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Shenwan Hongyuan Research Report

Release Time:2022-05-14 Topic:Shenwan Hongyuan Securities Ranking Reading:7 Navigation:Stock Liao information > Finance > Invest > Shenwan Hongyuan Research Report phone-reading

1. Company introduction

Shenwan Hongyuan (000166.SZ) is a securities company formed by the merger of Shenyin Wanguo and Hongyuan Securities in 2015. In 2015, Shenwan Hongyuan Group Co., Ltd. was officially listed on the Shenzhen Stock Exchange. In 2019, Shenwan Hongyuan Group Co., Ltd. was listed on the Hong Kong Stock Exchange.

Shenwan Hongyuan's business covers four major sectors: corporate finance, personal finance, institutional services and transactions, and investment management.

From 2018 to 2020, Shenwan Hongyuan’s revenue compound growth rate was 17.79%

(Source: Shenwan Hongyuan Annual Report)

As of September 3, the closing price of Shenwan Hongyuan in A shares was 5.34 yuan; the closing price in Hong Kong shares was 2.09 yuan. As of the end of 2020, the total share capital of Shenwan Hongyuan A shares and H shares was 25.040 billion shares, of which the total share capital of A shares was 22.536 billion shares and the total share capital of H shares was 2.504 billion shares.

(Source: Tiger Securities)

2. Financial analysis and data scoring

From 2018 to 2020, Shenwan Hongyuan’s operating income was 15.277 billion yuan, 24.593 billion yuan and 29.492 billion yuan respectively, and its net profit was 4.160 billion yuan and 5.735 billion yuan respectively. 100 million yuan and 7.766 billion yuan. In the same period, Shenwan Hongyuan's revenue growth rate was 14.29%, 60.98% and 19.58% respectively; the net profit growth rate was -9.55%, 37.86% and 35.41% respectively.

Compared with other securities companies, the overall performance of Shenwan Hongyuan is improving.

Taking CITIC Construction Investment as an example, from 2018 to 2020, CITIC Construction Investment's operating income was 10.907 billion yuan, 13.693 billion yuan, and 23.351 billion yuan, and its net profit was 3.087 billion yuan and 5.502 billion yuan, respectively. Yuan, 9.509 billion yuan. During the same period, the revenue growth rates of CITIC Construction Investment were -3.50%, 25.54% and 70.53% respectively; the net profit growth rates were -23.11%, 78.19% and 72.85% respectively.

(Source: Corporate Financial Report)

The performance of Shenwan Hongyuan is generally better than that of CICC, Companies such as China Securities Investment Corporation have experienced rapid growth in performance from 2018 to 2019. In 2020, Shenwan Hongyuan's performance growth rate was slightly lower than the average of comparable companies.

On August 28, Shenwan Hongyuan disclosed its semi-annual report. In the first half of 2021, Shenwan Hongyuan's operating income was 16.079 billion yuan, an increase of 20.12% over the same period in 2020; its net profit was 4.521 billion yuan, a year-on-year increase of 12.05%. %.

Shenwan Hongyuan Group includes securities, investment, funds, futures and other types of subsidiaries, and its business covers four major sectors: corporate finance, personal finance, institutional services and trading, and investment management.

In the first half of 2021, Shenwan Hongyuan's corporate financial business segment achieved operating income of 1.309 billion yuan, a year-on-year increase of 23.03%, of which: investment banking business segment 734 million yuan, principal investment business segment 575 million yuan; personal The financial business segment achieved an operating income of 4.174 billion yuan, a year-on-year increase of 1.15%; the institutional service and transaction business segment achieved an operating income of 9.928 billion yuan, a year-on-year increase of 34.38%; the investment management business segment achieved an operating income of 668 million yuan, a year-on-year decrease of 17.26% %.

The IPO reference believes that in the first half of 2021, Shenwan Hongyuan's business performance has achieved rapid growth except for the investment management business. At present, the "Matthew effect" of the securities industry has intensified, and the variousThe development of this business is at an advantage compared with small and medium-sized securities companies. Taking advantage of the advantages of leading securities companies, Shenwan Hongyuan has achieved rapid development.

