\u3000\u3000 China Stock Market News ( East Money Information Co.Ltd(300059) )
Event: China stock market news released the first quarterly report of 2022. The company achieved a total operating income of 3.196 billion yuan, a year-on-year increase of 10.61%; The net profit attributable to the parent company was 2.171 billion yuan, a year-on-year increase of 13.63%; The earnings per share was 0.17 yuan and the weighted average return on net assets was 4.33%.
Event comments
The investment income increased year-on-year, and the growth of R & D expenses dragged down the performance of net profit. In the first quarter, the company achieved a total operating income of 3.196 billion yuan, a year-on-year increase of + 10.61%, mainly driven by the growth of brokerage business and two financing business income. The scale of the company’s new bond investment in the first quarter increased by + 59.76% to 53.63 billion yuan compared with the beginning of the year, driving the company’s investment income to increase by 175.8% to 447 million yuan year-on-year. However, affected by the high base of last year, the year-on-year + 93.9% of R & D expenses and the sharp decline in the income from changes in fair value, the company’s net profit attributable to the parent company in the first quarter was 2.171 billion yuan, a year-on-year increase of 13.63%.
The market share of brokerage business increased steadily. In the first quarter of 2022, the average daily turnover of stock bases in Shanghai and Shenzhen was 1008.6 billion yuan, a year-on-year increase of + 6.48%. In the same period, the company realized a net income of 1.35 billion yuan from handling fees and commissions, a year-on-year increase of + 28.9%. Thanks to the huge customer flow, perfect financial ecology and the improvement of the average customer assets of existing customers, the company’s brokerage business scale and market share continued to grow. According to the proportion of brokerage business in securities business in 2021 and the commission rate of 0.022%, the market share of brokerage business of the company in the first quarter was about 4.49%, which was + 0.44pct compared with the end of 2021.
Net interest income grew brightly, and the share of the two financial markets fell slightly month on month. At the end of the first quarter of 2022, the balance of two financial institutions in the industry was 1.68 trillion yuan, a year-on-year increase of + 1.5%, a decrease of 8.7% compared with the end of 2021. The company continued to expand its capital, strengthen the construction of offline business department, and maintain a relatively stable scale of two financing business. In the first quarter of 2022, the company realized a net interest income of 606 million yuan, with a year-on-year increase of 37.22%, mainly due to the year-on-year increase in the interest income of margin trading and other creditor’s rights investment. At the end of the first quarter of 2022, the company financed 39.697 billion yuan, down 8.5% from the end of 2021. The proportion of the two financial markets of the company decreased slightly compared with that at the beginning of the year.
High base and lower than expected sales of new funds lead to pressure on revenue. According to wind data, the overall size of new development funds in the market in the first quarter of 2022 was 273.8 billion yuan, down significantly from 1068 billion yuan in the first quarter of last year. Among them, stock + hybrid public funds issued a total of 156.3 billion yuan, a year-on-year decrease of 80.1%. In the first quarter, the overall market was depressed, and the growth of fund subscription and holding was under pressure. According to wind data, the net value of equity + hybrid funds at the end of the first quarter was 7.37 trillion yuan, down 13.7% from 8.54 trillion yuan at the end of 2021. However, nearly 70% of Dongcai’s public fund consignment income comes from the share of fund management fee, which partially offsets the impact of the cold purchase of the fund, and the decline of consignment income is small. In the first quarter of 2022, the company’s financial e-commerce revenue, financial data revenue and advertising service revenue decreased by 11.5% year-on-year to 1.24 billion yuan. With the absolute advantages of product richness, user flow and stickiness, the market share of fund consignment business is expected to continue to increase.
Investment advice
Affected by the market downturn, the company’s consignment business is under pressure, dragging down the overall performance. We believe that the company, as the leader of third-party fund consignment and Internet brokerage, still has great room to improve the market share of various businesses. Relying on its strong customer flow, high-quality service capability and rich product line advantages, Dongcai is expected to continue to expand its business scale, enrich its cash realization channels and realize the steady growth of the company’s performance under the background of the trend of wealth management. We estimate that the total operating revenue of the company from 2022 to 2024 will be 17.494 billion yuan / 21.737 billion yuan / 26.461 billion yuan, with a year-on-year increase of 33.6% / 24.3% / 21.7%; The net profit attributable to the parent company was 11.611 billion yuan / 15.199 billion yuan / 18.691 billion yuan, with a year-on-year increase of 35.8% / 30.9% / 23.0%. Based on the closing price on April 22, 2022, the corresponding 2022pe is expected to be 23.73 times, maintaining the “strongly recommended” rating.
Risk tips
The activity of stock based trading decreased, the subscription volume and holding volume of the fund market fell more than expected, the epidemic was repeated, and the economic decline exceeded expectations.
