Since its establishment, Shenwan Hongyuan has been committed to providing comprehensive financial products and services to corporate, individual and institutional customers. The company's main business lines include corporate finance, personal finance, institutional services and trading, and investment management.
In the past three years, Shenwan Hongyuan's total revenue and other income were RMB 21.72 billion, 20.92 billion and 24.11 billion respectively (units are the same below) . As we all know, in the past three years, the situation at home and abroad has been volatile, and the domestic economy has entered a new normal. Especially in 2018, the turbulence of the capital market has intensified, but Shenwan Hongyuan's revenue has maintained a stable level. Moreover, Shenwan Hongyuan maintains quality development, and its weighted average return on equity ranks among the top in the industry.
Specifically, the four business lines of the company have changed. Among them, the income and other income of the corporate finance business decreased year-on-year, which was mainly affected by the IPO policy and the overall market contraction of the debt financing business. At the same time, it is noted that the segment revenue and other income of the company's institutional services and trading business increased significantly year-on-year, mainly because the company's increase in the scale of its fixed portfolio led to an increase in net investment income from fixed investment transactions. Shenwan Hongyuan adapts measures to local conditions and changes with time. The scientific and reasonable business structure enables Shenwan Hongyuan to achieve cross-cycle development, thus standing out in the competition of hundreds of securities companies.
2. Decoding the Success of Shenwan Hongyuan
There has always been a saying of "depending on the sky" for securities companies , its performance changes with the fluctuation of the market, showing a strong cyclical. Since its establishment in the 1980s, Shenwan Hongyuan has witnessed the development of China's securities industry and experienced several rounds of market cycles, but it has been able to maintain steady and quality development.
In the securities industry with serious homogeneity, only by thinking about the reasons behind Shenwan Hongyuan's "stable and far-reaching" can we deeply understand the uniqueness of Shenwan Hongyuan. Looking back at the process of Shenwan Hongyuan from small to large and from weak to strong, the author summarizes the following three reasons:
1. Strong market influence and brand
Shenwan Hongyuan was established in 1980 In the 1990s, it is one of the old securities firms in my country. It is not only a witness to the development of China's securities industry, but also a promoter of the development of China's securities industry. In the company's operating history, the company has completed a series of mergers and acquisitions, including the integration of the former Shenyin Securities, the former Wanguo Securities and the former Hongyuan Securities. Now, Shenwan Hongyuan has become a powerful brand with a long history in China's capital market.
In addition, the company's controlling shareholder is Central Huijin, which is a wholly state-owned company authorized by the State Council to make equity investments in key state-owned financial enterprises. The controlling shareholder also greatly enhances the company's brand influence.
Based on more than 30 years of development experience and strong shareholder support, Shenwan Hongyuan has a deep understanding of the Chinese market, explored and catered to market needs, and completed many groundbreaking transactions and innovations, enabling the company to continue to provide Leading corporate, personal, institutional and investment management services.
2. High-quality growth
Risk management is one of the core competitiveness of financial enterprises. Shenwan Hongyuan has always been adhering to the concept of creating value through risk management, and the risk control of business quality takes priority over the expansion of business scale. During the long-term development of the company, a prudent risk management culture has been formed, cultivated employees' awareness of risk management, and achieved stable operation.
As a result, Shenwan Hongyuan has been awarded the China Securities Regulatory Commission's "Class A AA" securities company regulatory rating (the highest rating for any Chinese securities company so far) for eight consecutive years from 2011 to 2018. One of the four securities companies.
In the environment of strict supervision and deleveraging in 2018, many financial companies exposed lack of risk management, leading to operational problems.However, Shenwan Hongyuan still maintains a stable operation, which is the result of the pursuit of high-quality growth.
3. Forward-looking layout
Shenwan Hongyuan's forward-looking location layout and enterprise structure lay a solid foundation for sustainable development. After several mergers and acquisitions, Shenwan Hongyuan has formed a corporate structure featuring "investing in parent company Shenwan Hongyuan Group + securities subsidiary Shenwan Hongyuan Securities", which is conducive to the company's establishment of a capital market full-industry chain business model, so as to better serve customers Provide services to changing investment and financing needs.
In addition, Shenwan Hongyuan has a unique network layout that runs through the east and west of China and spans China and foreign countries, which enables the company to have a highly coordinated location advantage with comprehensive coverage and prominent focus.
A strong brand, strict risk management and forward-looking layout are the "three axes" for Shenwan Hongyuan's success, driving the company to go through cycles and develop steadily.
