The first venture uses FICC and asset management business to build differential competitiveness. The first venture firmly promotes the strategic goal of "becoming a securities company with fixed income characteristics and the core of asset management business", establishing a fixed income full business chain and creating a "fixed income +" asset management system, which is expected to form its own brand characteristics.
2021 and 2022H1, the combined profit contribution rates of Capital Management subsidiary Chuangjin Hexin and Yinhua Fund are 42.68% and 51.38% respectively, and the contribution of asset management profits ranks among the forefront of the industry.
Asset management and fixed collection business as the core features, the level of ROE needs to be improved. The first comprehensive strength of entrepreneurship is about 47 in the industry. The first venture takes "becoming a securities company with fixed income characteristics and asset management business as the core" as its strategic goal, starting with the "fixed income +" asset management system, constantly strengthening product creation and enhancing the ability of active management. efforts will be made to build differential competitiveness in the field of large asset management business. At the profit level, 2019-2022H1, the ROE of the securities industry in the past three years were 6.30%, 7.27%, 7.83% and 3.03% respectively, while the ROE of the first startup in the same period was 5.67%, 5.83%, 5.17% and 1.98% respectively, all lower than the industry average.
Asset management business: performance important support, asset management subsidiary profit contribution of more than 40%. The net income of handling fees in 2021 and 2022Q1-3 first Entrepreneurship was 9.20 yuan and 743 million yuan respectively, an increase of 33.87% and 12.21% respectively over the same period last year, accounting for 38.86% of the income of 2022Q1-3, a significant increase of 10.59% over 2021.
In terms of scale, the company implemented the requirements of the new regulations on asset management, shrinking the channel business, and the scale of asset management decreased year by year, from 218.073 billion yuan in 2017 to 56.621 billion yuan in 2022H1. At the subsidiary level, the combined profit contribution rates of 2021 and 2022H1, Chuangjin Hexin (51.07%) and Yinhua Fund (26.1%) are 42.68% and 51.38%, respectively.
Investment business: investment income is strongly related to the capital market, focusing on the development of fixed income business. From 2019 to 2021, the proportion of income from the first venture capital remained between 36% and 41%, which is an important source of income for the company.
Affected by the volatility of the stock market in 2022, 2022Q1-3 investment income + fair value change profit and loss of 352 million yuan, accounting for 18.43% of income. In terms of scale, the scale of corporate financial investment expanded steadily from 2017 to 2021, with a CAGR of 7.91%. In terms of structure, the company firmly promotes the development of fixed income business. 2022H1's self-equity securities and securities derivatives / net capital and non-equity securities and securities derivatives / net capital are 6.84% and 189.22% respectively.
Brokerage business: the proportion of income is stable, strengthen the construction of regional channels. In 2021 and 2022Q1-3, the first venture realized brokerage fee income of 4.75 yuan and 295 million yuan respectively. Among them, stock brokers and seat leasing are the core of the brokerage business, and 2022H1 agents' income from buying and selling securities and seat leasing accounts for 93.64% of the total revenue of the brokerage business. In terms of channels, the company focuses on Guangdong, as of 2022H1, of the company's 56 business departments, 16 are located in Guangdong, accounting for 28.57%. In the first half of 2022, in order to strengthen regional operation, the company upgraded 9 large business departments to branches, strengthened branch management and improved the promotion of regional advanced experience.
Investment banking business: the proportion of income shows a downward trend, actively expand innovative business. The first venture investment banking business is carried out by a wholly-owned subsidiary, Yicheng Investment Bank. In 2021 and 2022Q1-3, the company's investment banking fee income was 3.06 yuan and 188 million yuan respectively, accounting for 9.41% and 9.82%, respectively. In terms of equity financing, the total amount of equity underwriting of 2022H1 is 4.711 billion yuan; in terms of bond financing, the total amount of bond underwriting of 2022H1 is 5.964 billion yuan. The company is actively expanding green debt, rural revitalization debt and other innovative business. 2022H1, the "National Network Leasing 2022 low-carbon Transformation Bond" jointly underwritten by a pioneering investment bank, is the first low-carbon transformation-linked corporate bond in the domestic leasing industry.
Risk factors: public offering fund business development is not as expected, investment business loss risk, agency turnover decline, wealth management market development is lower than expected, credit business risk exposure risk.
Investment suggestion: with the reform of the capital market and business innovation of the securities industry, the concentration of the securities industry is expected to increase.
The first venture is characterized by fixed income and capital management business, continues to strengthen the ability of active management and product creation, and is expected to create characteristic brand value and differential competitive advantage in the future. We believe that the current price basically reflects the reasonable valuation of the first venture, and the company's stock price is expected to keep pace with the changes in the industry as a whole in the future. The net profit of the first venture is expected to decline by 24% in 2022. It is estimated that the BVPS of 2022 and 23 will be 3.53 and 3.66 yuan respectively.