\u3000\u3000 China Stock Market News ( East Money Information Co.Ltd(300059) )
In the first quarter, the weighted profit per share of the parent company was RMB 1.3 billion, with a year-on-year net income of RMB 1.23 billion and a year-on-year net income of RMB 1.3 billion, with a year-on-year average of RMB 1.2 billion.
The market share of brokerage business continued to rise, and the net interest income maintained a high increase: 1) in the brokerage business sector, the company’s net income from handling fees and commissions dominated by brokerage business (accounting for 86% in 2021) increased by + 29% to 1.35 billion yuan year-on-year, and the average daily stock base turnover of the whole market in 2022q1 increased by + 6.8% to 1089.7 billion yuan year-on-year. The higher growth rate of the company was mainly due to the further increase of market share, We estimate that the market share of share based turnover of 2022q1 company will increase to 4.2% (3.8% in 2021). 2) In the margin trading sector, the company achieved net interest income of + 37% year-on-year to 610 million yuan. By the end of March, the balance of dual financing in the whole market was 1672.8 billion yuan, up from – 8.7% at the end of last year. The scale of funds raised by the company was 39.7 billion yuan, up from – 8.5% at the end of last year. It is expected that the market share of dual financing business of the company will remain stable. 3) The company’s investment income (including fair value profit and loss) increased by + 15% year-on-year to 190 million yuan.
The downturn in the fund sales market has dragged down the revenue of the sector, which is expected to stabilize in the follow-up: the company’s operating revenue dominated by fund sales is – 11% to 1.24 billion yuan year-on-year. It is expected that the decline in revenue is mainly due to the high base in 2021q1 and the downturn in the fund sales market under severe market fluctuations, which has dragged down the decline in the revenue of front-end subscription and subscription expenses. The share of newly issued funds in 2022q1 is – 75% to 266.3 billion year-on-year. We continue to be optimistic about the growth of ownership brought by the transformation of C-end traffic users and institutional business expansion. Considering that the trailing Commission with ownership as the core of the company’s fund sales revenue is dominated, the subsequent sector revenue is expected to stabilize and recover.
The operating cost rate remained stable and increased R & D investment. In 2022q1, the total operating cost of the company was 1 billion yuan, a year-on-year increase of + 19%, and the operating cost rate reached 32%, basically the same as that in 2021. Among them, administrative expenses, sales expenses and R & D expenses increased by + 26%, – 27% and + 94% year-on-year to RMB 510 million, 110 million and 230 million respectively. The company increased R & D investment to improve service capacity and user experience.
Investment suggestion: maintain the Buy-A investment rating. Short term market fluctuations do not change the long-term trend of residents’ asset allocation to equity migration. We are optimistic about the high growth of the company as the core target of the wealth management track. Since the beginning of the year, the correction of the company’s share price has been obvious, and it is expected to usher in valuation repair after the market stabilizes. It is estimated that from 2022 to 2024, the company will realize a net profit attributable to the parent company of 9.9 billion yuan, 11.8 billion yuan and 13.7 billion yuan, with a year-on-year increase of + 15.9%, + 18.6% and + 16.2% respectively. The target price is 31 yuan, corresponding to the PE of 35×2022.
Risk tips: macroeconomic downturn, sharp fluctuations in the capital market and intensified industry competition
