The performance of the brokerage sector has continued to improve this year, contrary to the poor performance of stocks in the secondary market. As of November 25, the index of securities companies has fallen 9.41 per cent for the year, and ETF (512000), the market's most popular ETF with a size of more than 24.1 billion yuan, is down 8 per cent.
Correspondingly, all kinds of funds continue to increase the size of the brokerage plate--
At the end of the third quarter, public offering funds accounted for 0.61% of heavy stocks in the brokerage sector (except Oriental Wealth), significantly bottoming out from 0.11% of 21Q2.
The 10 billion private equity Ningquan assets at the helm of Yang Dong increase their holdings in 370000 H shares of Oriental Securities.
Northward funds bought a large number of Oriental Wealth, and the cumulative net purchase reached 3.642 billion yuan at the close of trading from the beginning of November to 25, ranking second only to the Ningde era.
Market sentiment wind direction standard securities firm ETF (512000) share in the last two trading days a continuous net increase of 108 million, a total of continuous net inflows of funds reached 117 million yuan. The latest estimated size is 24.2 billion yuan, ranking second among all industries in the Shanghai and Shenzhen stock markets in terms of ETF scale.
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Can the unsatisfactory brokerage sector in 2021 usher in a highlight moment in the coming year? At the end of 2021, the 2022 non-bank sector prospects of various mainstream institutions have been released one after another, specially collating the latest 2022 prospects of the non-bank teams of CITIC Construction Investment, Open Source Securities, Guotai Junan and Huachuang Securities, refining the core ideas for investors' reference.
[Citic Construction Investment: grasp the double main line of "Wealth Management + Registration system Reform")
Light capital business of securities firms: residents' wealth is accelerated to enter the market, and brokerage / asset management business becomes the core performance-driven.Under the policy combination of "housing without speculation + new regulations on capital management + reform of the capital market registration system", residents' wealth continues to transfer from real estate and savings to the capital market. In the first three quarters, the share of market-wide partial stock fund issuance was + 16% compared with the same period last year, driving the continued growth of brokerage / asset management (including fund management) business income, which was + 19% and 25% compared with the same period last year.
Securities firms focus on capital business: the scale of capital consumption continues to expand, and the risk of impairment is significantly alleviated.The self-operation scale of listed securities firms increased steadily in the first three quarters. By the end of the third quarter, the financial investment scale of listed securities firms totaled 4.53 trillion yuan, an increase of 14% over the beginning of the year, with investment business income of 124.4 billion yuan, an increase of 10% over the same period last year, and an average investment rate of return of 2.88%. With the increase in fixed income assets, the income stability has been improved. In terms of credit business, benefiting from the continued pressure on the scale of stock pledge, the impairment risk has been further resolved.
Looking forward to 2022, we believe that investors should grasp the double main line of "wealth management + registration reform" and pay attention to securities firms with excellent public offering consignment / management ability, as well as securities firms with excellent underwriting ability of investment banks.
At the demand level, the continuous entry of residents' wealth into the market is still the most important industry increment.Under the background of the obvious increase in the demand for equity allocation, the contribution of brokerage / asset management business to the performance of securities firms will gradually increase, and their stable income growth will stabilize some fluctuations of securities firms' investment banking / proprietary business, thus boosting the overall valuation level of the brokerage plate.
On the supply side, the full registration system and the establishment of the North Stock Exchange will further enrich the supply of the equity market.With the official opening of the Beijing Stock Exchange, to further make up for the shortcomings of supporting small and medium-sized enterprises and new economy enterprises, the CSRC's requirements for the quality of listed companies are constantly improving, accelerating the clearance of bad products, and iterating over high-quality targets. The competitive advantage of the head brokerage with active pricing power will be further highlighted.
Investment advice:Under the neutral assumption, the brokerage industry will achieve an operating income of 556 billion yuan in 2022, + 10% year-on-year, and a net profit of 211.3 billion yuan, which will be maintained at about 8% compared with the same period last year. It is suggested to focus on: one is the securities firms with the core competitiveness of wealth management, and the other is the securities firms with the core competitiveness of investment banking business.
