Main points of investment
1. The performance is in line with expectations and the month-on-month growth continues.
On the whole, the company's performance is in line with expectations, and the sustained and sound trust business is still a strong guarantee for the company's performance growth. The quarter-on-quarter data are better than the same period last year: first-quarter revenue of 1.59 billion yuan, year-on-year-2.66%, month-on-month + 13.90%; return to the mother net profit of 1.056 billion yuan, year-on-year + 3.51%, month-on-month + 25.28%.
two。 The inherent business fluctuates, the trust business continues to grow, and the margin continues to increase.
In terms of inherent business, interest income was 141 million yuan, an increase of 81 million yuan over the same period last year. The investment income was 25 million yuan, a decrease of 61 million yuan over the same period last year, of which the fair value change income was-405 million yuan. the main reason for our analysis is that the stock market fluctuated greatly in the first quarter, making it more difficult to invest. From the balance sheet, the financial assets measured at fair value and included in the current profit and loss reached 4.395 billion yuan, a sharp decrease of 1.014 billion yuan compared with the beginning of the year. In the trust business, the net income of handling fees and commissions is 1.902 billion yuan, + 21.22% compared with the same period last year, and + 17.70% compared with the previous year, which is still the core factor for the company to maintain sound performance.
CSC continued to increase its shareholding to 4.41%, and its shareholding increased by 0.73%. Huijin returned to the top 10 shareholders with a shareholding ratio of 0.91%, the same as in the third quarter of 2017, with a combined shareholding of about 5.32%, a significant increase.
3. The scale of the industry has reached an inflection point of growth, and strict supervision will continue.
Since the beginning of this year, the industry regulatory policy has been rapidly tightened, new bank regulations and structured trust product restrictions have been introduced, trust companies have faced window guidance one after another, and the scale growth of the industry has reached an inflection point. According to social financing data released by the people's Bank of China in March, the balance of new trust loans in the month was-35.7 billion yuan, showing a negative growth for the first time since December 2015. New trust loans totaled 75.8 billion yuan in the first quarter, down about 90 percent from the same period last year, and the share of social financing fell to 1.40 percent from about 11 percent in 2017. We expect the growth rate of industry assets under management to decline significantly for the whole year, and we should pay more attention to the business quality indicators of each company in the future.
4. Investment advice:
In the context of the limited growth of channel trusts in the first quarter, the company's business structure with active management business as the core continues to show obvious advantages, and high-quality trust assets continue to make an important contribution to stable performance. Companies obtain financing through non-public issuance of preferred shares and other means to effectively reduce the overall financing costs, while the asset side through epitaxial mergers and acquisitions and diversified layout to improve asset quality. To sum up, we estimate that the company's EPS for 2018 and 2019 will be 0.87 and 0.92, respectively, and the corresponding Pamp E will be 13.6 and 12.9 times, respectively, maintaining the "recommended" rating.
5. Risk hint: the peripheral capital market continues to fluctuate, the supervision of the trust industry continues to tighten, and the underlying stocks of equity investment are retracted greatly.
