\u3000\u3000 China Stock Market News ( East Money Information Co.Ltd(300059) )
Event: the company released the first quarterly report of 2022. In 2022q1, the total operating revenue was 3.196 billion yuan, a year-on-year increase of + 10.6%; The net profit attributable to the parent company was 2.171 billion yuan, a year-on-year increase of + 13.6%, which was in line with the overall expectation; The net assets attributable to the parent company were 59.618 billion yuan, a year-on-year increase of + 35.37%.
Key investment points
The overall revenue side is in line with expectations: 1) the market share of securities brokerage business continues to increase: as of 2022q1, the average daily stock based turnover of the market has increased from 2021q1 + 7.3% to 1099.9 billion yuan year-on-year. As of March 2022, the share of stock trading market in Tibet has reached 3.71% (the overall market share of Dongcai securities is higher), driving the net income of securities handling fees and commissions of the company to + 29% year-on-year to 1.35 billion yuan. 2) The market share of securities financing and financing business was the same as that of 2021q4 and increased compared with 2021q1: the balance of market financing and financing increased by + 1.1% year-on-year to 1672.8 billion yuan; In 2022q1, Dongcai completed the conversion of convertible bonds into shares, and the capital was rapidly replenished. The share of the company’s two financial markets increased to 2.37% (1.99% in 2021q1), resulting in a year-on-year increase in the company’s net interest income of + 37% to RMB 606 million. 3) The fund market activity decreased, and the front-end application and redemption fee decreased, which dragged down the fund business income of the company: the 2022q1 market fluctuated sharply, the transaction activity at the application and redemption end decreased significantly year-on-year, and the business income of Dongcai fund increased from – 11% to 1.24 billion yuan year-on-year. Benefiting from the golden age of wealth management and the long-term improvement of the equity market, we expect the ownership of Dongcai fund to increase steadily. In 2021, more than 60% of the company’s fund business income came from the tail Commission and sales service fee of fund consignment (51% in 21q1 due to high market activity). By the end of 2021, the holding scale of non monetary public funds of Tiantian fund was 673.9 billion yuan (compared with 21q1 + 56%), and the holding scale of equity public funds was 537.1 billion yuan (compared with 21q1 + 43%), with a market share of 6.22%.
The cost side was slightly higher than expected: the investment in R & D expenses was higher than expected: the fund transaction expenses of 2022q1 company decreased simultaneously, and the operating cost was – 34% year-on-year to 134 million yuan; Sales and management increased from – 27% / + 26% to 114 / 507 million yuan respectively year-on-year, of which R & D expenses increased by + 94% to 229 million yuan year-on-year. The company increased R & D investment and is expected to invest in R & D projects of optimized transaction account opening platform, user interaction service platform, distributed tens of millions of concurrent user system, etc.
Proprietary investment met expectations, and non recurring income exceeded expectations: 1) the substantial increase in trading financial assets resulted in a significant increase in investment income: in 2022q1, trading financial assets increased by + 136% compared with 21q1, from + 60% to 53.6 billion compared with the end of 21, and the investment income from the company’s main investment bonds increased by + 176% to 447 million yuan (mom + 85%). In addition, due to the sharp fluctuations in the equity market in 2022q1, the income from changes in fair value was – 255 million yuan (05 million yuan in 2021q1 and 142 million yuan in 2021q4). 2) Non recurring income exceeded expectations: in 2022q1, the company received 186 million yuan of government subsidies included in the current profit and loss, resulting in other income of + 2025% to 193 million yuan year-on-year.
Profit forecast and investment rating: Based on the sharp fluctuations in the market, we assume that the average daily stock based trading volume / two financing balance of the fund in the whole year is RMB 100 billion / 170 billion respectively, the proportion of brokerage / two financing market increases to 4.35% / 2.65% respectively, the fund sales decline by 55% (i.e. front-end application and redemption fee), and the ownership of equity funds at the end of 2022 is the same as that in 2021 (i.e. the share of back-end management fee is stable), Investment income increased by + 95% to 1.4 billion yuan due to the significant increase in scale. Based on the decline of market trading activity, we lowered the forecast of net profit attributable to parent company in 20222024 to 10.150 (110.02) / 130.12 (139.59) / 16.345 (17.686) billion yuan, a year-on-year increase of + 18.68% / 28.19% / 25.61%, corresponding to EPS of 0.77/0.98/1.24 yuan in 20222024; The current market value corresponds to 27.14/21.17/16.86 times of P / E from 2022 to 2024. We are still optimistic that the market share of long-term companies will continue to increase, continue to strengthen the leading position of retail wealth management and maintain the “buy” rating.
Risk tips: 1) decline in market activity; 2) The epidemic control was not as expected; 3) Macroeconomic downturn.
