The net profit of homing is + 2950%, which is in line with expectations.
Baoshuo announced 1-3Q17 results: operating income was 1.508 billion yuan, an increase of 269.9% over the same period last year; net profit belonging to the parent company was 227 million yuan, an increase of 2950% over the same period last year, corresponding to 0.13 yuan per share and 1.52% of ROAE during the period.
Trend of development
Huachuang Securities 1-3Q17 achieved an income of 1.266 billion yuan and a net profit of 277 million yuan, accounting for 84% and 122% of the total income and return net profit of listed companies respectively (the original main business loss). Among them, Huachuang Securities 3Q has a revenue of 455 million yuan and a net profit of 95 million yuan, which is slightly lower than that of Q2 (revenue 466 million yuan, net profit 116 million yuan).
Bond underwriting is a bright spot in non-capital business. The company's Q3 fee and commission income + 39%HoH to 327 million yuan, of which Huachuang brokerage business stock-based trading volume of 150.943 billion yuan, market share slightly increased to 0.26% compared with the first half of the year; investment banks in Q3 underwriting two additional issues totaling 911 million yuan, currently 23 IPO reserves, ranking 27th in the industry, bond underwriting Q3 achieved 3.99 billion yuan, more than in the first half, Q3 share rose to 0.51%.
The capital business is expanding rapidly. After the matching financing funds are in place, the company's capital strength has improved significantly. The investment income of 1-3Q company is + 924% to 455 million yuan, which is expected to come mainly from bond investment. Capital intermediary business has also achieved rapid growth, including Q3 financing balance + 7%HoH to 1.834 billion yuan; buying and resale assets + 36%HoH to 7.3 billion yuan; lending funds increased by 300 million yuan compared with the previous month.
The management shareholding plan is back on the agenda. The company is currently re-planning equity incentive plans for listed companies and the management of Huachuang Securities, and the flexibility of the management mechanism brought by the background of private enterprises is expected to be further improved. In addition, the recent cooperation between Huachuang Securities and Agricultural Bank Of China will have a positive impact on its customer acquisition, channel layout and business development.
Profit forecast
We have raised our earnings per share forecasts for 2017 and 2018 by 6 per cent and 7 per cent respectively from RMB0.18 and RMB0.22 to RMB0.19 and RMB0.24 respectively.
Valuation and suggestion
At present, the company's share price corresponds to 17e 1.5x Phand B. We maintain our recommended rating and target price of 18.73 yuan, which is 42.98% upside from the current share price.
Risk
Regulation continues to intensify and the market goes down sharply.
