Event Overview
In the first quarter of 2023, Cinda Securities realized an operating revenue of 1.090 billion yuan, yoy+36%; a net profit attributable to the parent company of 216 million yuan, yoy+30%; and a weighted average ROE of 1.39%, an increase of 0.07 percentage points over the first quarter of 2022. By the end of the first quarter of 2023, Cinda Securities had total assets of 72.669 billion yuan, net assets of 16.599 billion yuan, and total equity of 3.243 billion shares.
Cinda Securities was approved by the CSRC for IPO in December 2022 and listed on the Shanghai Stock Exchange on February 1, 2023, with an offering price of 8.25 yuan per share and an initial offering of about 2.675 billion yuan.
Investment businesses drive the performance of the first quarter
In the first quarter of 2023, the net income of brokerage business/investment banking/asset management fees of Cinda Securities was RMB 192/026/92 million, - 26%/- 40%/+80% year on year; Net interest income/net investment income/net income from changes in fair value were RMB 87/359/126 million respectively,+61%/+212%/year on year.
Referring to the relevant market indicators of the securities industry, the daily average turnover of A-shares in the first quarter of 2023 is 878.7 billion yuan, yoy-13%. The monthly average holding size of partial funds is 7086.4 billion yuan, yoy-14%; the newly issued partial funds are 68.5 billion shares, yoy-37%. The average balance of the two financing days is 157 million yuan, yoy-10%. In the first quarter, the IPO/additional issuance/rights issue/total financing scale was respectively 651/249.3/22/316.6 billion yuan, - 64%/107%/- 91%/- 3% year-on-year.
Management expenses are balanced in 2022Q4 and 2023Q1
In the first quarter of 2023, Cinda Securities paid 823 million yuan in administrative expenses, an increase of 45% over 567 million yuan in the first quarter of 2022. Accordingly, the company's administrative expenses in the first half of 2022 and the second half of 2022 will be 1220 million yuan and 730 million yuan respectively, and 993 million yuan and 1319 million yuan in the same period of 2021.
The shareholder's qualification is extraordinary, and the characteristic business potential is huge
The controlling shareholder, China Cinda, holds 78.67% of Cinda Securities. The benign synergy ecosystem of China Cinda and its subsidiaries gathers customer acquisition channels, business information, business opportunities and other resources, and is expected to achieve customer centered all-round business collaboration by taking advantage of the company's business qualifications and investment research capabilities. We believe that as an important platform for China Cinda's financial sector, Cinda Securities is expected to become a key link for China Cinda to coordinate the financial business within the group and connect the domestic capital market. In the process of disposing non-performing assets, participating in enterprise mergers and acquisitions, and providing comprehensive financial services, China Cinda Group will derive a large number of financial advisory, asset securitization, debt restructuring and debt equity swap projects, which will become the business source of Cinda Securities' characteristic development.
Investment advice
We maintain the company's total operating revenue forecast of 4.166 billion yuan, 4.423 billion yuan and 4.589 billion yuan in 2023-2025, with year-on-year growth of 21.17%, 6.17% and 3.75% respectively; The net profit attributable to the parent company from 2023-2025 is predicted to be 1.457 billion yuan, 1.514 billion yuan and 1.582 billion yuan, with year-on-year growth of 18.72%, 3.91% and 4.51% respectively; From 2023 to 2025, EPS will be RMB 0.45, RMB 0.47 and RMB 0.49 per share (calculated according to the share capital after issuance), and PE corresponding to the latest closing price of RMB 15.40 will be 34.28X, 32.98X and 31.56X respectively. Considering the shareholder strength of Cinda Securities and the development potential of the company's characteristic business, as well as the small circulating market value and great flexibility of the secondary new shares, we maintain the "increase in holdings" rating of Cinda Securities.
Risk warning
Compliance and risk control risks during the company's business expansion; The risk that the service rate or commission rate of the company and the securities industry will decline more than expected; In the future, attention should be paid to the lifting of the ban and the reduction of shareholders' holdings.
The company's performance is strongly related to the capital market, and the impact of capital market fluctuations on its profitability; The risk of economic recovery not meeting expectations after the optimization of epidemic prevention and control; The process of domestic liquidity easing was not as expected; The risk of decline in A-share trading activity.
The risk of significant fluctuations in the RMB/US dollar exchange rate, significant changes in the US China interest margin and liquidity impact, and the risk of interest rate fluctuations beyond expectations.
