\u3000\u3000 Citic Securities Company Limited(600030) (600030)
Event: Citic Securities Company Limited(600030) released the performance forecast for 2021. It is estimated that the company will achieve an operating revenue of RMB 76.570 billion in 2021, with a year-on-year increase of 40.80%; The net profit attributable to the shareholders of the parent company was 22.979 billion yuan, a year-on-year increase of 54.20%; The weighted average roe was 12.01%.
The performance growth rate reached a new high in recent five years, and roe increased steadily. The growth rate of the company’s revenue / net profit in 2021 was 40.8% / 54.2% respectively, reaching a new high in recent five years. Driven by high performance growth, the company’s roe increased by 3.8 percentage points to 12% year-on-year in 21 years, the highest growth rate in recent five years. We believe that leading securities companies not only benefit from the steady development of the capital market, but also benefit from the improvement of market share and the comprehensive contribution of single customers under the background of strengthened supervision.
Various businesses have developed steadily and the pressure of credit impairment has been mitigated. In 2021, the capital market continued the trend of rapid development and accelerated opening in 2020, and various businesses of securities companies developed steadily. Taking the proportion of the company’s revenue in the first three quarters of 2021 as an example, the proportion of the company’s investment / brokerage / investment bank / asset management / other revenue is 27% / 18% / 10% / 14% / 31% respectively. As an industry leader, the proportion of the company’s businesses is relatively balanced. From the perspective of income growth, the growth of brokerage business and two financing business driven by active market transactions and the development of investment business are expected to contribute mainly to the increment. In addition, we expect to benefit from the gradual clearing of credit business risks such as stock pledge, and the credit impairment loss in 21 years has decreased significantly year-on-year.
The company’s valuation is at a historical low, which deviates from the fundamentals, and the landing valuation of allotment is expected to accelerate the repair. According to our profit forecast, the current stock price corresponds to the company’s PB valuation of 1.7x/1.5x and PE valuation of 14.7x/12.3x in 21 / 22 years, which is at the lowest level in recent five years. From the perspective of the industry, the industry valuation is at a historical low. We believe that driven by the expectation of high performance growth in 22 years, the industry valuation has a certain repair space. And considering the landing of the company’s share allotment refinancing, the company’s valuation is expected to accelerate the repair in the short term.
Earnings forecast, valuation and rating. The accelerated opening of the capital market is good for the securities industry. In the short term, under the catalysis of the “restless spring” market, securities companies with high performance growth rate and undervalued value have higher allocation cost performance. In the medium term, the fundamentals of the securities industry continue to improve and the leading market share continues to increase. It is expected that the company’s performance in 22 years will maintain steady growth. For a long time, under the background of the in-depth promotion of capital market reform, the company, as an industry leader, is expected to continue to benefit from policy dividends, and its excellent exhibition ability and strong resource advantages are expected to help roe rise steadily. Based on the continuous improvement of the activity of the capital market and the improvement of the company’s market share exceeding our expectations, we raised the net profit for 21-23 years to 22.947 billion yuan (up 13.6%), 27.599 billion yuan (up 10.7%) and 33.612 billion yuan (up 8.1%) respectively, maintaining the “overweight” rating of A-Shares and the “buy” rating of H shares.
Risk tip: the promotion of capital market deep reform policy is not as expected; The sharp market shock affected the stock price performance.
