The comprehensive strength of Bank of China Securities ranks about 40 in the securities industry. Asset management is the company's advantage business, the company also holds securities management and public fund licenses, 2022H1 at the end of the entrusted assets ranked third in the industry.
Bank of China International Holdings, a major shareholder of Bank of China Securities, is a wholly owned subsidiary of Bank of China Ltd., and its degree of globalization and integration are in the forefront of the industry. The company can give full play to the synergy advantage of "investment bank + commercial bank", while meeting the comprehensive financial service needs of shareholders and related enterprises, at the same time, relying on shareholder resources to enhance the core competitiveness.
Ranked about 40 in the industry, relying on shareholder resources to enhance the core competitiveness. The comprehensive strength of Bank of China Securities ranks about 40 in the industry. Bank of China International Holdings, a major shareholder of Bank of China Securities, is a wholly-owned subsidiary of Bank of China Ltd.. Bank of China Ltd. is the longest-running bank in China, and its degree of globalization and integration is in the forefront of the industry. The company can give full play to the business synergy advantage of "investment bank + commercial bank", while meeting the comprehensive financial service needs of shareholders and related enterprises, at the same time, relying on shareholder resources to enhance the core competitiveness. At the profit level, 1-3Q2022 Bank of China Securities achieved revenue of 2.255 billion yuan, down 14.26% from the same period last year; net profit from its parent was 766 million yuan, down 18.76% from the same period last year; diluted ROE was 4.68%, compared with 6.01% in the same period last year.
Wealth management: the proportion of income from brokerage business is on the rise, and the income from consignment products reaches 61% CAGR. In terms of brokerage business, 2022H1 achieved a net income of 481 million yuan, down 6.40% from the same period last year, accounting for 33% of total revenue. The proportion of brokerage income rose from 19% to 35% in 2018-2021, and became the largest source of income since 2020. Among the business segments, the company's revenue from consignment products grew the highest from 2017 to 2021, with CAGR reaching 61%, mainly due to the company's efforts to expand its wealth management customer base. 2022H1 achieved net income of 55 million yuan, down 23.9% from the same period last year due to market fluctuations. In terms of credit business, the scale of the last two financing of 2022H1 was 10.695 billion yuan, down 14.2% from the same period last year; the stock repurchase scale was 436 million yuan, down 24.1% from the same period last year.
Investment management: the net income of asset management increased by 8.2% compared with the same period last year, and the total scale of asset management ranked third in the industry. In terms of asset management business, 2022H1 achieved a net income of 394 million yuan, an increase of 8.2% over the same period last year. In terms of trend, the net income of 2019-2022H1 is rising steadily, and the share of income is basically stable at around 25%. In terms of scale, the assets under management of Bank of China Securities at the end of 2022H1 were 719.2 billion yuan, ranking third in the industry, down 4.8 per cent from the same period at the end of 2021. In terms of private equity investment and alternative investment business, according to its announcement, the company intends to cooperate with the government to set up high-quality tracks such as industry-guided fund layout, health, hard technology and so on.
Institutional finance and trading: the proportion of investment bank income continues to decline, and the scale of proprietary securities has increased steadily in the past five years. In terms of investment banking, 2022H1 achieved a net income of 54 million yuan, down 41.1 percent from the same period last year. In terms of trend, the share of net income of the company's investment bank has declined, from 14% in 2017 to 4% of 2022H1, mainly due to the decline in underwriting rates and bond underwriting. In terms of investment trading business, 2022H1 realized net investment income + fair value change net income of 124 million yuan, due to a low base in the same period last year, an increase of 79.7% over the same period last year. In terms of scale, the scale of the company's self-investment has increased steadily in the past five years.
Risk factors: a-share turnover decreased significantly; credit business risk exposure; investment losses; investment banking business development lagged behind; wealth management market development was lower than expected.
Profit forecast and valuation: based on the above situation, we forecast that the annual operating income in 2022-23-24 will be 333,37 / 3.9 billion yuan, and the net profit attributable to the parent company will be 10.9 Universe 1.93 billion yuan. We selected Guolian Securities, Nanjing Securities, Caida Securities and Hua'an Securities as the comparable companies of BOC Securities. Wind unanimously expects the average PB valuation in 2022 to be about 1.60 times. The current PB of BOC Securities is 1.80 times, which is higher than that of comparable companies, mainly due to the fact that the ROE level (4.78%) in the first three quarters of 2022 is better than the average of comparable companies (3.84%).
With the reform of the capital market and the business innovation of the securities industry, the securities industry will move towards concentration. At the same time, the fluctuation of the stock market will inevitably bring the beta effect, which will make the valuation of securities firms fluctuate greatly. In the short term, market fluctuations and the decline in stock-based trading volume and other adverse factors will suppress the overall profit level of the brokerage sector. In the long run, with the periodic negative digestion of the brokerage plate, it is expected that the company's valuation will gradually recover with the growth of profits.