\u3000\u3000 China Stock Market News ( East Money Information Co.Ltd(300059) )
The valuation has reflected the downward revision expectation of earnings, the market share promotion trend has not changed, and the “buy” rating has been maintained
The company’s operating revenue and net profit attributable to the parent company in 2022q1 were RMB 3.20/2.17 billion respectively, with a year-on-year increase of + 10.6% / + 13.6%. The deduction of non net profit was RMB 2 billion, with a year-on-year increase of + 5.3% and a month on month increase of – 13.4%. The deduction of non net profit was in line with our expectation and lower than the market expectation. In the first quarter, the net value of A-share market and partial share funds fell sharply, resulting in a month on month decline in the company’s performance; On a year-on-year basis, the increase in market share has led to the year-on-year growth of securities business. It is expected that the year-on-year decline in fund sales will lead to the year-on-year pressure on the consignment income. Considering the large decline of the stock market, based on the assumption of – 15% of the annual partial stock fund index and – 12% of the daily average stock turnover, we lowered the forecast of the company’s net profit from 2022 to 2024 to 92.6/117.1/14.69 billion yuan (up 99.2/126.7/15.92 billion yuan), and the EPS from 2022 to 2024 was 0.5 billion yuan 84 / 1.06/1.33 yuan. Since the beginning of the year, the correction of the company’s share price has been obvious, and the valuation has basically reflected the downward revision expectation of profit. As the leader of Internet wealth management scarcity, the company has fully benefited from the long logic of residents’ wealth migration to the equity market. The market share increase trend has not changed, and the institutional business has made efforts to contribute incremental income. The current share price corresponds to 29.8 / 23.5 / 18.8 times of PE in 2022 / 2023 / 2024 respectively, maintaining the “buy in” rating.
The decline of net fund value has significantly dragged down the holding and sales volume, and the holding market share is expected to continue to rise
In 2022q1, the company’s operating revenue (mainly contributed by the fund consignment revenue) was 1.24 billion, a year-on-year – 11%, in line with our expectations. The sharp decline in the fund market caused the company’s fund sales to shrink significantly year-on-year (the fund sales base in 21q1 was high), which significantly dragged down the year-on-year growth of the agency sales revenue in the first quarter. With the rising contribution of tail commission income, it is expected that the year-on-year growth rate of commission sales income in the second quarter will become positive. In the first quarter, the partial stock fund index fell by 17.5%. We expect the holding scale of partial stock funds in the whole market to be – 13% quarter on quarter; Under the net subscription at the retail end and the force from the institutional end, we expect the chain decline of the company’s partial share and non commodity ownership scale to be less than the market, and the ownership market share is expected to increase slightly.
The market share of brokerage business increased against the trend, and the management and R & D expenses increased rapidly
(1) in 2022q1, the company’s net income from handling fees and commissions was 1.35 billion yuan, a year-on-year increase of + 29%, which is expected to be mainly contributed by brokerage business, and the average daily stock turnover in the market was + 6.7% year-on-year. It is estimated that the trading volume of 22q1 shares of the company accounts for 3.75%, an increase of 0.18pct compared with 3.57% in 2021. At the end of 22q1, 39.7 billion yuan was financed, accounting for 2.51% of the two financial markets, which was -0.02pct compared with the beginning of the year. (2) The investment income (including the profit and loss from changes in fair value) is 190 million, and the annualized return on proprietary investment is 1.7%. It is expected that the decline in the positions of some funds will put pressure on the return on investment. (3) 22q1 company’s sales expense was 114 million, a year-on-year increase of – 27%; Management fees and R & D expenses were 510 million / 230 million respectively, with a year-on-year increase of + 26% / + 94% respectively. Management fees and R & D expenses accounted for 23% of total operating revenue, an increase from 20% in 2021.
Risk warning: the decline in the net value of public funds causes the performance to be lower than expected; The company’s market share growth was lower than expected.
