Shen Wanhong disclosed that the first quarterly report of 2020 was slightly better than expected. By the end of the first quarter, the company achieved both operating income and profit growth, which was better than the industry average. The operating income was about 7.7 billion yuan (+ 41.0%), mainly contributed by other businesses. At the same time, the net profit returned to the mother was 1.99 billion yuan (+ 6.7%), and the diluted earnings per share was 0.08 yuan. The weighted average return on equity was 2.36 per cent (- 0.27pt), slightly better than expected. The revenue contributions of the five major business sectors, namely brokerage, investment banking, asset management, credit and proprietary business, are 16.7%, 2.5%, 3.7%, 11.0% and 22.0%, respectively.
Benefiting from the active market investment, the personal financial sector greatly boosted the trading volume of A shares in the same period, with turnover of 11.2 trillion yuan (+ 72%), 19.6 trillion yuan (+ 123%) and 19 trillion yuan (+ 2.7%) from January to March, respectively. The personal financial sector was greatly boosted, of which the net income from brokerage fees was about 1.29 billion yuan (+ 25.1%). The net interest income is about 850 million yuan (+ 59.4%).
The market continued to decline in the first quarter, and the performance of proprietary business was under pressure.
During the same period, the market continued to decline, with CSI 300s falling by-2.26%,-1.59% and-6.44% respectively from January to March, resulting in pressure on the company's proprietary business performance, with changes in investment income and fair value totaling about 1.69 billion yuan (- 22.1%). At the same time, the fair value of investment in other equity instruments changed to-460 million yuan, compared with 1.1 billion yuan in the same period last year, a sharp decline over the same period last year.
Investment banking and asset management business are not performing well, but the potential is still there.
In the same period, the net income of the company's asset management business is about 290 million yuan (- 10.6%), and the net income of investment banking business is about 190 million yuan (- 32.1%). From the beginning of the year to now, the amount of stock and debt underwriting of the company is 18.1 billion yuan and 76.4 billion yuan respectively, ranking 6th and 10th in the industry, with sufficient potential.
Profit forecast and investment suggestion
It is estimated that the company's 20-22-year net profit will be 100 million yuan in 61-70-83 (compared with the same period last year), and the diluted EPS will be 0.25 billion yuan and 0.28 yuan respectively, respectively. The current stock price will be rated as "overweight" according to the dynamic PE of 18-16-13.
Risk hint
Monetary policy has changed more than expected in terms of direction and intensity.