Market performance:
In the current period (January 17, 2022-january 21, 2022), the non bank (Shenwan) index was + 2.68%, ranking 7 / 31 in the industry, the brokerage II index was + 2.41%, and the insurance II index was + 4.34%; Shanghai Composite Index + 0.04%, Shenzhen Component Index – 0.86%, gem index – 2.72%. The top five stocks rose or fell: Shenzhen Asia Link Technology Development Co.Ltd(002316) (+ 52.23%), Chinalin Securities Co.Ltd(002945) (+ 13.00%), Panda Financial Holding Corp.Ltd(600599) (+ 9.30%), Guolian Securities Co.Ltd(601456) (+ 8.65%), Central China Securities Co.Ltd(601375) (+ 7.86%); The top five stocks rose or fell: Yong’an Futures (- 18.15%), Anxin Trust Co.Ltd(600816) (- 11.16%), Easy Visible Supply Chain Management Co.Ltd(600093) (- 10.69%), Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) (- 9.07%) and Nanhua Futures Co.Ltd(603093) (- 8.04%).
Core view
Brokerage: after two weeks of adjustment, the brokerage sector began to stabilize and recover this week. This week, the securities sector rose 2.41%, outperforming Shanghai and Shenzhen 3001.30pct and Shanghai stock index 2.38pct. The leading stocks mainly have two characteristics: first, the head securities companies that underestimate the value, such as Huatai Securities Co.Ltd(601688) (+ 7.46%), Guotai Junan Securities Co.Ltd(601211) (+ 6.55%), Gf Securities Co.Ltd(000776) (+ 4.86%); Second, some small and medium-sized market value securities companies with good performance began to lead the growth of large market value securities companies. For example, Guolian Securities Co.Ltd(601456) (+ 8.65%) and Central China Securities Co.Ltd(601375) (7.86%). We believe that there are three main reasons for the rise in the valuation of the securities sector:
1. The interest rate reduction policy was implemented and the signal of steady growth was clear. On the 17th, the central bank carried out 700 billion yuan of one-year medium-term lending convenience operation and 100 billion yuan of seven-day open market reverse repurchase operation; On the 20th, the central bank announced a “double drop” in LPR. The implementation of the interest rate reduction policy has released a clear signal of steady growth, which is conducive to the easing of liquidity and boost the confidence of the equity market, and has a direct positive effect on the securities sector.
2. High probability of performance. The annual report performance of 2021 will be published one after another. At present, 10 securities companies have released performance forecasts, all of which have achieved significant performance growth. Among them, Central China Securities Co.Ltd(601375) net profit attributable to parent company increased by 360.20% – 436.90%, ranking first in the industry temporarily. Among other securities companies, the net profit attributable to the parent company is greater than or equal to 50%, including Founder Securities Co.Ltd(601901) , Citic Securities Company Limited(600030) , Everbright Securities Company Limited(601788) three securities companies; Among the top 30% – 50%, including Guolian Securities Co.Ltd(601456) , Guoyuan Securities Company Limited(000728) , Zheshang Securities Co.Ltd(601878) , Guotai Junan Securities Co.Ltd(601211) four securities companies, the overall performance is brilliant.
3. The valuation has a high margin of safety. At present, the valuation of Pb in the securities sector is 1.69 times, ranking at the 45th quantile since 2016, which has a certain repair space. Under the double advantages of high probability of good fundamentals and gradual bottoming out of policies, there is a great contrast between sector valuation and it. From the perspective of the main capital flow of the market in the past five trading days, the main capital is still optimistic about the wealth management business line. The top three net inflows in the securities sector are Gf Securities Co.Ltd(000776) (+ 523 million yuan), Huatai Securities Co.Ltd(601688) (+ 427 million yuan) and Orient Securities Company Limited(600958) (+ 329 million yuan). From the perspective of capital inflow to the north, Huatai Securities Co.Ltd(601688) (+ 923 million yuan), Haitong Securities Company Limited(600837) (+ 499 million yuan), Guotai Junan Securities Co.Ltd(601211) (+ 482 million yuan) and other undervalued head securities companies are the key allocation objects.
We are firmly optimistic about the two main lines of the securities sector: first, we pay attention to the leading securities companies with high growth rate of industry performance and undervalued value, such as Citic Securities Company Limited(600030) , Huatai Securities Co.Ltd(601688) ; second, we pay attention to the securities companies benefiting from wealth management, such as Gf Securities Co.Ltd(000776) , China Industrial Securities Co.Ltd(601377) .
Insurance: on January 20, the national interbank lending center announced that the five-year LPR was reduced by 5bp to 4.6%, the first reduction since April 2020. In addition, the one-year LPR was further reduced by 10bp to 3.7% after being reduced by 5bp in December last year.
Although the reduction of LPR over 5 years does not mean that the real estate market is fully relaxed, the signal of wide credit is stronger, and commercial banks in many cities across the country have also begun to implement the adjusted new interest rate. This means that the marginal repair of real estate continues to advance, and the real estate chain has certain rebound expectations, which will further drive the recovery of the insurance sector, but there are no conditions for reversal in the overall trend. Year to date, Ping An Insurance (Group) Company Of China Ltd(601318) , The People’S Insurance Company (Group) Of China Limited(601319) , New China Life Insurance Company Ltd(601336) , China Pacific Insurance (Group) Co.Ltd(601601) and China Life Insurance Company Limited(601628) share prices have increased by 6.23%, 0.43%, 2.91%, 4.02% and – 1.83% respectively. Since 2015, insurance funds have been continuously distributed in real estate. Based on the characteristics of resisting short-term economic fluctuations, high dividend and high growth of the real estate industry, insurance has invested with the characteristics of long-term funds. However, when the real estate risks are gradually exposed, insurance enterprises have ushered in a large-scale “reduction tide” of real estate in recent years, Therefore, the impact of the subsequent adjustment of the real estate market on the insurance sector has become more complex. Excluding the influencing factors of real estate, the interest rate cut is a good thing for insurance products. Compared with the products of other financial institutions represented by bank financial management, the income of insurance products will increase its attractiveness with the interest rate cut. If there is still room for subsequent interest rate cuts, it will boost the improvement of the liability end of the insurance board this year.
From January to December 2021, the growth rates of life insurance premiums of listed insurance enterprises were: China Taiping (3.0%), New China Life Insurance Company Ltd(601336) (2.5%), China Life Insurance Company Limited(601628) (1.2%), The People’S Insurance Company (Group) Of China Limited(601319) (0.7%), China Pacific Insurance (Group) Co.Ltd(601601) (0.6%), Ping An Insurance (Group) Company Of China Ltd(601318) (- 4.1%). From January to December 2021, the original premium income of property insurance of listed insurance enterprises were: PICC Property Insurance (3.8%), CPIC property insurance (3.4%), and Taiping property insurance (2.1%), Ping An Property Insurance (- 5.5%), the effect of streamlining and optimizing the team of life insurance agents will be gradually reflected in the premium income and policy quality. NBV may improve, but it will take time to rebound significantly; The comprehensive reform of auto insurance still has an impact, and the non auto insurance business is also developing synchronously. In the future, the growth power of property insurance premium income will be more diversified.
Risk tips: strengthened supervision, intensified external market risks, market fluctuations and repeated epidemic situations
