Events:

When the company released its semi-annual report for 2017, its operating income was 1.411 billion yuan, down 14.14% from the same period last year; the net profit attributed to shareholders of the parent company was 565 million yuan, down 25.75% from the same period last year; and earnings per share was 0.21 yuan.

Main points:

Brokerage and proprietary business have declined greatly.

The company's revenue fell 14.14% in the first half of the year, mainly due to the contraction of revenue from brokerage and proprietary business. In the first half of the year, industry brokerage business revenue fell by 30.59% compared with the same period last year, and the company dropped by 21.04% compared with the same period last year, which was less than the industry level. The market share was 0.89%, down 0.2 percentage points from the same period in 2016, and the industry ranked 27th, the same as at the end of 2016. Subject to the low volatility of the stock and bond market, the company's proprietary income fell 35.69%, a larger decline.

Asset management business: structure optimization, active management promotion

The company's "big investment bank, big asset management, big sales" strategy has achieved initial results. The proportion of income from large investment banks and large asset management businesses increased significantly, accounting for 18% and 12% respectively in the first half of the year, up 10 and 5 percentage points respectively from 2015. The net income of the asset management business was 241 million yuan, down 36.01% from the same period last year.

The product type structure has been optimized, the ability of active management has been further improved, and the contribution rate of active management income has reached more than 80%.

Investment banking business: rich project reserves

With the help of good projects and talent reserve, the company achieved a net income of 284 million yuan in investment banking business in the first half of the year, ranking 21st in the industry, up 8 places from the end of 2016. In the first half of the year, a total of 3 IPO projects, 6 single equity refinancing projects, 1 M & A restructuring project, 7 bonds and 3 asset-backed securities products were completed, with a total main underwriting amount of 23.144 billion yuan. In terms of project reserve, there are 11 IPO projects under review and 18 refinancing projects recommended by the company, and the industry ranks 19th and 5th respectively. In addition, the company is in the IPO listing coaching phase of a total of 29 projects, ranking 12th in the industry.

Investment suggestion

The synergy between the company and its major shareholder, China Oriental, is remarkable. In the first half of the year, the cumulative scale of each collaborative business is nearly 100 billion yuan, and the total revenue of the collaborative business is expected to increase by 13.59% over the same period last year. In the future, China Oriental will introduce new strategic investors to further integrate high-quality resources at home and abroad, which will help the company to enhance its collaborative business. At present, more than half of the company's branches are concentrated in Fujian, with obvious geographical advantages.

Give the company an "overweight" rating.

Risk hint

Trading in the market is light and trading volume shrinks sharply.