For the securities industry, listed securities companies are undoubtedly the main force. At present, five companies have released the performance express of 2021, among which Citic Securities Company Limited(600030) , Guotai Junan Securities Co.Ltd(601211) , China Merchants Securities Co.Ltd(600999) 3 head securities companies have demonstrated their extraordinary strength with a net profit of more than 10 billion yuan.
However, “significant deviation between brokerage performance and valuation” has become a hot topic in the current market. In recent years, the fundamentals of securities companies have improved, but the valuation has not been systematically improved. So when can the “bull market flag bearer” carry the flag again? During the interview, many chief analysts of securities companies generally said, “the profits of securities companies continue to reach a new high, and the value of securities companies’ sector allocation is prominent at the current time point.”
The head net profit of 3 companies exceeded 10 billion yuan
wealth management boosts steady performance growth
As an important participant in the capital market, the profitability of the securities industry continues to improve. Under the characteristics of high volatility market in 2021, the head securities companies maintain a stable growth rate, and the characteristic small and medium-sized securities companies are also creating more surprises.
Among the top securities companies, Citic Securities Company Limited(600030) , Guotai Junan Securities Co.Ltd(601211) , China Merchants Securities Co.Ltd(600999) achieved net profits of 22.979 billion yuan, 15.013 billion yuan and 11.613 billion yuan respectively, with year-on-year growth rates of 54.2%, 34.98% and 22.35% respectively. In addition, the year-on-year growth rates of net profits of Guoyuan Securities Company Limited(000728) and Northeast Securities Co.Ltd(000686) were 36.52% and 23.51% respectively. Moreover, from the perspective of the other six listed securities companies that have issued performance forecasts, the lowest year-on-year growth rate of net profit is also over 30%, while Central China Securities Co.Ltd(601375) is a “dark horse”, and the year-on-year growth rate of net profit is expected to reach 360.2% to 436.9%. So far, the year-on-year growth rate of net profit of 11 listed securities companies that have disclosed the performance forecast or express report of 2021 has exceeded 20%.
For the reasons for the steady growth of the performance of the securities industry, the chief executives of securities companies also have a more unified view. Chen Mengjie, chief strategist of YueKai Securities Research Institute, said in an interview with Securities Daily, “From the perspective of profit driving force, the direct reason for the high profit growth of securities companies in 2021 is mainly the gradual promotion of wealth management performance and the continuous development of the performance of brokerage and investment banking business. The ‘multiplier effect’ brought by the growth of wealth management scale drives the continuous improvement of the business scale of securities companies; brokerage and investment banking businesses benefit from the high market boom, the reform of registration system, the establishment of Beijing stock exchange and other multi-layer enterprises Driven by the construction of the secondary market, we will continue to promote growth and promote the performance growth of securities companies. “
Guotai Junan Securities Co.Ltd(601211) Liu Xinqi, chief analyst of non banking industry, said, “the main reason for the high growth of securities companies’ profits is the high growth of wealth management business; while wealth management brings the high growth of institutional management scale, which will bring the rapid growth of securities companies’ institutional business in the future.”
valuation is still relatively low
configuration value highlights
Since this year, the average decline of 41 A-share brokerage stocks has been 3%, slightly outperforming the Shanghai Stock Exchange Index in the same period; Only Guolian Securities Co.Ltd(601456) , Central China Securities Co.Ltd(601375) , Chinalin Securities Co.Ltd(002945) , Huatai Securities Co.Ltd(601688) , Guotai Junan Securities Co.Ltd(601211) , Guosen Securities Co.Ltd(002736) 6 securities companies rose. So, what is the overall trend of A-share brokerage stocks next? When can the sector usher in “spring flowers”?
In terms of valuation, Chen Li, chief economist of Chuancai securities and director of the Research Institute, told the Securities Daily, “after the overall decline in 2021, the current valuation has been at a relatively low level, with a certain margin of safety and allocation value.”
Soochow Securities Co.Ltd(601555) Hu Xiang, chief analyst of non bank finance, also said, “there is a great contrast between the fundamentals and policies of securities companies and the valuation. The profits of securities companies continue to reach a new high, and the relative roe is close to the level of the previous bull market (2015-2016), but its valuation is still at the bottom quarter of the historical valuation, which is optimistic about the long-term allocation value of securities companies.”
At present, securities companies have gradually reduced their dependence on the brokerage business of “relying on heaven to eat”, comprehensively transformed wealth management, and showed a trend of differentiated development. It has also simultaneously spawned a new track of wealth management investment, and the stock price trend of securities companies has also been greatly differentiated.
Chen Mengjie said, “From the perspective of the capital market environment, in recent years, with the promotion of the reform of the capital market and the improvement of residents’ financial management concept, the national wealth has accelerated to flow into the capital market, providing broad space for the business expansion of securities companies, so that the performance of securities companies continues to maintain high growth. Superimposed on the macro policy level, with wide liquidity and good credit, the securities companies sector has ushered in a double boom of policy and industry. The performance continues to improve Against a good background, the current market is in the stage of style switching, and the sale of Xinji is cold in the short term. As a sector with relatively high performance and undervalued value in non bank, securities companies are suitable to start layout. “
“Generally speaking, although the trading volume of trillion yuan is normalized at present, due to the increasingly homogeneous competition in the securities industry, the commission income decreases year by year, and the incremental contribution to the income of securities companies is relatively limited. Therefore, the industry focuses more on investment banking and wealth management.” Chen Li said, “In terms of investment banking business, the comprehensive registration system is expected to continue to advance steadily this year, which not only has higher requirements for the investment banking business of securities companies, but also brings greater increment; in terms of wealth management business, it mainly focuses on two types of securities companies, one is the securities companies that have started to layout the fund business earlier. This kind of securities companies have the first mover advantage, and the rapid expansion of the business of their fund companies has contributed more than 20% to the securities companies Profit; The second category is that securities companies with strong research business are easier to realize transformation. At present, research business is becoming more and more important for value discovery and risk prevention. The strength of research ability will determine whether the expansion of securities companies’ wealth management business is smooth. “
Western Securities Co.Ltd(002673) Luo zuihui, chief analyst of non banking industry, said, “the resumption experience shows that in the environment of loose liquidity, the brokerage sector, as a sector with obvious beta attribute, will have obvious excess returns. Therefore, the allocation value of the brokerage sector is prominent at the current time point.”
In terms of industry allocation, “it mainly focuses on growth companies that are optimistic about the wealth management track for a long time and head value companies that are undervalued. It focuses on companies with differentiated management in the main line of wealth management investment and head companies with strong business ability and comprehensive strength, obvious moat advantages and in the stage of valuation restoration.” Chen Mengjie added to reporters.