[open source securities: the prosperity of the brokerage industry continues, and the business line of big wealth management maintains growth]
The prosperity of the brokerage industry has continued, and the business line of big wealth management has maintained growth.Under the background of the transfer of residents' assets to rights and interests, the deepening of registration reform and relatively loose liquidity, we expect that the overall net profit of listed securities firms is expected to increase by 15% in 2022, and the industry ROE will further increase to 10.2%. Brokerage investment may still focus on the main line of big wealth management, liquidity and stock market beta factors may become an important catalyst for marginal changes in the profits of securities firms' capital-based business, focusing on undervalued head brokerage opportunities.
The lack of block opportunities of securities firms, the main line of wealth management out of the independent market.As of November 25, the brokerage sector outperformed the market, and the market trading volume continued to be hot in the second half of the year. Brokerages with strong big wealth management business walked out of a strong independent market, while the establishment of the Beijing Stock Exchange in September drove brokerages to rise. Fierce competition in the industry and increased reliance on capital have led to a lack of opportunities. From a fundamental point of view, the prosperity of securities firms has continued. In the first three quarters of 2021, the revenue / net profits of 40 listed securities firms were + 15% and 23% respectively compared with the same period last year. Even with a high base in the third quarter of 2020, they can still achieve positive growth of more than 20%.
Wealth management and asset management are the main drivers of future earnings growth.(1) Wealth Management: 2021 the market activity is relatively high, and the market turnover is expected to remain high in 2022. The transformation of wealth management of securities firms continues to deepen, product consignment revenue is expected to maintain rapid growth, driving the continued growth of brokerage business, fund investment as an important starting point in the transformation of wealth management, AUM and the number of customers continue to grow. (2) Capital management: public offering business contributes higher profits. With the liberalization of policy and the continuous growth of public offering scale, many securities firms actively layout public offering business. At the same time, the transformation of active management of securities firms is expected to drive the high growth of asset management performance, and wealth management and asset management are expected to become the main drivers of performance in the future.
The investment banking business may slow down in the follow-up, and the contribution of direct investment and follow-up investment profits will continue to grow.
(1) Investment banking: Science and Technology Innovation Board implemented the registration system in 2019, and the capital market ushered in a deep reform. The scale of IPO has increased rapidly since 2019. After two years of high growth, the scale of IPO has declined since the second half of 2021 compared with the same period last year. Investment banking business places more emphasis on high-quality development, and the profit growth rate of investment banking business may slow down.
(2) Investment: at present, most securities firms limit their directional self-exposure to a small scale, non-directional business such as power derivatives, and their risk exposure is relatively small, which is conducive to stabilizing market fluctuations. At the same time, the contribution of direct investment and follow investment performance increases, and the overall income of the investment business is expected to be more robust in the future.
(3) Credit business: the expansion of the scale of financing and financing drives the growth of net interest income, and the risk of stock pledge decreases significantly.
[Guojun: the next consensus on investing in brokerage stocks-institutional business]
The outbreak of residents' wealth management demand has promoted the scale of institutional customers and the demand for brokerage services, and the brokerage industry has benefited from the higher-than-expected profits brought by the high growth of institutional business.Benefiting from the outbreak of residents' wealth management demand, the management scale of institutional clients will grow rapidly, and the overall scale of asset management will grow from 53.57 trillion in 2017 to 63.73 trillion in 2021. The rapid expansion of the scale of asset management has led to the rapid growth of institutional clients' demand for investment consulting, custody, securities lending, derivatives and other business (all maintaining a growth rate of more than 50%). However, from the perspective of market performance, the outbreak of investor demand for wealth management has brought about the profit growth of the brokerage industry, paying more attention to the consignment and asset management links, and the securities stocks with competitive advantages in consignment and asset management are also far ahead of the market. However, the profit contribution of institutional business to the securities industry has not been fully recognized, and the rise of related stocks lags far behind the industry.
