year-on-year, and the income of asset management business in 2022q1 will be + 42.6% to 16.3 billion yuan year-on-year. 2) The reform of the capital market continues to deepen, and the investment banking business will develop steadily: we expect the investment banking business revenue of 2022q1 industry to be + 43.5% year-on-year to RMB 17.3 billion. 3) The rapid development of securities lending promotes the improvement of capital intermediary business, but the poor performance of the index affects the fluctuation of investment transactions: we expect that the net interest income of 2022q1 industry will be + 2.9% to 14.8 billion yuan year-on-year, and the securities investment income of 2022q1 industry (including changes in fair value) will be – 15.0% to 25.8 billion yuan year-on-year. 4) We expect that the net profit of securities companies in 2022q1 will be + 10.4% year-on-year to 46.6 billion yuan, and the wealth management, investment banking and asset management businesses still have significant advantages. We mainly recommend [China stock market news], [ Citic Securities Company Limited(600030) ] and [ China International Capital Corporation Limited(601995) ] (Hong Kong stocks).
Risk tips: 1) decline in market activity; 2) Less than macroeconomic expectations; 3) The innovation policy of the securities industry is less than expected; 4) External tensions affect the industry.
