I. events:

On the evening of August 18, Dongxing Securities (601198) disclosed its semi-annual report that the company's operating income in the first half of the year was 1.411 billion yuan, down 14.14% from the same period last year, and its net profit was 565 million yuan, down 25.75% from the same period last year. In terms of shareholders, the shareholding of CSC has increased significantly from 27.42 million shares reported in the first quarter to 112 million shares, with a shareholding ratio of 4.06%, making it the company's third largest shareholder and the largest tradable shareholder.

Second, comments:

In the first half of 2017, under the influence of the continuous shock adjustment of the market, the company achieved operating income of 1.411 billion yuan, a decrease of 232 million yuan, or 14.14%, compared with the same period last year, mainly as follows: the net income of handling fees and commissions decreased by 232 million yuan, or 21.04%, compared with the same period last year; the profit and loss of investment income and fair value changes decreased by 332 million yuan, a decrease of 35.69% At the same time, the net interest income increased by 337 million yuan compared with the same period last year.

The decline in operating income and net profit of the company is greater than the average level of the industry, in line with expectations.

In the case of the decline of brokerage business income and proprietary business income, the growth of capital intermediary business income makes up for the decline of traditional brokerage business to a certain extent. Although the income of investment banking and asset management business has declined greatly, the income of the two businesses is more than 240 million yuan, which has significantly increased in the proportion of the company's business income, and has become an important business development direction of the company. It is an important revenue support for the company's annual performance to stabilize and rebound. It is a pity that there is a loss of 85 million yuan in alternative investment.

1. The contribution of the rapid growth of capital intermediary business to income is obvious.

During the reporting period, the balance of margin trading of the company was 8.705 billion yuan, the balance of margin trading of the parent company ranked 21st in the market, the cumulative amount of financing purchases ranked 18th in the market, and the interest income of the two financial institutions in the first half of the year was 354 million yuan. The scale of stock pledge repurchase business continued to grow rapidly. at the end of June, the balance of stock pledge (including the scale of stock pledge in asset management business) was 19.5 billion yuan, an increase of 2.63% over the beginning of the year, and realized 160 million yuan in stock pledge interest income with own funds, an increase of 154.41% over the same period last year. In the case of the decline of brokerage business income and proprietary business income, the growth of capital intermediary business income makes up for the decline of traditional brokerage business to a certain extent.

2. The proportion of investment banking and asset management income to improve the effectiveness of business structure transformation in the first half of 2017, the proportion of income from large investment banks and large asset management business was 18% and 12% respectively, up 10 percentage points and 5 percentage points respectively over the first year of listing.

In terms of investment banking business, the company achieved a net income of 284 million yuan in investment banking business in the first half of the year, accounting for 20.10% of the income, which has become one of the company's important sources of income. According to the Securities Association, companies ranked 21st in investment banking net income as of June 30, 2017, up eight places from the end of 2016. In the first half of the year, the company completed 3 IPO projects, 6 single equity refinancing projects, 1 M & A restructuring project, 7 bonds and 3 asset-backed securities products, with a total main underwriting amount of 23.144 billion yuan. Among them, the number of stock main underwriters is 9, and the total amount of funds raised by stock main underwriting projects is 12.136 billion yuan. According to wind statistics (listing date is the time point), the number of stock main underwriters and the amount of underwriting in the first half of the company ranked 16th and 18th in the industry, while the number of bond underwriters was 7, with a financing scale of 11.008 billion yuan.

In terms of asset management business, the company achieved a net income of 241 million yuan in asset management business, down 36.01% from the same period last year, and remained among the top 20 in the industry. By the end of June 2017, the total entrusted size of the company's asset management was 119.149 billion yuan, including 46 collective asset management plans with a management scale of 29.044 billion yuan, and a targeted asset management plan with a management scale of 77.588 billion yuan, an increase of 22.40% over the end of 2016. there are 4 special asset management plans, with a management scale of 2.664 billion yuan, an increase of 69.98% over the end of 2016. There are six fund management products with a management scale of 9.854 billion yuan, an increase of 37.68% over the end of 2016.

In line with the development of the market, the company focuses on improving the comprehensive service capacity of investment and financing around the development direction of "large investment bank, big asset management and big sales". From the perspective of various business income, the transformation of its business structure has achieved results.

3. The project reserve is enriched and the investment banking business is expected to continue to grow.

In terms of project reserve, there are 11 IPO projects under review, 18 refinancing projects under review, 15 projects under review on the new third board, and the industry ranks 19th, 5th and 16th respectively. In addition, the company is in the IPO listing coaching phase of a total of 29 projects, the industry ranked 12th. The project reserve is relatively substantial, which has laid a relatively solid foundation for the sustained growth of investment banking revenue.

4. The stock price of CSC is expected.

In terms of shareholders, the shareholding of CSC has increased significantly from 27.42 million shares reported in the first quarter to 112 million shares, with a shareholding ratio of 4.06%, making it the company's third largest shareholder and the largest tradable shareholder. As the representative of the "national team", the behavior of CSC in the market has a very important impact on the direction of market investment. Therefore, in the second quarter, CSC may have a positive impact on Dongxing Securities's holding behavior or the company's share price. Investors should pay attention to it in due course.

III. Conclusion

The proportion of the company's brokerage business income to the company's operating income is only 31.89%, and the transformation of the company's business income structure has achieved results. under the strategic development background of "big investment bank, big asset management, big sales", investment business and asset management business are becoming important business pillars of the company, and the growth of its income will be of great significance to the development of the company.

IV. Main risks

The risks that Dongxing Securities faces in the second half of this year may mainly come from two aspects: first, the risk of continuous market adjustment; second, the improvement of investment banking and asset management business is less than expected.