This report is read as follows:
Jiangsu and Ningxia provinces occupy the market advantage, brokerage business online and offline coordinated development, the importance of credit business is prominent, and the development is stable, the capital strength has been significantly enhanced after 18 years of IPO.
Main points of investment:
For the first time, it was given a rating of "prudent overholdings" with a target price of 7.99 yuan. The company is headquartered in Nanjing, Jiangsu Province, a solid customer base, while in-depth layout of Ningxia area, obvious location advantages. Brokerage business online and offline coordinated development, credit business strictly control risks, the proportion increased steadily, and the capital strength was significantly enhanced after the 2018 IPO. 19Q1 revenue and homing net profit rose 53.8 per cent and 91.1 per cent respectively compared with the same period last year. We estimate that the company's net profit for 2019-21 will be 6.7 million yuan, 0.27 million yuan, 0.23 billion yuan and 7.4% for 2019-21, respectively, and the ROE will be 6.2%, 6.8%, 7.4%, respectively. With reference to the valuation of the peer-to-peer comparable company, the company is given 2.4X Pmax B, corresponding to the target price of 7.99 yuan.
With wealth management as the core, credit business drives growth. 1) in the 1880s, the income of the securities trading business (including seat leasing) was 292 million yuan, accounting for 24% of the total income, and the industry ranked 46th. The company insists on the coordinated development of online and offline. The number of APP users of Golden Compass has increased by about 87% compared with the same period last year, and the number of customers of the company has increased by 5.8% compared with the same period last year. 3) the 18-year net interest income is 372 million yuan, accounting for 30% of the total income, which is the largest source of income for the company. Margin interest income 369 million yuan, the industry ranked 40th, the business balance of 3.678 billion yuan; equity pledge interest income of 135 million yuan, the industry ranked 53rd, the financing balance of 2.467 billion yuan.
The location of the two provinces is dominant and the risk control system is sound. 1) at present, there are 95 securities business departments in China, of which 47 are located in Jiangsu Province, which are among the top five in the industry in terms of the number of business departments, the share of shares and the number of customers in Jiangsu Province. In addition, there are 15 outlets in Ningxia, with the number of business departments and stock-based turnover in the region ranking first, and holding 51% of Ningxia equity trading center. 2) the company establishes a five-level compliance risk control system from the board of directors to business departments and branches, and compliance and risk management cover all businesses and links, and the classified evaluation results are Class An and A for four consecutive years.
Catalyst: the improvement of market activity; the continuous promotion of capital market reform and innovation.
Risk tips: credit risk of capital intermediary business; strict supervision of the industry.