The market fell sharply, and proprietary trading dragged down the performance of securities business: 1) the market fluctuated in the first quarter of 2022, and the overall performance of listed securities companies was lower than expected: in 2021 and 2022q1, a total of 42 listed securities companies in the industry realized operating revenue of 648.7 billion yuan (year-on-year + 23%) / 99.5 billion yuan (year-on-year – 29%) and net profit attributable to parent company of 1984 billion yuan (year-on-year + 32%) / 25.1 billion yuan (year-on-year – 43%) respectively, The annual roe was 9.8% / 4.6% respectively. Compared with the performance of the listed companies in 2021, the performance of the listed companies in 2021 is stable due to the pressure of the overall performance of the listed companies in 2022q1. 2) Poor market conditions and proprietary business dragged down the overall performance of securities companies: the brokerage income / investment bank income / asset management income / net interest income / proprietary income of 42 listed securities companies in 2022q1 were 326 / 139 / 112 / 533 / – 191.3 billion yuan respectively, with a year-on-year growth rate of – 4% / + 15% / – 2% / + 5% / – 106% respectively. 3) The stock market fluctuated sharply, and the self operated business of listed securities companies was generally under pressure: among the 42 listed securities companies, six listed securities companies turned negative in 2022q1 due to the sharp decline of self operated income, and only six securities companies had a positive year-on-year increase in self operated business income.
Wealth management was under pressure for a short time, and the investment banks of leading securities companies were bright: 1) the market transaction volume increased year-on-year, and the market downturn dragged down the consignment business and asset management business: the transaction volume of stock base in 2022q1 reached 632713 billion yuan, a decrease (- 12%) month on month, and the year-on-year increase was still stable (+ 7%). Since the beginning of 2022, the performance of the secondary market has been sluggish, the net value of the fund has fallen sharply, the risk appetite of investors has decreased, and the equity funds have suffered net redemptions continuously, which has put pressure on the brokerage business of securities companies in 2022q1. Only 15 of the 42 securities companies have a positive growth rate of brokerage business income. Affected by the low outlook of the equity market, the asset management business of securities companies was greatly impacted. The overall asset management business income of 41 securities companies decreased by 2.3% year-on-year, and the year-on-year decline of head securities companies was generally more than 20%. 2) The head of investment banking business has an obvious trend of concentration, and the annual registration system is expected to be further promoted: in 2022q1, the total IPO fund-raising of the securities industry increased by + 136% year-on-year to RMB 179.8 billion, and the bond underwriting scale of securities companies increased by + 7% year-on-year to RMB 2451.4 billion. In 2022q1, the IPO scale Cr5 is 63%. Since 2018, the industry concentration (IPO fund-raising concentration) has maintained a high concentration, both above 50%. With the promotion of the comprehensive registration system, the market activity is expected to be further improved in the future. As an important part of direct financing in the capital market, securities companies will test their pricing ability, channel ability, research strength and comprehensive strength, and head securities companies will benefit more from the dividend of industry policies.
The industry valuation is close to the historical bottom, and the layout on the left is recommended: we expect the net profit of the securities industry to decline by 7.55% year-on-year in 2022, the contribution of investment banking business is incremental, and the wealth management and proprietary business are expected to remain under significant pressure. 1) The market adjustment affects the brokerage business, and the equity is good. The asset management business is relatively stable: we expect that the net income of the industry’s brokerage business will be – 13.8% to 133.3 billion yuan year-on-year in 2022, and the income of the industry’s asset management business will be + 4.7% to 33.3 billion yuan year-on-year. 2) Benefiting from the continuous deepening of capital market reform, the investment banking business will develop steadily: we expect the industry’s investment banking business revenue to be + 14.3% year-on-year to 76.8 billion yuan in 2022. 3) The rapid development of securities lending market promotes the steady improvement of capital intermediary business, but the poor performance of the index affects the slight fluctuation of investment transactions: we expect that the net interest income of the industry will be + 10.6% to 79 billion yuan year-on-year in 2022, and the income from securities investment (including changes in fair value) of the industry will be – 50.0% to 67.3 billion yuan year-on-year. 4) We expect that the net profit of securities companies will decrease by 7.6% year-on-year to 176.7 billion yuan in 2022, and the net profit margin of the industry will increase slightly in 2022, an increase of 2.0pct to 40.0% compared with 2021. 5) The policy catalyzes the improvement of industry valuation. The current sector valuation is close to the historical bottom and has significant allocation value. At present, the valuation of securities companies is at a historical low. The macro environment and capital market reform promote the stable rise of the roe center of the securities industry. The valuation of securities companies will be repaired and have significant long-term investment value. We mainly recommend [China stock market news], [ Citic Securities Company Limited(600030) ] and [ China International Capital Corporation Limited(601995) ] (Hong Kong stocks).
Risk tips: 1) decline in market activity; 2) The macro-economy is less than expected; 3) The innovation policy of the securities industry is less than expected; 4) External tensions affect the industry.
