Although the performance of the brokerage sector index was poor last year, from the perspective of performance, last year was a good harvest year for brokerage companies.
Up to now, a total of three securities companies have issued the pre increase announcement of performance in 2021. According to the data, the net profit of some securities companies increased by 436.90% year-on-year last year, with an amazing growth rate. Some institutions pointed out that it is expected that the performance of securities business in 2021 will continue to grow under the high base in 2020, and the total revenue and net profit of the securities industry will increase by 20% year-on-year.
the performance of the three securities companies increased in advance last year
Central China Securities Co.Ltd(601375) net profit increased by more than 4 times year-on-year
Up to now, three securities companies have issued advance performance increase announcements for 2021, namely Citic Securities Company Limited(600030) , Zheshang Securities Co.Ltd(601878) and Central China Securities Co.Ltd(601375) .
On January 4, the “big brother” of the securities industry Citic Securities Company Limited(600030) issued an announcement on the pre increase of performance in 2021. This is the first A-share brokerage to issue a performance pre increase announcement.
Citic Securities Company Limited(600030) said in the announcement that the net profit attributable to the shareholders of the parent company in 2021 is expected to be no less than the level of the first three quarters of 2021, that is, no less than RMB 17.645 billion, an increase of no less than 18.41% over the whole year of 2020.
On January 7, Zheshang Securities Co.Ltd(601878) also came to “report the good news”. It is expected that the net profit attributable to the shareholders of the listed company in 2021 will increase by about 488-651 million yuan compared with the same period of last year, with a year-on-year increase of about 30% – 40%.
Compared with Citic Securities Company Limited(600030) , Zheshang Securities Co.Ltd(601878) , the performance growth of Central China Securities Co.Ltd(601375) is amazing. On January 9, Central China Securities Co.Ltd(601375) said in the announcement that according to the preliminary calculation of the financial department, the net profit attributable to the shareholders of the listed company in 2021 is expected to increase by 376 million yuan to 456 million yuan compared with the previous year, a year-on-year increase of 360.20% – 436.90%. The increase is really amazing.
what are the reasons for performance growth
So far, only these three securities companies have issued performance forecasts, and all of them are pre increase announcements. So, what are the reasons for the pre increase in the performance of these securities companies?
As for the main reasons for the pre increase in performance, Citic Securities Company Limited(600030) said that China’s economy has overcome the impact of the epidemic, continued to improve, the capital market has developed vigorously, and all businesses will develop in a balanced and steady manner in 2021.
In terms of business, a number of main businesses of securities companies ushered in relatively good performance growth last year.
In 2021, the average daily transaction volume of the two cities exceeded the record high in 2015. The average daily transaction volume of the two cities in the whole year was 1058.3 billion yuan, an increase of 24.76% over 2020, which is undoubtedly beneficial to the brokerage business of securities companies. In terms of investment banking, 524 companies had IPOs in 2021, with a financing scale of 543.773 billion yuan, a year-on-year increase of 13.17%; The refinancing scale was 1.26 trillion, a year-on-year increase of 5.68%; The scale of debt commitment was 11.37 trillion, a year-on-year increase of 14.04% over 9.97 trillion in 2020; In terms of asset management business, the transition period of the new regulations on asset management is coming to an end, and the channel oriented asset management has been significantly reduced. The total scale of asset management has decreased from 17 trillion before the new regulations to 8.64 trillion in the third quarter of 2021, with a pressure drop of nearly 50%. With the improvement of the industry’s active management ability, asset management revenue has stabilized and rebounded. In the third quarter of 2021, asset management revenue was 22 billion, a year-on-year increase of 3%. In terms of credit business, In 2021, the average daily scale of the two financial institutions was 1762 billion yuan, a year-on-year increase of + 37%.
Behind the high growth of Central China Securities Co.Ltd(601375) performance is the obvious support of investment banking and other businesses. Central China Securities Co.Ltd(601375) said that in 2021, the multi-level capital market was continuously improved and the capital market was booming. The company actively grasped the market opportunities and continuously improved its core competitiveness. The main businesses such as investment banking and primary and secondary market investment developed steadily. It is estimated that the total consolidated profit of the company last year was 700 million-750 million yuan, with a year-on-year increase of 556 million to 606 million yuan.