The head brokerage has three major competitive advantages that make it more able to benefit from the rapid growth of institutional business.According to the data we have tracked, the CR5 of institutional businesses, including seats, custodians, securities lending and derivatives, are 26%, 80%, 72% and 69% respectively, which are much higher than the market share concentration of other brokerage businesses. The core reason lies in the following competitive advantages of head securities firms: 1) first-mover advantage, securities firms with competitive advantage are the first batch of securities firms to obtain relevant pilot business; 2) talent advantage, the per capita salary level of head securities firms is far ahead of that of the same industry, and the service ability and business level of high-quality talents can better meet the needs of institutional customers with high cognitive level. 3) the advantage of financing cost, which is lower than that of the same industry, which makes it more able to meet the balance sheet service needs of institutional customers.
Investment advice:We believe that there are not only consignment and asset management links in the investment opportunities brought about by the outbreak of residents' wealth management demand, but also the improvement of the scale of institutional management will also lead to an increase in the demand for comprehensive financial services. Head securities firms with competitive advantages also benefit from higher-than-expected profits from institutional business.
[Huachuang Securities: ten-year prospect, there is a long way to go, and there is a long way to go in the future]
The fundamentals of the brokerage industry have improved since 2016, but valuations have not risen systematically.We expect the industry average ROE to rise from 8.0% to 14.2% over the next decade as the labor pains of industry transformation end.
The equity market is booming, and the asset management business may become the fastest growing business in the future. In the past 15 months, the growth rate of stock + mixed funds has reached 96.6%, and the entry of residents' financial funds into the market has become the main line of the asset management market.It is expected that in the next ten years, the AUM of public offering funds + brokerage management will increase by 3.16 times, and the net profit of return to the mother will increase by 3.8 times.
The core increment of brokerage business in the future lies in wealth management and institutional brokerage business. The securities settlement model helps to form PB integrated services and enhance the support of institutional business to the performance of securities firms.It is estimated that in the next decade, the net profit of the business of selling financial products will increase by 3.3 times, and the net profit of the agency trading of securities will increase by 1.87 times.
Investment banking business can pay attention to the change of business pattern brought about by the registration system. With the establishment of the Beijing Stock Exchange and the new third board reform, PE/VC leads the capitalization development of investment banks and realizes the whole life cycle service of enterprises. It is expected that under the full registration system, floating income is expected to bring sustainable profit support for securities firms.The net profit of investment banking is expected to increase by 1.83 times over the next decade (excluding investment and buoyant earnings).
Proprietary business "from heavy to light" change, pay attention to the transformation of customer-oriented business. The scale of derivative financial assets + liabilities of listed securities firms increased by 19.5% compared with the beginning of the year, and the derivatives business is of core significance to the promotion of ROA and enabling brokerage, investment banking and credit business.
The impairment risk of credit business may be greatly alleviated, and the margin lending business has a broad space. In 2020, the impairment preparation of industry stock quality business accounts for 7% of the total stock quality Prida, and the room for further impairment is expected to be limited.It is estimated that the net interest income of securities lending business will increase from 7.5 billion yuan to 33.5 billion yuan (CAGR+17%) by 2030.
The net profit of heavy capital business is expected to increase by 2.84 times over the next decade.The industry may move from the thickening capital stage to the leverage stage, and the industry ROE will benefit from the improvement. Emerging businesses such as derivatives and margin trading may contribute more and more to performance growth.
[introduction to Securities firm ETF (512000)]
Brokerage ETF (512000) tracks the CSI securities company index, covering all the brokerage stocks listed on the market for more than half a year, a total of 50. According to the latest data on the official website of the China Securities Index Company, the top five weights account for 46%, and the top 10 account for 62%. 60% of positions are concentrated in the top 10 leading securities firms, sharing the long-term value of the strong ones. Another 40% of positions take into account the high flexibility of the performance of small and medium-sized securities firms, which is an efficient investment tool for centralized layout of head securities firms and small and medium-sized securities firms at the same time.
