Summary of the report: profitability has improved steadily, and there is much room for performance improvement in 2020. Tianfeng Securities is a comprehensive listed securities company with full license, which was rated as Class An AA securities firm in 2019. In the past five years, the company's operating income as a whole showed an upward trend, with an average annual compound growth rate of 4.6%.
The net profit of homing has declined due to the provision of large asset impairment. In 2020, with the recovery of the economy, the replenishment of capital, the business growth brought about by the acquisition of Hengtai and the introduction of various favorable policies for the deepening reform of the capital market, the company's profitability is expected to pick up.
Securities brokerage business: the transformation of wealth management, is expected to achieve corner overtaking. In 2019, the competition in the industry was fierce, and the performance of the company's brokerage business declined under pressure. The acquisition of Hengtai Securities provides a supplement to the company's brokerage business, and the employment of China Merchants Bank wealth management veteran Wang Hongdong has greatly enhanced the professionalism of the team. This year, the company will improve the status of wealth management business, and is expected to achieve corner overtaking through fund investment business, and build a wealth management moat of securities firms from three aspects: stabilizing strategic position, improving service quality, and cultivating professional ability, and become a cutting-edge securities firm in wealth management.
Investment banking business: stable performance in the forefront, to build an all-round investment bank. In 19 years, the company's investment bank achieved income of 735 million yuan, + 89.23% compared with the same period last year, and the debt and M & A business ranked first in the industry.
Ding Xiaowen and Lu Yingshi lead investment banks and mergers and acquisitions, and investment banking performance is expected to move forward steadily. Asset management business: subsidiaries have been approved and the scale has increased steadily. The company has obvious advantages in the scale of entrusted funds, with entrusted customer assets of 167.4 billion yuan at the end of 2019. In addition, Tianfeng Capital Management subsidiary was approved, and the Xinhua fund was included in the bag through Hengtai Securities, and the business scale was greatly expanded.
Proprietary business: performance growth, scale expansion, solid income self-management is expected to achieve good results. In 2019, the net income of the company's proprietary business reached 1.198 billion yuan, + 283% compared with the same period last year, with a growth rate in the forefront of the industry. After the acquisition of Hengtai, the scale of the company's proprietary securities has increased significantly. It is expected that under the leadership of Zhai Chenxi, the performance of Tianfeng Securities collection team is expected to continue to improve.
Investment advice: the company's business layout is complete, this year is the first year of marching to the leading securities firms, the strategic direction is determined, each part of the business is led by industry experts, superimposed bull market cycle, performance outbreak is expected, growth is prominent. We expect the company's net income per share from 2020 to 2022 to be 0.08,0.11 and 0.13 yuan respectively. Coverage for the first time, giving a "buy" investment rating.
Risk hint: COVID-19 epidemic led to increased market volatility and increased risk of debt default
Investment logic: investment rating and valuation
We estimate that the company's operating income from 2020 to 2022 will be 56.43,71.05 and 8.11 billion yuan respectively, with year-on-year growth rates of 46.73%, 25.90% and 14.16% respectively, and net profit of 5.62,7.56 and 854 million yuan respectively. the year-on-year growth rates were 82.45%, 34.67% and 12.90%, respectively. The realized net income per share is 0.08,0.11 and 0.13 yuan respectively. Based on the closing price of 5.43 yuan on May 25, 2020, the corresponding PE is 64.46,47.87 and 42.40 times, respectively. The company's business layout is complete, this year is the first year of marching to the leading securities firms, the strategic direction is determined, each part of the business is led by industry experts, superimposed bull market cycle, performance outbreak is expected, growth is prominent.
Coverage for the first time, giving a "buy" investment rating.
Key hypothetical point
1. The securities brokerage business obtains the customer resources of Hengtai Securities, seizes the market opportunity to actively carry out the transformation of wealth management; at the same time, the funds are mainly invested in wealth management business and brokerage business. two。 Investment banking business to maintain advantages, the company's strategy to attach importance to the superimposed capital market reform brought investment banking business to the east, the performance continues to be healthy and upward. 3. The asset management business continues to strengthen the active management of brands and give full play to the advantages of fixed-income products. 4. The combination of proprietary business and Hengtai, expanding the scale of proprietary securities, superimposed rights issue and capital increase, the prospect of business development is promising. 5. The private equity business has received a large amount of capital replenishment from the company and will continue to contribute to performance returns in the coming years. 6. The consolidated financial statements of Tianfeng and Hengtai in 2020 have led to a substantial increase in the income and profits of securities brokers, asset management and proprietary business.
Different from the public's understanding
The market generally believes that Tianfeng is a medium-sized provincial securities firm, each business is squeezed by the leading securities firms, the development channel is single, the business space is small, it is difficult to overtake at the bend, and most of the time it fluctuates with the trend of the market.
We believe that the board of directors of Tianfeng Securities has determined the strategic goal of the company and positioned the future development of the company as a leading securities firm. After the big leaders of the company raise the flag, the business of the company is deployed to the top level in the industry. In recent 3-4 years, the company began to break through from the securities research business, and its research ability quickly entered the top 10 of the industry from unknown to unknown, and various businesses were promoted by the coordination of industrial chain research. In recent years, the company focuses on the deployment of various business sectors, the acquisition of Hengtai to make up for business deficiencies, a wide range of talent, investment banking, brokerage, asset management, self-management, research and other business leaders have been deployed, this year is expected to continue to make efforts. This year is the first year on its way to becoming a leading securities firm. It just so happens that the reform of the capital market has been promoted, the wealth management business has sprung up, and the fund investment business is expected to make a breakthrough. The company is expected to copy China Merchants Bank's successful experience in wealth management, and is expected to achieve corner overtaking 3-5 years later, squeezing into the list of leading securities firms.
Stock price performance catalyst
1. The role of rights issue in helping the company's self-management, securities brokerage and private equity fund business. two。 Various businesses are invited to the industry master as the leader; the acquisition of Hengtai, the two sides complement each other, driving up the stock price. 3. In 2019, the reform of the capital market system was rolled out in an all-round way, and a series of policies such as the introduction of Science and Technology Innovation Board, the new rules on refinancing and the reform of the gem registration system were good for the performance of securities firms. In 4.2020, the policy was looser than expected, releasing a lot of liquidity, reducing corporate financing costs, and a series of positive policies to enhance market risk appetite.
Core risk hint
1. COVID-19 's epidemic situation led to increased market volatility by 2. 5%. As the economy goes down, the risk of debt default increases.
