CITIC Securities (600030) 2019 Semi-annual Results Express Commentary: Decline in self-employed earnings or the main suppressive factor
Event: CITIC Securities disclosed the 2019 semi-annual results report. The company’s operating income and net profit attributable to shareholders of the parent company increased by 9 respectively.
Decline in self-employment income or the main suppressive factor.
Ranked in the first quarter reported to the mother net profit of 58.
The previous growth rate of 29%, the company’s reported net profit growth rate actually narrowed, slightly lower than expected.
We believe that the reason is that at least the second quarter of last year was the quarter in which the company’s net profit performance was the best, with a certain high base impact; benefiting from the market recovery in the first quarter of the year, the company’s investment income increased by 106%, and the second quarter entered the adjustment period, Self-employment income is expected to decline significantly.
In terms of brokerage business, the growth rate of market turnover in Q2 exceeded Q1, and revenue is expected to remain stable.
The average daily turnover in 2019H1 was 5,824 trillion, an increase of 33% a year, while the average daily turnover in 2019Q1 was 5,753 trillion, a year-on-year growth rate of 21%.
The company’s brokerage business revenue contracted slightly in the first quarter due to the company’s business structure.
CITIC Securities has a relatively high percentage of institutional customers, and the release of retail trading activity is not strongly conducive to the increase in the company’s brokerage business income. The company’s brokerage business performance is expected to be stable in the first half of the year.
The investment banking business is expected to grow rapidly. Only refinancing has contracted, and the IPO market share has increased significantly.
This year’s IPO projects showed a significant concentration of leaders. In CITIC Securities, there were 10 IPOs in 2019H1 (7 in the same period last year) and 11 additional (20 in the same period last year).
The total size of the initial offering is 15.1 billion (ten years + 90%), with a market share of 25%, a significant increase from the 9% market share in the same period last year; the additional issue amount is 37.2 billion (-14% to date).
In terms of debt underwriting, the total underwriting volume of CITIC Securities’ corporate bonds + corporate bonds in the first half of the year was $ 76.8 billion, + 33% per year.
Asset management business is still in the transitional stage.
According to the latest asset management scale ranking, CITIC Securities averaged 1 in 2019Q1.
29 trillion yuan, an average month-on-year decrease of 16%, and the scale of active management dropped by 15%. The proportion of active management increased from 39% last year to 40%. CITIC Securities still ranked first in the industry in terms of scale.
However, the road to transition is long and stubborn. Although the scale of asset management of securities brokers has slowed down, it has not seen stabilization.
Investment suggestion: The overall accrual rate of CITIC Securities’ annual credit business impairment losses is high, the quality of existing projects is guaranteed, and this risk is expected to be controllable.
Affected by market adjustments, the company’s second-quarter performance was slightly higher than expected, and we initially adjusted the EPS forecast for 2019/2020/2021 to 1.
50 yuan (the original forecast was 1.
94 yuan), BPS is 13.
44 yuan, the corresponding PB is 1.
51 times, ROE is 8 respectively.
Based on the further interpretation of the industry’s leading concentration, the company leads the industry in many aspects such as capital adequacy ratio and business scale, plus if it successfully sells its CITIC Construction 北京夜网 Investment 5 during the year.
58% will increase the company ‘s net profit by an additional 40-55 million, and we give 2-2 in 2019 results.5x PB estimate, target price range of 27-33 yuan, maintaining the “recommended” level.
Risk warning: the development of innovative business is blocked, financial supervision is tightened, and other systemic risks.