Market performance:
In the current period (from April 11, 2022 to April 15, 2022), the non bank (Shenwan) index was – 0.72%, ranking 10 / 31 in the industry, the brokerage II index was + 0.03%, and the insurance II index was – 1.83%;
Shanghai Composite Index – 1.25%, Shenzhen Component Index – 2.60%, gem index – 4.26%.
The top five stocks in terms of rise and fall: Minsheng Holdings Co.Ltd(000416) (+ 7.27%), Hongta Securities Co.Ltd(601236) (+ 6.56%), St Panda (+ 5.90%), China Greatwall Securities Co.Ltd(002939) (+ 5.22%), Nanjing Securities Co.Ltd(601990) (+ 4.59%); The top five stocks rose or fell: ST Xishui (- 22.73%), ST Lvting (- 22.08%), Shenzhen Asia Link Technology Development Co.Ltd(002316) (- 17.91%), ST easy to see (- 16.03%), Anhui Xinli Finance Co.Ltd(600318) (- 14.19%).
Core view
Securities companies: the central bank decided to reduce the deposit reserve ratio by 0.25 percentage points on April 25, and reduce an additional 0.25 percentage points for some qualified urban commercial banks and rural commercial banks.
At the liquidity level, the RRR reduction released a total of about 530 billion yuan of long-term funds and reduced the capital cost of financial institutions by about 6.5 billion yuan. Overall, the RRR reduction has further enriched the market liquidity and promoted the improvement of market trading volume. At the same time, it also reduces the financing cost of securities companies and helps to improve the overall leverage ratio of the industry. On the other hand, the range of this RRR reduction is 0.25bp narrower than the two RRR reductions in 2021, mainly because the liquidity of China’s market has basically remained reasonably abundant, the main obstacle to the recovery of the real economy lies in the downturn of financing demand, and the scale of direct and indirect financing in the market in April was significantly lower than that in the same period last year. The improvement of financing demand still needs to be combined with industrial policy regulation, which needs to be further tracked and observed.
In terms of market sentiment, on April 13, the executive meeting of the State Council announced that it would timely use monetary policy tools such as RRR reduction to reduce comprehensive financing costs. Therefore, this RRR reduction basically met market expectations. However, due to the outbreak of the epidemic in March, the downward pressure on China’s economy further increased, and many industries such as consumption, infrastructure construction and real estate were affected. Combined with the impact of multiple factors at home and abroad, such as the upside down of interest rate difference between China and the United States, the recovery of foreign production capacity and the narrowing of export surplus, the market sentiment remained depressed and the transaction volume continued to decline. The combination of this comprehensive and targeted RRR reduction not only reflects the precise regulation role of China’s monetary policy, but also reflects that the central bank is expected to use monetary policy for further precise regulation in the future, which will help restore market confidence.
For the brokerage industry, on the one hand, the decline of social financing costs has a certain positive effect on the bond market. At the same time, the initial realization of monetary policies such as the reduction of reserve requirements is also conducive to further abundant market liquidity, promote the recovery of market confidence, and then boost the brokerage business. On the other hand, the landing of RRR reduction and the certainty of accurate regulation of monetary policy in the future are expected to promote the market to usher in a structural rebound, and the undervalued sector has greater growth space and certainty. At present, the valuation of Pb of securities companies is 1.43x, which is below the 20th quantile since 2016, and the callback space is limited. The head securities companies have strong anti risk ability and high pressure resistance in the face of stock market fluctuations Citic Securities Company Limited(600030) released 2022q1 results show that under the background of continuous market shock and downturn in the first quarter, the net profit attributable to the parent company increased by 1.24% year-on-year, and the revenue decreased by only 7.20%. It has strong anti cyclical ability and strong certainty of steady growth. It is suggested that securities companies should pay close attention to the long-term performance, such as .
