Event description:
On March 13, 2018, the IPO of Nanjing Securities was approved by the Review Committee, and on June 1, Nanjing Securities applied offline. This time, it is proposed to issue 275 million shares, with a total share capital of 2.749 billion shares after the completion of the issue, with an issue price of 3.79 yuan per share, with an estimated net capital raised of 937 million yuan.
Main points of investment:
The business is mainly carried out around Jiangsu Province and Ningxia, with obvious location advantages. The company has 86 business departments, of which 42 securities business departments are located in Jiangsu Province, accounting for 48.84%; 15 business departments and 1 branch have been set up in Ningxia, with outlets all over most prefecture-level cities in Ningxia. It has strong pricing power in Ningxia market, and the regional leading competitive advantage is obvious.
It is highly dependent on traditional business, and the contribution rate of brokerage business to operating income is the highest. In 2015, 2016 and 2017, the income of securities brokerage business was 1.91 billion yuan, 777 million yuan and 568 million yuan respectively, accounting for 63.67%, 51.81% and 41.06% of the current operating income, respectively. As of December 31, 2017, the company has 15 branches and 86 business departments, and the securities brokerage business has 1.1125 million customers and custodian customer assets totaling 184.77 billion yuan.
Credit trading business is growing rapidly and has become a new growth point of performance. In 2015, 2016 and 2017, the operating income of the credit trading division was 670 million yuan, 442 million yuan and 498 million yuan respectively, accounting for 22.34%, 29.47% and 35.99% of the operating income in the same period, respectively. Among them, the interest income of margin trading business is 712 million yuan, 448 million yuan and 415 million yuan respectively, accounting for 23.74%, 29.87% and 29.96% of business income respectively.
Profit forecast and valuation: according to the development trend of the industry and the level of the company's competitiveness, we expect the company's operating income to be 1.447 billion yuan, 1.516 billion yuan and 1.609 billion yuan respectively, and the net profit to be 475 million yuan, 484 million yuan and 521 million yuan respectively, and the corresponding EPS is 0.17,0.18 yuan and 0.19 yuan per share respectively. With reference to the valuation of the comparable company, combined with the future growth of the company, the company is given 1.77 × PB in 2018, corresponding to the target price of 6.58 yuan.
Risk tips: 1) the secondary market fluctuates sharply; 2) the market competition exceeds expectations.