Three, take advantage of the technology innovation board, the future can be expected
History silently predicts the future. Since its establishment, Shenwan Hongyuan has maintained steady development. Looking forward to the future, relying on Shenwan Hongyuan's "three axes" and superimposing the spring of the stock market, the time and place are right for everyone. It is believed that Shenwan Hongyuan will continue to maintain high-quality growth.
Entering 2019, as the Politburo meeting shifted the focus of financial work from risk prevention to institutional reform, balancing development and risk, positive signals were sent from top to bottom.
The stock market has ushered in spring. The major domestic stock market indexes went up rapidly after the Spring Festival, the trading activity increased significantly, and the balance of the two financing also increased significantly month-on-month. It is worth noting that the scale of refinancing has also continued to expand. And Shenwan Hongyuan is the direct beneficiary of the bullish stock market.
The science and technology innovation board is accelerating. As a test field for capital market reforms, the Science and Technology Innovation Board guides stock reforms with increments and promotes the process of capital market market-oriented reforms. The registration-based issuance arrangement on the Science and Technology Innovation Board will test the research, pricing, and sales capabilities of securities firms. In this context, the transformation of investment banks from "business-oriented" to "customer-oriented" will be accelerated. At the same time, the Sci-tech Innovation Board will also accelerate the creation of a full-life-cycle "big investment bank" system by securities companies to achieve synergy and value extension across the entire industry chain.
Shenwan Hongyuan has a first-mover advantage on the Sci-tech Innovation Board. Shenwan Hongyuan's corporate structure covers "listed investment parent company + securities subsidiary", and can provide corporate customers with one-stop financial services and financial support throughout the entire life cycle:
1) Initial stage: provide NEEQ recommendation and listing services , private equity investment and private debt services;
2) Growth stage: provide IPO sponsorship and underwriting services;
3) Late stage/listed: underwrite bonds and additional shares, and Assist clients in M&A transactions to help their businesses grow and develop.
In addition, under the more market-oriented operation environment of the registration system, the price discovery function of the market will become more effective, and the resource allocation function of the capital market will be more fully utilized, which will promote high-quality companies to win market pricing recognition. Pricing power has become the core competitiveness, and market-oriented competition will promote securities companies to enter the era of "the strong is king".
In the past, the scale and income of the investment banking business in the securities industry showed a trend of concentration. In 2018, the total proportion of the top ten securities companies’ IPO underwriting scale rose to 78% (2017: 58%). Project resources are concentrated in the hands of large securities companies with business advantages, forming the Matthew effect of investment banking business.
(Note: data source WIND, top five brokers in CR5, top ten brokers in CR10)
As a leading brokerage, Shenwan Hongyuan has benefited from the increase in concentration. In terms of investment banking business, Shenwan Hongyuan ranked fifth in terms of the number of IPOs underwritten in China since the establishment of the Chinese securities market until December 31, 2018; Shenwan Hongyuan ranked first in the NEEQ recommended listing.
Finally, under the STAR Market underwriters can participate in the strategic follow-up investment system, underwriters will participate in the subscription of new shares with their own funds. In addition to honing professional capabilities such as value discovery and risk control, securities companies also need to constantly Only by consolidating capital strength can we enjoy the capital dividends brought by the issuer's stock rise. Shenwan Hongyuan has sufficient working capital. In 2016, 2017 and 2018, the company's operating cash flows before changes in working capital were RMB 11,435.6 million, RMB 10,750.0 million and RMB 11,138.1 million, respectively. This listing and fundraising will once again increase the capital strength of Shenwan Hongyuan, which is conducive to gaining an advantage in future competition.
Shenwan Hongyuan as aThe old-fashioned brokerage has continued to grow and maintain high-quality growth all the way. The amazing landing in the Hong Kong capital market is now stepping on the bull market in the mainland stock market, and at the same time enjoying the historic dividend of the establishment of the Science and Technology Innovation Board. With multiple benefits, Shenwan Hongyuan may become the star of IPOs in the Hong Kong market this year.
According to statistics, the refinancing of securities companies in the bull market will help to enlarge their performance and significantly improve their competitiveness. In the bull market state, the performance of securities companies has been greatly improved under the dual support of capital expansion and market uptrend, including ROE, net assets and net profit and other operating indicators have improved after the completion of financing.
Looking forward to the future, after listing, Shenwan Hongyuan will continue to lead corporate financial services, upgrade personal financial services, expand institutional services and transactions, improve investment management services, maintain a leading position in China's securities industry, and strive to become an international company. Competitive financial service provider.
Landing on the Hong Kong Stock Exchange is just a new starting point for Shenwan Hongyuan's new journey.
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