In terms of performance, as of April 16, a total of 36 securities companies have published annual reports or performance letters, and the head securities companies have basically published all their annual reports. The total operating income of 36 securities companies was 596773 billion yuan, a year-on-year increase of 22.96%, and the total net profit attributable to the parent company was 182079 billion yuan, a year-on-year increase of 30.67%. Among the 36 securities companies, only 3 have negative growth in net profit attributable to their parent companies, with overall outstanding performance and significantly improved profitability. Taking a closer look at the 30 securities companies that have disclosed the annual report of 2021, the highlights include the following:
1. The profitability has been significantly improved, with a total of nine parent companies with a net profit of more than 10 billion. Among the 31 listed securities companies, the operating income of 8 securities companies exceeded 30 billion yuan, an increase of China Galaxy Securities Co.Ltd(601881) , Shenwan Hongyuan Group Co.Ltd(000166) , Gf Securities Co.Ltd(000776) and China International Capital Corporation Limited(601995) 4 over the same period of last year. The net profit attributable to the parent company of 9 securities companies exceeded 10 billion, an increase of China Merchants Securities Co.Ltd(600999) , China Galaxy Securities Co.Ltd(601881) , China Securities Co.Ltd(601066) and China International Capital Corporation Limited(601995) . The weighted roe of net assets of 31 listed securities companies was 10.15%, with a year-on-year increase of 1.34pct. Among them, the number of securities companies with roe greater than 10% increased by 2 to 10, and the roe of China stock market news exceeded 20%.
2. Most securities companies have achieved high growth, and some small and medium-sized securities companies have outstanding growth ability. Among the 31 securities companies that announced their performance, a total of 23 securities companies reported a growth rate of more than 20% in net profit attributable to their parent companies, with strong overall growth capacity. Among them, some small and medium-sized securities companies have outstanding growth ability Central China Securities Co.Ltd(601375) net profit attributable to parent company increased by 392.04% year-on-year, with Orient Securities Company Limited(600958) (+ 97.26%), China stock market news (+ 79.00%) and Founder Securities Co.Ltd(601901) (+ 66.19%) among the highest in the industry Citic Securities Company Limited(600030) as a leader in the industry, it has achieved an operating revenue of 76.5 billion yuan and a net profit attributable to the parent company of 23.1 billion yuan, which is much higher than that of other securities companies. Under this high base, it increased by 40.71% and 55.01% respectively year-on-year, and its leading position is stable.
3. The performance of wealth management has been significantly boosted. The brokerage, investment banking, asset management, credit and proprietary businesses of 31 listed securities companies increased by 21.05%, 7.84%, 30.14%, 14.44% and 12.30% respectively year-on-year. In terms of wealth management business, based on the high market turnover in 2021, the securities trading business of securities dealers increased by more than 20%, and the growth of Zheshang Securities Co.Ltd(601878) , Soochow Securities Co.Ltd(601555) , Orient Securities Company Limited(600958) , Tianfeng Securities Co.Ltd(601162) , Chinalin Securities Co.Ltd(002945) , China International Capital Corporation Limited(601995) increased by more than 30%. In addition, in 2021, the transformation of asset management business of securities companies achieved remarkable results, and the income of asset management business increased significantly. Among them, Guolian Securities Co.Ltd(601456) , China Industrial Securities Co.Ltd(601377) , Zhongtai Securities Co.Ltd(600918) , Zhongtai Securities Co.Ltd(600918) , Gf Securities Co.Ltd(000776) increased by more than 50%, and the growth rates of Orient Securities Company Limited(600958) and Citic Securities Company Limited(600030) and Citic Securities Company Limited(600030) also exceeded 40%. The big asset management dividend has been initially highlighted.
