Core view:
Review 2021: the profitability of the securities industry has been proved. According to the operating data of securities companies of China Securities Association in 2021, 140 securities companies in the whole industry realized an operating revenue of 502.4 billion yuan and a net profit of 191.1 billion yuan, with a year-on-year increase of 12.03% and 21.32% respectively, which is also the increase of revenue and net profit of the securities industry for three consecutive years. By the end of 2021, the total assets of the securities industry were 10.59 trillion yuan and the net assets were 2.57 trillion yuan, an increase of 19.07% and 11.34% respectively over the end of the previous year. In terms of investment banking business, the number of initial listings on the science and innovation board and gem accounted for 75.05% of the number of IPOs in the whole year, and the financing amount accounted for 65.48% of the total IPO Financing in the whole year, indicating that the status of the two boards in the equity financing market has been further improved. In terms of wealth management: by the end of 2021, the securities industry had opened 298 million A-share capital accounts for customers, a year-on-year increase of + 14.89%. The closing balance of customer transaction settlement funds (including credit) was 1.90 trillion yuan, a year-on-year increase of + 14.66%, and the customer base continued to expand. The net income from agency sales of financial products was 20.69 billion yuan, a year-on-year increase of + 53.96%. The proportion of income in brokerage business income also increased to 13.39%, an increase of 3.02 PCT. In terms of asset management business, at the end of 2021, the scale of asset management business in the securities industry was 10.88 trillion yuan, a year-on-year increase of + 3.53%. In particular, the scale of collective asset management represented by active management increased significantly by 112.52% to 3.28 trillion yuan. In the whole year, the net income from asset management business was 31.786 billion yuan, a year-on-year increase of 6.10%.
In terms of listed securities companies, the performance concentration of head securities companies continues to improve, and OTC derivatives help smooth the fluctuation of investment income. As of the disclosure of information on April 12, the operating revenue Cr5 of securities companies in 2021 was 39.3%, with a year-on-year increase of + 3.3pct; The net profit attributable to the parent company Cr5 was 45.0%, with a year-on-year increase of + 6.6%. The wealth management / investment banking business shows the same trend of concentration to the head. The self operated income of securities companies (investment income – joint venture income + statistical caliber of changes in fair value) was – 3.1% year-on-year in 2021 compared with that in 2020, benefiting from the rapid development of OTC derivatives. Under the impact of Q4 market in 2021, the ability of listed securities companies to resist fluctuations and smooth income was enhanced, and there was no huge loss.
We believe that the securities business sector deserves continuous attention in 2022: securities companies benefit from favorable policies and the development of diversified businesses, and their performance is good. Short term market pressure will not hinder the vigorous development of the industry. Wealth management business is an important breakthrough for the future performance growth of securities companies, and can even revalue the industry value of securities companies. In the long run, the trend of residents’ funds continuously entering the market remains unchanged. For securities companies, what is more important is how to convert the customers obtained in the initial stage into their own wealth resources for subsequent whole process wealth management services, from the fierce price war in the early stage to the role transformation of having bargaining power and moat in the later stage. This will put forward higher requirements for the active management and investment research ability of various securities companies.
Industry outlook and performance Outlook: it is expected that the industry wide operating revenue of the securities industry based on the pessimistic / neutral / optimistic core assumptions will be 520.7/5879662.9 billion yuan respectively in 2022, and the net profit is expected to be 1979 / 2232 / 265.2 billion yuan. Based on the neutral assumption, the operating revenue and net profit increased by 17% year-on-year in 2022. Under the influence of market and external adverse factors, the first quarterly report of listed securities companies may show the situation that the strong is always strong under the Matthew effect. The ability of large comprehensive securities companies to resist risks is stronger than that of small and medium-sized securities companies that rely more on a single business as the main source of income.
Recommended target: 1) leading securities companies: Huatai Securities Co.Ltd(601688) , China International Capital Corporation Limited(601995) . Highlight: benefiting from the national policy guidance of building aircraft carrier level securities companies, it has stronger ability to resist risks and obtain stable returns; 2) Securities companies with wealth management characteristics and participating in high-quality public funds: Gf Securities Co.Ltd(000776) , China Industrial Securities Co.Ltd(601377) (: not deeply covered yet)
Risk tip: the effect of policy implementation is less than expected or even tightened, liquidity is tightened, stock based turnover has fallen sharply, and the overall market downside risk.