According to data from the Securities Industry Association, in the first half of 2021, 139 securities companies achieved operating income of 232.414 billion yuan, a year-on-year increase of 8.91%; net profit of 90.279 billion yuan, a year-on-year increase of 8.58%. Shenwan Hongyuan's performance growth rate was significantly higher than the industry average.

While achieving performance growth, Shenwan Hongyuan's awareness of risk control has gradually increased. In the first half of 2021, the capital leverage ratio of Shenwan Hongyuan decreased by 0.32 percentage points, and the risk coverage ratio increased by 23.00 percentage points. Risk reduction will help Shenwan Hongyuan achieve stable and orderly development.

3. Company performance:

1. Product market performance:

The overall corporate finance business declined slightly, but the investment banking business grew at a higher rate.

In 2020, Shenwan Hongyuan's corporate finance business achieved operating income of 2.265 billion yuan, a year-on-year decrease of 1.22%. Among them, the investment banking business achieved a revenue of 1.493 billion yuan, a year-on-year increase of 25.14%. A total of 27 equity financing projects were completed throughout the year, including 7 IPO projects, 15 refinancing projects, and 5 selected tiers (ranked No. 2 in the industry). The amount is 27.344 billion yuan; 2 M&A and reorganization projects have been reviewed and passed, ranking 7th in the industry.

The personal finance business grew steadily, and the brokerage business performed well.

In 2020, Shenwan Hongyuan's personal finance business achieved an operating income of 9.007 billion yuan, a year-on-year increase of 24.51%. Among them, the brokerage business benefited from the overall recovery of the capital market. The assets under custody of securities customers reached 4.19 trillion yuan, an increase of 30.89% over the end of the previous year, and the market share was 6.83%, ranking high in the industry; the net income of agency trading business reached 4.279 billion yuan, Steady in the forefront of the industry.

The market competitiveness of the trading business has been greatly improved, and the total scale of new OTC options ranks first in the industry.

In 2020, Shenwan Hongyuan's institutional services and trading segment achieved an operating income of 16.203 billion yuan, a year-on-year increase of 20.93%. In the prime brokerage business, the revenue of seat leasing in 2020 was 692 million yuan, an increase of 64.18% over the previous year, and the market share reached 4.12%. In terms of proprietary trading business, it has obtained a number of innovative qualifications, and the total newly added OTC options ranks first in the industry, and the market ranking has been greatly improved.

The investment management business revenue continued to grow, and the scale of public funds was at the forefront of the industry.

In 2020, Shenwan Hongyuan's investment management business achieved an operating income of 1.934 billion yuan, a year-on-year increase of 16.02%. Among them, equity management products have achieved outstanding results, surpassing the CSI 300 index over the same period in an all-round way; ABS projects have made significant progress, with a total of 14 orders issued throughout the year, with an issuance scale of 18.889 billion yuan; as of the end of 2020, the company's public offering funds reached 587.945 billion yuan, ranking first in the In the forefront of the industry.

2. Team performance:

In 2020, Shenwan Hongyuan will leave four directors, supervisors and senior managers, namely general manager and executive director Xu Zhibin; non-executive director Wang Fengchao; Independent non-executive director Yang Qiumei and deputy general manager, chief financial officer and secretary of the board of directors Yang Changyun.

3. Capital market performance:

According to data, as of the close on June 30, Shenwan Hongyuan closed at 4.68 yuan, down 11.36% from 5.28 yuan at the end of 2020. On January 4, the share price of Shenwan Hongyuan reached a maximum of 5.34 yuan, and the highest point increased by 1.14% compared with the largest increase at the beginning of the year. At present, the latest total market value of Shenwan Hongyuan is 117.187 billion yuan, ranking 8/51 in the market value of the securities company trust sector and 128/4445 in the market value of the A-share market in the two cities. As of the close on June 30, Shenwan Hongyuan had a total of 1 day of large transactions in the first half of 2021, with a total of 1 transaction and a total transaction amount of 73.6212 million yuan, all of which were discounted transactions.

