On August 31, Galaxy Securities became the last large securities firm among the top 10 securities firms to disclose its semi annual report. As of June 30 this year, the operating income of Galaxy Securities was 4.3 billion yuan, down 24% year on year, and the net profit attributable to the owners of the parent company was 1.3 billion yuan, down 38% year on year. The year-on-year decline in performance was due to the "stumble" of proprietary business - the loss of proprietary and other securities trading services was 819 million yuan.
"Two wheel drive, coordinated development" is the business model of Galaxy Securities. The achievements in the first half of 2018 show that the dual wheel drive model of integrating the development of large brokerage and large asset management business and the development of large investment banks has achieved some success. In the first half of this year, among the 23 comparable listed securities firms, the brokerage business income of Galaxy Securities reached 4.4 billion yuan, only less than citic securities 5.1 billion yuan, ranking second; Its asset management income was 400 million yuan, up 8% year on year; The operating income of investment banks was 345 million yuan, up 173% year on year.
The general trend goes down and self support is affected
As of the last day of August, A-share listed brokers have disclosed their annual reports for the first half of 2018. Galaxy Securities became the last of the top 10 securities companies to disclose its semi annual report. Against the backdrop of the overall cold winter in the securities industry, Galaxy Securities also failed to fight a beautiful battle.
As of June 30 this year, the operating income of Galaxy Securities was 4.307 billion yuan, a year-on-year decrease of 1.362 billion yuan, or 24.03%. The net profit attributable to the owners of the parent company reached 1.311 billion yuan, a year-on-year decrease of 37.93%.
The year-on-year decline in performance is due to the "stumble" of proprietary business. Investment income decreased by 1.365 billion yuan or 131.74% year on year; Net interest income decreased by 268 million yuan or 17.48% year on year. In terms of proprietary and other securities trading services alone, its operating income was RMB - 819 million, down 278.65% year on year, mainly due to the large fluctuations in the fair value of the company's equity assets.
Under the general downward trend of the market, it is difficult for securities companies to save themselves. The proprietary business of equity of Galaxy Securities held more varieties that participated in private placement in previous years, but these varieties generally performed poorly during the reporting period, and the fair value of their equity assets fluctuated significantly. Galaxy Securities said that in the face of the current situation of losses in equity investment, the company has carried out a series of stop loss and loss reduction measures, mainly including suspending fixed increase investment and incorporating fixed increase tradable shares into strategic management, improving position structure, implementing risk hedging, etc. However, from the results, such businesses of Galaxy Securities have been greatly impacted in the A-share market.
In addition to Galaxy Securities being dragged down by its proprietary business, the proprietary business of 20 comparable securities firms declined year-on-year. Including Donghai Securities Guosen Securities , Guodu Securities Northeast Securities The self operating income of the Company was all losses, with losses of 36 million yuan, 336 million yuan, 58 million yuan and 41 million yuan respectively, down 128%, 120%, 116% and 114% year on year.
Two wheel drive works
In 2017, the business model of Galaxy Securities was adjusted from "one core and two wings, coordinated development" to "two wheel drive, coordinated development". Its vision is to achieve the goal of "building an aircraft carrier broker and establishing a modern investment bank", that is, to become a versatile broker. The so-called "two wheel drive": one is wealth management, which means that big brokerage and big asset management businesses are gradually moving towards integrated development, providing customers with comprehensive wealth management services; The other round is large investment banks, which support the real economy and serve enterprise financing.
Judging from the achievements of Galaxy Securities in the first half of 2018, the two wheel drive strategy has achieved results. Compared with other securities companies, the decline of brokerage business is relatively small; The asset management revenue increased year on year; Investment banking business revenue soared by more than 100%.
The performance of Galaxy Securities in big brokerage and big asset management business has certain highlights. Among the 23 comparable listed securities firms, the brokerage business income of Galaxy Securities reached 4.4 billion yuan, only ranking second below CITIC Securities' 5.1 billion yuan. According to the unaudited data of the Securities Association of China, the net income of the securities trading agency business of the securities firm ranks the third in the industry, with a market share of 4.70%.
In terms of asset management, the revenue in the first half of this year was 400 million yuan, up 8% year on year. However, compared with other securities companies in the industry, there is still a certain gap. On top of Galaxy Securities, the asset management income of CITIC, Industrial, Everbright and China Merchants was 3.4 billion yuan, 1.3 billion yuan, 1.1 billion yuan and 600 million yuan respectively. The asset management income of Galaxy Securities is only 11% of that of CITIC Securities.
In terms of investment banking business, the investment banking business of Galaxy Securities rose against the trend. In the first half of 2018, under the situation of strict supervision, the scale of equity financing in China's capital market shrank significantly. According to WIND information data, in the first half of 2018, Shanghai Stock Exchange and Shenzhen Stock Exchange raised 92.287 billion yuan in IPO financing, down 26% year on year; The scale of equity refinancing was 617.255 billion yuan, down 18% year on year.
Among the 23 comparable securities firms, only 6 had higher income than the same period last year, namely Galaxy Nanjing Securities 、 Haitong Securities 、 the pacific ocean 、 Dongxing Securities and Zhongyuan Securities 。 Galaxy Securities ranked first in terms of year-on-year growth, with its investment banking revenue of 345 million yuan, up 173% year on year. Galaxy Securities said that in the first half of this year, the company successfully completed two IPO projects and one merger and reorganization project, achieving 100% passing rate. At the same time, the company has made progress in large and medium-sized project reserve, early project cultivation, innovative enterprise services, comprehensive financial advisory services, etc. In terms of bond financing, the company undertook several green bonds and completed the company's first venture capital medium-term note; At the same time, we will strengthen cooperation with large financial institutions and establish a sales system at different levels with the help of a large number of outlets.
However, there is still a certain distance between Galaxy Securities and leading investment banks. Among the 23 comparable listed securities firms, CITIC Securities has the largest income from investment banks, with a revenue of 1.47 billion yuan, followed by Haitong Securities CSC Investment banking revenue was 1.41 billion yuan and 1.4 billion yuan respectively. Investment banking income of Galaxy Securities is only 23% of that of CITIC Securities.
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