The first quarterly report of listed securities companies released a bad signal.
On April 24, China Merchants Securities Co.Ltd(600999) took the lead in disclosing the financial data of the first quarterly report of 2022, and achieved a revenue of 3.697 billion yuan in the reporting period, a year-on-year decrease of 38%; The net profit was 1.49 billion yuan, a year-on-year decrease of 43%. In the context of the continuous growth of the performance of the securities industry in recent years, China Merchants Securities Co.Ltd(600999) the revenue and net profit both fell by about 40%, which made people sweat for the securities sector.
It should be noted that the seller has long been giving the market a preventive shot for the decline in the performance of securities companies in the first quarter. When the performance of the secondary market was sluggish in the first quarter, the traditional brokerage business and wealth management business of securities companies were difficult to develop, and the self operated business of securities companies was also under pressure, and the follow-up investment system also made securities companies bear more investment risks of new shares. Some analysts even said that during the reporting period, Citic Securities Company Limited(600030) may be the only traditional securities firm to achieve positive growth in net profit attributable to the parent company.
self operated fall, difficult performance
“In the first quarter of 2022, the market volatility intensified, the epidemic situation remained severe, the company’s business activities faced challenges, and the company’s performance was under pressure.” China Merchants Securities Co.Ltd(600999) is mentioned in the first quarterly report. In this context, its revenue in the first quarter was 3.697 billion yuan, a year-on-year decrease of 38%; The net profit attributable to shareholders of listed companies was 1.49 billion yuan, a year-on-year decrease of 43%.
According to the data, in the first quarter, China Merchants Securities Co.Ltd(600999) had a loss of about 1.206 billion yuan from changes in fair value, a year-on-year decrease of 465.5% compared with the profit of 330 million yuan in the same period last year. China Merchants Securities Co.Ltd(600999) explained this as “changes in the valuation of financial instruments”. However, the sharp decline of this financial index has obviously dragged down its proprietary investment income.
Based on the simple estimation of “self operated income = investment income + income from changes in fair value – investment income for associates / joint ventures”, in the first quarter, China Merchants Securities Co.Ltd(600999) self operated income was about 176 million yuan, a significant decrease of nearly 91% year-on-year compared with 1.948 billion yuan in the same period last year – you know, in 2021, China Merchants Securities Co.Ltd(600999) self operated income accounted for 37.6%, which can be seen from the drag of self operated business Waterloo on its overall performance.
In the past 2021, China Merchants Securities Co.Ltd(600999) self operated investment achieved both scale and yield. At the end of 2021, the scale of its financial assets was 311658 billion yuan, with a year-on-year increase of 36.04%, accounting for 52% of the total assets. In 2021, the company’s net investment income and profit and loss from changes in fair value totaled 11.1 billion yuan, with an annualized rate of return of 4.09%, an increase of 0.4 percentage points year-on-year.
According to different business lines, investment banking is China Merchants Securities Co.Ltd(600999) the only line to achieve performance growth, with a net fee income of 449 million yuan, a year-on-year increase of 8.66%. The net income from brokerage fees was 1.649 billion yuan, a year-on-year decrease of 11.57%; The net income from service charges of asset management business decreased by 21.65% year-on-year, about 207 million yuan.
In addition, China Merchants Securities Co.Ltd(600999) in the first quarter, there was a credit impairment loss of about 130 million yuan, with a year-on-year increase of 99.45%, mainly due to the increase in the expected credit loss of the provision financing business, indicating that the downturn of the market also had a certain impact on its two financing business. At the same time, due to the increase of accrued estimated liabilities, the China Merchants Securities Co.Ltd(600999) non operating expenditure in the first quarter was 9.6183 million yuan, an increase of 382.52% year-on-year.
first quarter coupon business performance red light
In addition to China Merchants Securities Co.Ltd(600999) , Citic Securities Company Limited(600030) previously passed the first quarter report card through the performance express. The performance express shows that Citic Securities Company Limited(600030) in the first quarter, the operating revenue reached 15.216 billion yuan, a year-on-year decrease of 7.20%; The net profit attributable to the shareholders of the parent company was 5.229 billion yuan, a year-on-year increase of 1.24%.
As a well deserved leader in the industry, the revenue decline of Citic Securities Company Limited(600030) shows that China Merchants Securities Co.Ltd(600999) may not be an example – in the past quarter, the good year of rapid growth of securities companies in the past few years may come to an end. Wang Zejun, a non banking analyst at China Post securities, said that under the background of the increasing market concentration of head securities companies, the head performance is still not optimistic. It is expected that the overall performance of the securities industry in the first quarter will be under pressure and individual stocks will be divided.
He particularly mentioned that in terms of proprietary business, under the downward trend of market shock, the investment and research capacity of different companies will be directly reflected in the performance difference of proprietary business income. The derivatives business ability of head securities companies is stronger than that of small and medium-sized securities companies, and their profitability in terms of anti risk fluctuation and structural market is stronger. However, it is common for new shares to break and investors to abandon their purchases this year. The follow-up investment system makes securities companies actively or passively bear the risk of investment income, resulting in further performance differentiation.
Combined with the Matthew effect of the securities industry, Liu Xinqi, chief analyst of Guotai Junan Securities Co.Ltd(601211) non bank, even proposed that Citic Securities Company Limited(600030) will be the only traditional securities firm to achieve positive growth in net profit attributable to parent company in the first quarter of 2022. The main reasons include: Citic Securities Company Limited(600030) financial assets expansion mainly comes from customer demand business represented by derivatives rather than directional business, so it is relatively less affected by market adjustment; During the reporting period, the base of its performance, especially the income from investment business, was relatively low; It is inferred that the decline of operating revenue is related to the decline of revenue with low profit margin such as bulk commercial transactions.
“Institutional business will become a new driving force for future profit growth.” Liu Xinqi believes that the trend of residents’ asset allocation demand from physical assets to financial assets and from non-standard assets to standardized assets continues to support the high growth of the asset management industry, thus promoting the rapid improvement of institutional business demand.