IV. Industry Trend Analysis

The China Securities Association said that the performance of the securities industry in 2020 continued to improve, reaching the highest level in the past three years, and the entire industry achieved an operating income of 439.815 billion yuan, a year-on-year increase 24.93%; realized a net profit of 170.778 billion yuan, a year-on-year increase of 39.20%. The return on net assets of the securities industry was 7.82%, an increase of 1.58 percentage points over the previous year, and the overall profitability of the industry continued to increase.

By the end of 2020, the total assets of the securities industry were 8.78 trillion yuan, and the net assets were 2.23 trillion yuan, up 22.32% and 14.02% respectively over the end of the previous year.%; the net capital of the industry was 1.80 trillion yuan, an increase of 11.80% over the end of the previous year.

V. Investment ratings and related reports

1. Northeast Securities, Guosen Securities, and Bank of China Securities all gave “overweight” ratings; Essence Securities maintained “buy” ratings; China Galaxy Securities maintained a "recommended" rating.

2. Views of securities companies:

Northeast Securities said that it is expected that the income of Shenwan Hongyuan Securities from 2021 to 2023 will be 32.16 billion yuan, 357.03 billion yuan, and 39.676 billion yuan, respectively, and the net profit attributable to the parent company will be 86.16, 9.811 billion yuan and 11.217 billion yuan, maintaining the investment rating of "overweight".

Guosen Securities stated that the net profit attributable to the parent company of Shenwan Hongyuan Securities in 20-22 is expected to be 6.1/7.0/8.3 billion yuan (year-on-year +7.3%/14.5%/17.8%), and the diluted EPS will be 0.25/ 0.28/0.33 yuan, the current share price corresponds to the dynamic PE of 18/16/13 times, respectively, giving an "overweight" rating.

Bank of China Securities stated that, maintaining the original profit forecast, it is expected that Shenwan Hongyuan's net profit attributable to the parent from 2020 to 2022 will be 6.7 billion, 7.7 billion, and 8.2 billion, corresponding to EPS of 0.27, 0.31, and 0.33, respectively. Maintain the Overweight rating.

Essence Securities stated that it maintains a buy-A investment rating. It is expected that Shenwan Hongyuan's EPS in 2020-2022 will be 0.25 yuan, 0.28 yuan and 0.32 yuan, and the 6-month target price is 5.5 yuan, corresponding to a valuation of about 1.6 yuan xPB.

China Galaxy Securities stated that Shenwan Hongyuan's investment business performed well, with improved income from investment banking and brokerage business, and the quality and efficiency of the transformation of asset management's active management gradually emerged. Optimistic about the future development prospects of Shenwan Hongyuan, combined with its fundamentals and valuation, maintain the "recommended" rating, 2020/2021 EPS 0.28/0.32 yuan, corresponding to PE 15.93X/13.94X.

6. Summary

1. Highlights of the company

Based on the above analysis, in 2020, in addition to the shrinking of corporate financial business, Shenwan Hongyuan’s personal financial business, brokerage business , investment management business, etc. have a relatively obvious improvement. In 2020, the scale of its public funds, the total scale of new OTC options, and the scale of equity financing will all be at the forefront of the industry. Northeast Securities, Guosen Securities, Bank of China Securities, China Galaxy Securities and other brokerages also believe that given the good performance of Shenwan Hongyuan, investors can choose to increase/buy its shares.

2. Risk Warning

Combined with the analysis of the macroeconomic situation, industry development trend, regulatory environment, the impact of the new crown pneumonia epidemic and Shenwan Hongyuan's own situation, the major risk factors it faces are mainly There are market risk, credit risk, liquidity risk, operational risk, policy risk, legal compliance risk and innovative business risk.

Among them, legal compliance risks have a greater impact on Shenwan Hongyuan. With the revision of the Securities Law, the promulgation and implementation of the Civil Code and its supporting judicial interpretations, and the amendment to the Criminal Law, the continuous improvement of various regulatory provisions on the securities market, and the increased penalties imposed by the regulatory authorities on violations of laws and regulations, Shenwan Hongyuan’s Legal compliance management will face greater challenges.

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