Investment banking business brings differentiated competitive opportunities for small and medium-sized securities companies. The income of investment banking business of leading securities companies was basically stable. The performance of Citic Securities Company Limited(600030) and China International Capital Corporation Limited(601995) was outstanding. The income scale of investment banking exceeded 8billion and 7billion respectively, with a growth rate of more than 18%. In 2021, the investment banking business income of some small and medium-sized securities companies achieved rapid growth, with Central China Securities Co.Ltd(601375) year-on-year growth of 207.56%, Guolian Securities Co.Ltd(601456) , Chinalin Securities Co.Ltd(002945) , Guoyuan Securities Company Limited(000728) increasing by more than 50%. The comprehensive registration system and the establishment of the Beijing stock exchange have significantly increased the income of investment banking business of small and medium-sized securities companies. The investment banking business of securities companies welcomes the opportunity period. The breakthrough of small and medium-sized securities companies in investment banking business also depends on their project reserves and whether they have differentiated competitive advantages in a certain field. The differentiation of proprietary business is significant. There is a 192.32% gap between the gains of securities companies with the highest and the lowest growth rate of investment income. The investment research ability of securities companies is more important during the continuous shock of the market.
On the whole, the high growth of securities companies in 2021 is mainly based on the incremental income brought by high market trading volume. However, under the general trend of continuous compression of traditional channel business, the transformation of asset management business of securities companies and the important new of investment strength are gradually highlighted. They are optimistic about the leading securities companies with undervalued value and the securities companies with wealth management advantages for a long time, such as Citic Securities Company Limited(600030) , Huatai Securities Co.Ltd(601688) , China stock market news, Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) , etc.
This week, five listed insurance companies successively released the first quarter premium data. In the first quarter, the original insurance premium income of insurance companies in the industry as a whole was 1.8 trillion yuan, a year-on-year increase of 4.4%. Listed insurance companies achieved a total of 1007474 billion yuan of original premium income, a year-on-year increase of 3.52% The People’S Insurance Company (Group) Of China Limited(601319) , China Life Insurance Company Limited(601628) , Ping An Insurance (Group) Company Of China Ltd(601318) , China Pacific Insurance (Group) Co.Ltd(601601) 601 , New China Life Insurance Company Ltd(601336) , New China Life Insurance Company Ltd(601336) respectively realized the original insurance premium income of RMB 232375 billion, RMB 315 billion, RMB 246477 billion, RMB 148732 billion and RMB 64.890 billion, with a year-on-year increase of 14.24%, – 2.75%, 1.11%, 7.23% and 2.36%. In terms of business, for life insurance, the original premium income of The People’S Insurance Company (Group) Of China Limited(601319) , China Pacific Insurance (Group) Co.Ltd(601601) and New China Life Insurance Company Ltd(601336) achieved positive growth, with a year-on-year increase of 17.94%, 4.23% and 2.36% respectively Ping An Insurance (Group) Company Of China Ltd(601318) and China Life Insurance Company Limited(601628) showed negative growth, with a year-on-year decrease of 2.75% and 2.27% respectively. In the first quarter, life insurance was still in the transition stage, facing the impact of negative factors such as the decline of the overall scale of the agent team and the impact of the epidemic, and the value of new orders and new businesses was under pressure. The recovery of life insurance business is mainly based on the level of industry transformation, product added value and the ability to meet customer needs. Improving the quality of agent team is still the focus of life insurance transformation.
For property insurance, the year-on-year growth rates of Ping An Insurance (Group) Company Of China Ltd(601318) , The People’S Insurance Company (Group) Of China Limited(601319) and China Pacific Insurance (Group) Co.Ltd(601601) were 10.34%, 12.24% and 13.84% respectively. In terms of property insurance, although the impact of the epidemic in March led to the decline of the original premium income, with the completion of the comprehensive reform of auto insurance, the overall positive trend of property insurance remains unchanged, and it is expected to maintain stable growth in the future. The negative assets of the insurance sector are gradually restored at both ends, and the bottom building stage is not over yet. The inflection point needs to wait, but the valuation of the sector is low. Under the stimulation of short-term policies, it is suggested to pay attention to the valuation repair opportunities.
Risk tips: major changes in industry rules, increased external market risks, market fluctuations and repeated epidemics