The contribution of investment banking to the company’s revenue can also be seen from the performance report of Central China Securities Co.Ltd(601375) in the first three quarters of this year. In the first three quarters of 2020, the company achieved a net profit of 497 million yuan, mainly due to the increase of income from investment banking and securities investment business and the improvement of profitability.
Zheshang Securities Co.Ltd(601878) said that in 2021, China’s economic development showed a steady and positive trend, and China’s capital market developed vigorously. The company actively grasped market opportunities, continuously improved the company’s core competitiveness and steadily developed all businesses, so as to realize the steady growth of net profit attributable to shareholders of listed companies.
Cinda Securities said that the market will be in a performance vacuum in the next quarter, but the performance of securities business in 2021 will continue to grow under the high base in 2020. It is expected that the total revenue and net profit of the securities industry will achieve a year-on-year growth of 20%.
continue to be optimistic about
it is expected that the performance of securities companies will achieve a positive growth of 8% – 12% next year
Under the good performance last year, the industry is also optimistic about the performance of securities companies this year. In particular, the reform of the comprehensive registration system is advancing steadily, which is expected to be implemented in 2022, and securities companies will also usher in a new round of development opportunities.
Everbright Securities Company Limited(601788) the non bank team expects that 2022 will be a great year for deepening the reform of the capital market. Securities companies will directly benefit from the reform of the registration system, the construction of multi-level capital market, the expansion of main financing channels and other aspects, and the policies are conducive to the healthy and sustainable development of the industry. Looking forward to the future, the activity of the capital market will be improved, and the performance of the securities industry is expected to maintain a high growth. Under neutral assumptions, it is predicted that the operating revenue and net profit of the securities industry will achieve a positive growth of 8% – 12% in 2022, and the industry roe is expected to be more than 7.9%.
The team pointed out that under the catalysis of factors such as the dividend of capital market reform and the improvement of industry development space, some securities companies are expected to achieve excess returns. Under the current industry background of undervalued and high performance growth, the brokerage industry still has great development space in wealth management, investment business and institutional business. The brokerage sector has a high allocation cost performance. The brokerage industry may have excess returns in 2022.
Shanxi Securities Co.Ltd(002500) the non bank team pointed out that the customer business of securities companies mainly includes investment banking, wealth management and institutional business. Due to the different resource endowments of securities companies, their business layout presents some differences. On the whole, the head securities companies have first mover advantages, comprehensive layout, overall leadership and form unbalanced advantages. Small and medium-sized securities companies follow up, hold the basic market and create regional advantages or segmentation advantages. Investment banking business is more affected by regulatory policies and presents periodic changes. The rapid improvement of issuance efficiency will gradually lead to the stock competition of enterprise customers. In comparison, the ceiling of wealth management business and institutional business is higher and the business space is broader. It is estimated that the operating revenue of securities companies will be 520.16 billion yuan in 2022, with a year-on-year increase of 10.7%; The net profit was 202.862 billion yuan, a year-on-year increase of 13.6%.
Cinda Securities said that as a direct beneficiary of the liquidity sector, securities companies may have excess returns in the future. In the context of the great development of wealth management, the scale of public funds exceeds 25 trillion, and the issuance in 2022 is expected to exceed expectations. The conditions for the realization of the whole market registration system have been gradually met, and the whole market registration system in 2022 is a foregone conclusion. Under the registration system, the number of enterprises meeting the listing standards will increase significantly, the issuance efficiency will be higher, and more high-quality companies will accelerate their landing in the A-share market; The registration system tests the asset pricing ability and sales ability of securities companies, the IPO rate is expected to increase, and the investment banking business in the securities industry is expected to see both volume and price rise. Head securities companies with strong asset pricing ability, sales ability and other comprehensive investment banking capabilities will fully benefit from the implementation of the whole market registration system.
(source: China Fund News)
