1. Incidents.
The company released its report for the first quarter of 2015.
2. Our analysis and judgment.
1) The performance exceeded market expectations, leverage increased steadily, and cost control was excellent.
2015Q1, the company achieved operating income of 579 million yuan (YOY +219.7%); net profit of 275 million yuan (YOY +345.1%); basic EPS of 0.078 yuan (YOY +110.8%), ROE reached 4.21% (yoy+1.42ppt), exceeding market expectations. During the reporting period, the company began to steadily increase its leverage ratio: by the end of Q1 2015, the company's total asset leverage ratio reached 2.87 times, and the active leverage ratio reached 2.00 times, and there is still plenty of room. Furthermore, the company's expense control was excellent, and the management fee rate was reduced to 29.8% during the reporting period (yoy-21.0ppt).
2) Brokering and self-employment contributions have increased, and net interest income has exploded.
Brokerage business: Net revenue in the first quarter reached 189 million yuan (YOY +201.0%), mainly due to the sharp increase in market transactions, while the market share remained at 0.22%, the same level as the full year of last year. Furthermore, since the company's brokerage business is relatively concentrated in the economically underdeveloped Yunnan Province, the comparable commission rate remained high at around 0.10% in the first quarter.
Investment business: Net revenue for the first quarter was 0.08 billion yuan (YOY -25.1%). The year-on-year decline in investment banking business during the reporting period was mainly due to the company's underwriting business not yielding results in the first quarter. However, the company's investment banking business accounts for a very small share, and the impact on performance is minimal.
Asset management business: Net revenue for the first quarter was 20 million yuan (YOY +55.2%), with steady growth.
Proprietary business: Investment income in the first quarter (investment income after excluding allied ventures plus fair value) reached 267 million yuan (yoy +223.4%), and the annualized return on investment was as high as 34.7%.
Capital intermediary business: At the end of the first quarter, the scale of the two finance business reached 3.54 billion yuan, and the purchase and resale of financial assets reached 3.6 billion yuan, up 56.8% and 2.1% respectively from the beginning of the year; as a result, the company's net interest income for the first quarter reached 95 million yuan (YOY +634.3%), making it the business line with the company's fastest year-on-year revenue growth rate.
3. Investment advice.
We believe that the flexible advantage of the company's first-quarter performance as a small regional brokerage firm has been reflected, and the following highlights are worth looking forward to: 1) The company's capital brokerage business still has great potential: the company's active leverage ratio at the end of the first quarter was only 2 times, far lower than other listed brokerage firms. There is plenty of room for leverage. The scale of the two finance business and stock pledged repurchase business has huge potential to grow; 2) The company is active in cooperating with Internet companies. Following the previous signing of a cooperation agreement with Online Banking Online, the company recently collaborated with Wind Information to release the “Three Banks” financial intermediation platform for the financial intermediation platform Promote the company Traditional business transformation and innovative business development are of great significance. Therefore, we maintain our “recommended” rating and maintain our previous earnings forecast for the company of 2015/2016 EPS of 0.28/0.50 yuan.
