\u3000\u3000 China Stock Market News (300059)
Event: on January 24, 2022, China stock market news announced that “dongcaizhuan 3” triggered the redemption conditions, and the board of directors decided to exercise the right of early redemption.
“Dongcai Zhuan 3” announced early redemption, and the overall progress met our expectations: 1) “Dongcai Zhuan 3” triggered the redemption conditions again, and the company exercised the right of forced redemption. On November 2, 2021, “Dongcai Zhuan 3” triggered the right of early redemption for the first time. On the same day, the company decided not to redeem “Dongcai Zhuan 3” in 2021; Recalculated on the first trading day after January 1, 2022, as of January 24, 2022, the share price of the company has exceeded 130% of the share price of “Dongcai Zhuan 3” (23.35 yuan) for 15 consecutive working days. The company announced that it decided to redeem in advance, and the overall progress is in line with our expectations. 2) As of January 24, 2022, the price of convertible bonds is 140.01 yuan, the conversion value is 139.57 yuan, and the conversion premium rate is 0.31%; The announcement shows that the trading and redemption date of “Dongcai Zhuan 3” is March 1, 2022, and the redemption price is 100.18 yuan (if the circulating face value of convertible bonds is less than 30 million yuan, the trading day may be advanced). After the completion of this early redemption, “Dongcai Zhuan 3” will be delisted in Shenzhen Stock Exchange.
The capital strength has been strengthened, EPS has been diluted in the short term, and the long-term development potential of the company is optimistic: 1) the “Dongcai transfer 3” was redeemed in advance, and the capital strength of the company has been further enhanced. The proportion of convertible bonds not yet converted into shares reached 95.17%, and the balance of convertible bonds was 15.037 billion yuan (as of January 21, 2022). Calculated according to the positive share price (32.59 yuan) on January 24, 2022 (convertible bond balance / conversion share price * positive share price), we expect that the convertible bonds will increase the capital of the company by 21 billion yuan. 2) Convertible bonds are expected to increase the company’s share capital, and we expect to dilute the company’s EPS in the short term. As of January 24, 2022, the total share capital of Dongcai is 10.366 billion shares. If all the remaining convertible bonds are converted into shares, we expect to increase the share capital of 644 million shares to 11.010 billion shares and dilute the EPS of the company by 6.21%. 3) Convertible bonds supplement working capital, which is expected to promote Dongcai securities to leap into the first tier of securities companies. In 2021, Dongcai securities realized a revenue of 7.300 billion yuan, a year-on-year increase of + 58.86%; The net profit was 4.825 billion yuan, a year-on-year increase of + 66.74%. We expect that with the addition of convertible bonds to the company’s capital, it is expected to form a strong support for the business development of Dongcai securities, drive the continuous expansion of credit and investment business, promote Dongcai securities to maintain high growth and leap into the first tier of securities companies.
Internet Financial platforms are developing well and optimistic about the new era of wealth management: 1) with the rapid development of the equity market, the advantages of the company’s platform are prominent, and the scale of fund ownership continues to rise. By Q3 of 2021, the number of non monetary public funds held by Tiantian fund had increased by + 13.95% to 578.3 billion yuan month on month, with a market share of 0.31pct to 3.99% higher than that in 2021q2, surpassing Industrial And Commercial Bank Of China Limited(601398) (market share: 3.91%) for the first time, and the scale expansion advantage of the platform was significant. We expect that with the continuous growth of residents’ wealth and the continuous expansion of Internet users, the income of the company’s fund consignment business will continue to increase. 2) The securities and fund sectors share the dividend of wealth management transformation and are optimistic about the company’s long-term development potential. With the approval of the investment advisory license of Dongcai securities, with the continuous improvement of the demand for investment advisory business, the securities companies have their own advantages in product design, sales and investment consulting. In addition, Dongcai has three core advantages in the field of wealth management: high flow, low cost and high-quality service. With the further supplement of capital, we expect Dongcai to invest in investment consultants There will be great achievements in customer asset allocation.
Profit forecast and investment rating: at present, China’s capital market has entered the golden development cycle. With the acquisition of fund investment advisory license and the acceleration of multi platform flow transformation, the company’s wealth management business will enter a good development period. We maintain the forecast of net profit attributable to the parent company from 2021 to 2023 of RMB 8.408/110.92/13.93 billion, corresponding to EPS of RMB 0.81/1.07/1.34 from 2021 to 2023; The current market value corresponds to 40.18/30.46/24.25 times of P / E from 2021 to 2023, maintaining the “buy” rating.
Risk tips: 1) market transaction activity decreases; 2) The market share of Dongcai securities was lower than expected; 3) The macro-economy is less than expected; 4) Market fluctuations impact the return on proprietary investment.