The profitability of constituent stocks has grown rapidly for three years in a row. In the first three quarters of 2021, the net profit of returning home reached 160.4 billion yuan, an increase of 23% over the same period last year, setting a new record for profits in the first three quarters of history, and continuously verifying the continuation of the high prosperity of the brokerage industry!
Head brokerage "strong Hengqiang", CITIC, Haitong, Guotai Junan, Huatai four head brokerage net profit in the first three quarters crossed the threshold of 10 billion, while only CITIC in the same period last year; small and medium-sized brokerage flexibility is better, Central Plains Securities, Ruida Futures, Pacific, Guosheng Financial Control and other small brokerages home net profit growth of more than 100%.
[the construction of the capital market is at an unprecedented new height]
In the new cycle of deepening the reform of the capital market, regulators will continue to increase the proportion of direct financing as one of the main goals of the capital market reform. Industry policies continue to make efforts and enter a new round of policy-driven innovation cycle. The establishment of the falling weight of the Beijing Stock Exchange further confirms that the construction of the capital market is at an unprecedented new height, which is conducive to the establishment of China's multi-level capital market, enhance the scale of financing, and bring broader business space and imagination for securities firms at the same time.
[liquidity of A shares goes up again, and trading continues to be hot]
As of November 25, the two cities have completed more than one trillion yuan of transactions for 25 consecutive trading days. Prior to this, the turnover exceeded trillion yuan for 49 consecutive days from July 21 to September 29, breaking the longest historical record for A-shares, and A-shares have officially entered the daily average transaction level of trillion yuan. Continued hot transactions will significantly stimulate the growth of business income such as brokerage, finance and proprietorship.
[brokerage ETF (512000) ranks top in terms of scale and trading in the market]
According to the latest data released by the Shanghai Stock Exchange on November 25th, the latest fund share of the brokerage ETF (512000) reached 22.458 billion on that day.The latest estimated size is 24.2 billion yuan, ranking second in the ETF scale of all industries in the Shanghai and Shenzhen stock markets.
Since 2021, the average daily turnover has reached 1.042 billion yuan, which is the top scale and liquidity ETF!
In addition to lower transaction costs (free from stamp duty), brokerage ETF (512000) also has a higher success rate relative to individual stocks. As of the close of trading on November 17, 39 brokerage ETF (512000) outperformed 39 of 50 constituent stocks, outperforming 80 per cent of constituent stocks in the same period! Trends such as brokerage ETF (512000) rose 51.34% from May 28 to July 9, 2020, replicating the performance of the securities company index in an all-round way. Brokerage ETF (512000) outperformed 32 of the 45 constituent stocks and 71 per cent of brokerage stocks in the same period.
The brokerage ETF has a linked fund (A share code 006098 C share code 007531), which also tracks the CSI all-index securities company index (index code 399975), providing investors on the Internet with an efficient investment tool to buy and sell 50 brokerage A shares with one click. Investors without on-site securities accounts can redeem the Class A share and Class C share of the brokerage ETF connection fund on the Internet consignment platform 724, which can be bought at least 10 yuan, which is convenient and efficient.
[risk Tip] the underlying index tracked by the brokerage ETF is the CSI all Index Securities Company Index (399975). The base date of the CSI Securities Company Index is June 29, 2007, released on July 15, 2013. the historical performance of the index is based on the simulation of the current component stock structure of the index. Its index stocks may change, and its historical performance does not predict the future performance of the index. Any information that appears in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, any form of expression, etc.) is for reference only and the investor is responsible for any discretionary investment behavior. In addition, any views, analyses and forecasts in this article do not constitute any form of investment advice to the reader, and the Company is not responsible for any direct or indirect losses arising from the use of the contents of this article. The investment of the fund is risky, and the past performance of the fund does not represent its future performance. Money fund investment is not the same as bank deposits, does not guarantee a certain profit, nor does it guarantee the minimum return.