The company disclosed its 2021 annual report on August 24. In the first half of 2021, the company achieved operating income of 10.321 billion yuan (+28.39%), net profit attributable to shareholders of listed companies of 4.790 billion yuan (+62.61%), net assets attributable to shareholders of listed companies at the end of the reporting period reached 91,635 billion yuan (+13.26%), and basic earnings per share of 0.46 yuan (+35.29%).
The brokerage business is running smoothly. In the first half of 2021, the company's brokerage and wealth management business achieved revenue of 4.809 billion yuan (+4.73%), accounting for 46.60% of total revenue, and is the company's main source of revenue. In terms of retail business, the number of customers of the company has increased steadily, with the number of brokerage clients reaching 11.86 million, an increase of 12.52% over the previous year. At the same time, the company's institutional business has strengthened cooperation with leading fund managers, and made every effort to promote cooperation with strategic clients such as national social security funds, banks and financial management subsidiaries, and overseas institutions. During the reporting period, the company's institutional business achieved commission revenue of 267 million yuan (+75.44%) for trading unit seats.
The steady progress of credit business coexists with the risk of pressure drop. While steadily developing the two finance business, the company continues to reduce the stock balance of stock pledges to further mitigate stock pledge risks. By the end of June, the scale of the company's financing and securities lending business was 59.95 billion yuan, an increase of 16% over the previous month. The balance of the stock pledged repurchase business funded by its own funds was 10.02 billion yuan, a decrease of 20% over the previous month.
The scale of equity underwriting has increased, and GEM IPOs have created an advantage. In the first half of 2021, the company achieved investment banking revenue of 920 million yuan (+44.40%). In terms of stock underwriting business, in the first half of the year, the company underwrote 14.75 stocks and convertible bonds (+47.50%), with a cumulative underwriting amount of about 25.210 billion yuan (+322.99%). The company underwrote 6.5 IPOs (+225%), of which 6 were GEM projects, with a total underwriting scale of 6.346 billion yuan (+556.26%); completed 8.25 refinancing underwriting (+3.13%), with an underwriting scale of 18.864 billion yuan (+277.81%). In terms of bond underwriting business, in the first half of the year, the company underwrote a total of 139.24 companies (+43.89%), with an underwriting scale of 116.963 billion yuan (+70.37%). The company has actively seized the opportunity of registration system reform, and its investment business, especially the IPO underwriting business, has been greatly improved.
Increase in investment business strength. In the first half of 2021, the company's investment and trading business achieved a total revenue of 3,067 billion yuan (+54.31%), accounting for 29.71% of revenue, an increase of 4.99 pct over the previous year. The operating profit margin of the company's investment and trading business reached 91.29% (+10.71 pct). With the investment of 6 billion dollars and the support of the investment and research system, the profitability of the company's investment and trading business has greatly increased.
The asset management business is centered on active management. In the first half of 2021, the company achieved revenue of 370 million yuan (+90.01%) from its asset management business.
The company mainly promotes active management transformation through product drive and channel expansion. On the one hand, the company's net asset management value was further reduced, down 25.58% year on year. Among them, the scale of the single asset management business decreased by 52.68% year on year. On the other hand, the scale of the pooled asset management business has increased significantly, with a year-on-year increase of 42.60%.
Investment advice: In the first half of 2021, the company's investment business performance exceeded expectations. On August 24, the company announced the storage and use of funds raised for the first half of 2021. Of the 14.78 billion yuan raised in 2020 (after deducting underwriting and sponsorship expenses), 6 billion yuan has been used for investment and trading business, and 2.5 billion yuan for capital intermediation business. Since the company classified the capital intermediary business as a brokerage and wealth management business segment, it is expected that the company's wealth management business and investment business will be further developed in the future. As the wealth management track is gradually verified, we have raised our profit forecast for Guoxin Securities. We predict that the company's basic earnings per share in 2021-2023 will be 0.83 yuan, 0.95 yuan, and 1.03 yuan, respectively, and net assets per share will be 8.02 yuan, 8.78 yuan, and 9.58 yuan respectively. Based on the market situation, the company's current valuation, and stock price, we will give the company 1.8 times PB, corresponding to a target price of 14.43 yuan, and give it a “buy” rating.
Risk warning: strengthened supervision, policy risks, market fluctuations, repeated epidemics
