\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 958 Orient Securities Company Limited(600958) )
Key investment points
Company profile: a comprehensive securities firm with strong asset management
Steady performance: in 2021, the company’s revenue increased by 5% year-on-year to 24.4 billion, and the net profit attributable to the parent increased by 97% year-on-year to 5.4 billion. Roe showed an upward trend after 2018, from 2.4% to 9.0% in 2021.
Outstanding asset management: from the perspective of business line income ranking, Orient Securities Company Limited(600958) is the leader in asset management business, and the net income of asset management business has been the top for four consecutive years.
Investment management: two famous brands lead the market
Dongfanghong: (1) high scale growth: the compound growth rate of Dongfanghong’s management scale from 2016 to 2021 was 49%, much higher than the industry level; (2) Leading performance: by the end of 2021, the return rate of active management of stock investment in the past seven years of Dongzheng asset management was 294.35%, ranking first in the industry and maintaining leading performance.
Huitianfu: (1) scale ranking: according to the monthly average scale data of 21q4 public fund companies’ non monetary financial management disclosed by China Foundation Association, huitianfu fund ranks third in the industry with a scale of 596.3 billion yuan, and the compound growth rate of scale from 2016 to 2021 was 38%; (2) Increase in profit contribution: huitianfu fund realized a net profit of 3.26 billion yuan in 2021, and its contribution to Orient Securities Company Limited(600958) net profit was 22%. Under the general trend of transferring residents’ wealth to the equity market, the public fund market will continue to expand, and huitianfu is expected to make more profits for Orient Securities Company Limited(600958) contribution.
Other businesses: comprehensive layout and deepening transformation
Wealth management: (1) high growth of agency sales revenue: the sales revenue of financial products in 2020 and 2021 was 390 / 570 million yuan respectively, with a year-on-year growth rate of 265% / 45%. The proportion of agency sales revenue in brokerage business revenue has increased from 1% in 2014 to 17% in 2021. In the 2020’s, the sales revenue ranked 11th in the industry, far higher than the 20th in agency sales revenue; (2) Approval of investment advisory pilot: the company was approved as a pilot qualification of fund investment advisory business in June 2021 and officially launched its business in November. As a means to further enrich the service for retail customers, fund investment advisers can enhance the competitive advantage of retail wealth management services and accelerate the transformation of corporate wealth management.
Investment bank: in June 2021 Orient Securities Company Limited(600958) issued an announcement that it plans to absorb and merge the subsidiary Oriental Investment Bank. After absorbing Oriental Investment Bank, it can not only solve the problem of division of investment banking business license, but also solve the restriction of liquidity risk and other indicators on subsidiaries, open the ceiling of investment banking business and enhance the competitiveness of the company’s investment banking business.
Sales transactions: the company’s self operated assets continued to expand from 50.4 billion in 2015 to 117 billion in 2021, supporting the growth of investment income. At the end of 2021, bonds accounted for 83% of self operated assets, and the investment style was relatively stable.
Profit forecast and valuation
The company’s asset management business relies on two major brands to lead the industry, and the transformation of wealth management is accelerated. It is expected that the operating revenue will increase by 8% / 12% / 10% year-on-year from 2022 to 2024; Net profit attributable to parent company increased by 11% / 22% / 13% year on year; From 2022 to 2024, BPS was 9.87/10.72/11.68 yuan per share, and the current price corresponding to Pb was 1.10/1.01/0.93 times. Give the company 1.5 times Pb in 2022, corresponding to the target price of 14.80 yuan, and give a “buy” rating for the first time.
Risk tips
The macro-economy has declined significantly; Capital market reform is less than expected
