\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 030 Citic Securities Company Limited(600030) )
Citic Securities Company Limited(600030) disclosed that in the first quarterly report of 2022, the company realized an operating revenue of 15.216 billion yuan during the reporting period, a year-on-year decrease of 7.20%; The net profit attributable to the parent company was 5.229 billion yuan, a year-on-year increase of 1.24%. EPS0. 36 yuan / share, a year-on-year decrease of 10.00%; ROE2. 26%, a year-on-year decrease of 0.55pct.
With investment as the “spear” and investment as the “shield”, the company achieved brilliant performance during the reporting period. The equity market fluctuated sharply in the first quarter, and the core market indexes such as Shanghai Composite Index, Shanghai Stock Exchange 50 and Shanghai Shenzhen 300 all decreased significantly, which seriously dragged down the performance of self operated investment. However, the company withdrew through balanced allocation and effective risk management control, and the “investment income + income from changes in fair value” decreased by only 14.5% compared with the same period. It successfully built a “safety cushion” and performed significantly better than its peers. With the help of the registration system “Dongfeng”, the company continued to make rapid progress in the field of equity investment banking, and the IPO Financing scale continued to maintain a growth of more than 50% under the high base in the same period of 21 years, driving the steady growth of the company’s investment banking revenue. During the reporting period, the company’s net income from investment banking fees reached 1.828 billion yuan, a year-on-year increase of 14.8%, becoming the company’s largest profit growth point.
In the market fluctuation, the company’s “wealth management + asset management” income is stable, which ensures the company’s “basic market”. In the first quarter, the performance of public and private funds was relatively low, which brought great challenges to the growth of the scale and management fee income of new development funds and stock funds, and then affected the income of securities companies involved in wealth management business such as financial product sales and fund investment advisers. However, relying on the advantages of the platform, the company gives full play to the efficient collaboration between the wealth management business line and Huaxia Fund, and contributes to the comprehensive development of big wealth management business through the asset management system focusing on Citic Securities Company Limited(600030) asset management, CITIC futures asset management and Jinshi investment. The proportion of big wealth management income has reached 40%, which is close to the level of overseas investment banks. At the same time, through the industry-leading equity derivatives and QDII and ficc business lines, the company provides a richer source of financial products for the wealth management line, and can also hedge market risks to a greater extent, reduce the fluctuation of net worth and improve the level of return, so as to improve the recognition of wealth management customers to the company’s management ability and brand. In addition, the high-quality product line also effectively helps the company to improve the efficiency of the use of its own funds, and also has the ability to improve the operating leverage ratio, so as to promote the profitability of the company.
In addition, the impairment loss of the company is partially reversed, and the risk is relatively controllable. The sharp fluctuations in the market have pushed up the risks of credit businesses such as margin trading, stock pledge and self operated and derivatives, and the risk of asset impairment has increased significantly. However, relying on the relatively perfect risk management system and sufficient risk provision in the early stage, the company realized the reversal of credit impairment losses and other asset impairment losses against the market during the reporting period, further thickening the company’s profit safety cushion.
Investment suggestion: at present, the business homogenization of the securities industry is still strong. Under the background of the continuous enhancement of Matthew effect, only the leading moat is expected to continue to exist and broaden, the resource agglomeration effect is more significant, and then have the opportunity to obtain a higher valuation premium. As the absolute leader of the industry, Citic Securities Company Limited(600030) not only has no obvious weakness in business and outstanding comprehensive strength in the industry, but also has certain characteristics and heterogeneity in business structure, and the anti cycle attribute has initially appeared. After the completion of the company’s share allotment, it is expected that 19 billion will be invested in the capital intermediary business, which is expected to further improve the profitability and comprehensive competitiveness. We are firmly optimistic about the company’s long-term development prospects and the future of building a “securities industry aircraft carrier”. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 25.526 billion yuan, 29.518 billion yuan and 33.375 billion yuan respectively, maintaining the “recommended” rating. Affected by the share allotment and market downturn, the current valuation of the company is only 1.22xpb, which has been seriously underestimated and has strong medium and long-term investment value. It is recommended to firmly buy and hold. The target price for the year is 26.5 yuan, corresponding to 1.7xpb.
Risk tips: macroeconomic downside risk, policy risk, market risk and liquidity risk.
