CITIC Securities (600030)

Category: Company Organization: China Galaxy Securities Co., Ltd researcher: Wu Pingping Date: March 23, 2021

The event company released its annual report for 2020.

    The increase in credit impairment losses affected performance. The company's asset size exceeded trillion yuan. In 2020, the company realized operating revenue of 54.383 billion yuan, up 26.06% year on year; Net profit attributable to the parent company was 14.902 billion yuan, up 21.86% year on year; The basic EPS was 1.16 yuan, up 14.85% year on year; ROE (weighted average) was 8.43%, with a year-on-year increase of 0.67 percentage points. The Company strengthened the provision of credit impairment losses and consolidated asset quality. In 2020, the Company accrued a credit impairment loss of 6.581 billion yuan, up 247.89% year on year. At the same time, the leverage ratio of the company continued to increase, pushing the balance sheet to further expand, and adding OTC derivatives and financing businesses. By the end of 2020, the company's leverage ratio was 4.67 times, 13% higher than that at the end of 2019; The scale of assets exceeded trillion yuan for the first time. Total assets and total liabilities reached 1.05 trillion yuan and 0.87 trillion yuan respectively, up 33% and 38.45% respectively from the end of 2019.

    The revenue contribution of investment business ranks first. In 2020, the company realized a revenue of 17.907 billion yuan from investment business, up 12.68% year on year, accounting for 32.93% of the total revenue. The loss of gains from changes in fair value was 6.391 billion yuan, an increase of 4.336 billion yuan over the end of 2019, of which the loss of derivative financial instruments held was 21.259 billion yuan. The company's proprietary stock business focuses on quantitative analysis and multi strategy application, and is committed to reducing dependence on directional investment. The company's derivatives business continued to expand, and the scale of derivative financial instruments increased significantly. By the end of 2020, the company's derivative financial assets had reached 20.158 billion yuan, an increase of 174.22% over the end of 2019.

    The brokerage business of companies with active transactions in the beneficiary market performed well. The scale of financing business continued to grow. Affected by the active transactions in the market, the brokerage income of companies performed well, and the transformation of wealth management continued to advance. In 2020, the turnover of market shares increased by more than 60% year on year, and the transaction in the beneficiary market was active. The company realized a net income of 11.257 billion yuan from brokerage business, with a year-on-year growth of 51.61%; The stock based trading volume reached 28.6 trillion yuan, with a market share of 6.49%. The market share of Hong Kong Stock Connect trading volume was 10.92%, and the financial products sold on a commission basis reached 944.7 billion yuan. The company continued to deepen the transformation and upgrading of wealth management, and gradually established a comprehensive wealth management platform to provide global asset allocation and trading services for domestic and foreign high net worth customers. The scale of wealth allocation investment business has reached 10 billion, and the number of registered investment consultants has remained the first in the industry. By the end of 2020, the company had more than 10 million retail customers, 75000 domestic corporate and institutional customers, and 8.5 trillion yuan of custody customer assets. The number of wealth customers is 126000, and the asset scale is 1.5 trillion yuan; There are 27000 high net worth clients with assets above 6 million yuan, and the asset scale is 1.3 trillion yuan; There are 13000 signed clients of wealth management accounts, and the assets of signed clients exceed 170 billion yuan.

    In 2020, the company realized a net interest income of 2.587 billion yuan, up 26.5% year on year.

    Of which, the interest income was 15.528 billion yuan, up 17.13% year on year; Interest expenditure was 12.941 billion yuan, up 15.41% year on year. The company increased the capital allocation for financing business, the scale of financing business continued to grow, and the scale of stock pledge decreased. By the end of 2020, the company had raised 116.741 billion yuan, a year-on-year increase of 65.18%; Redemptory financial assets for sale were 39.227 billion yuan, a year-on-year decrease of 33.32%.

    Investment bank equity and debt underwriting and M&A and restructuring maintain the leading edge. The scale and proportion of asset management active management have both increased. In 2020, the company realized a net income of investment banking business of 6.882 billion yuan, an increase of 54.13% year on year, achieving sustained growth. The company's stock and debt underwriting continued to maintain its leading position in the industry.

    In terms of equity underwriting, the company completed 158 A-share lead underwriting projects, with a lead underwriting amount of 313.599 billion yuan (including asset oriented additional issuance), a year-on-year increase of 12.08%, and a market share of 18.94%, ranking first in the market. Among them, there were 39 IPO lead underwriting projects, with a lead underwriting amount of 43.585 billion yuan, a year-on-year decrease of 3.43% and a market share of 9.3%; There were 119 refinancing lead underwriting projects, with a lead underwriting amount of 2700.14 billion yuan, up 15.06% year on year. In terms of bond underwriting, the underwriting amount was 1298.944 billion yuan, a year-on-year increase of 27.78%, and the market share was 12.93%, ranking first in the industry. In terms of mergers and acquisitions, the company completed major A-share asset restructuring transactions of about 277.7 billion yuan, with a market share of 43.47%, ranking first in the industry.

    In 2020, the company realized a net income of 8.006 billion yuan from asset management business, with a year-on-year growth of 40.28%. By the end of 2020, the company's asset management scale was 1.37 trillion yuan, 2.03% less than the end of 2019. The company orderly promoted the public offering transformation of large collections, optimized the structure of asset management business, and increased the scale and proportion of active management. By the end of 2020, the company's active management scale was 1052.645 billion yuan, with a year-on-year growth of 50.75%; Active management accounted for 77.04%, 26.97 percentage points higher than that at the end of 2019.

    It is suggested that the capital market should deepen reform and continue, the registration system should be comprehensively promoted, policy dividends should be continuously released, and the business space of securities firms should be expanded in multiple dimensions. The company has a solid leading position, significant institutional business advantages, and strong comprehensive strength. It is expected to take the lead in benefiting from the dividend of capital market system reform and the creation of aircraft carrier level brokers, achieving sustained growth in performance and steady improvement in profitability. The company plans to raise 28 billion yuan in share allotment to further strengthen its capital strength and help its business grow. We are optimistic about the future development prospects of the company. Combining the company's fundamentals and stock price elasticity, we maintain the "recommended" rating. The BVPS in 2021-2022 will be 14.95/15.97 yuan, corresponding to the PB in 2021-2022 will be 1.62X/1.51X.

    Risk indicates the risk that market fluctuations have a great impact on performance.