Geographical advantages are unique, and the growth of wealth management and asset management is expected.
The company is a securities firm in Zhejiang Province, benefiting from location advantages and shareholder resources, the company's investment banking + investment and wealth management and other business growth is expected. The company's wholly-owned subsidiary Caitong Capital Management contributed 19% to the average profit in the past three years, the fixed collection business has obvious advantages, and the market share of public offering non-goods continues to increase; the market share of the company's new accounts continues to increase, and the number of online accounts has reached a new high showing the advantages of online gold business. the company cooperates closely with BABA Group and is expected to benefit from the Alipay flow dividend brought by the release of three-party diversion in the future. The company's shareholding subsidiary Yong'an Futures and Zhejiang Merchant assets contributed 31% of the average total profit from 2020 to 2022. As the leading enterprises of futures and local AMC, the two subsidiaries have outstanding profitability and are the stabilizers of the company's ROE. We estimate that the net return from 2023 to 2025 will be 21.8 million at 27.7 and 3.53 billion, compared with the same period last year, with a year-on-year increase of + 44%, 27%, 6.5% Roe, 6.5%, 7.8%, 9.2%, and 0.6, 0.8, respectively. The current share price is 1.0 times PB 1.1 amp, giving a "buy" rating for the first time.
The business is deeply cultivated in Zhejiang, and the subsidiary company has strong profitability.
The main results are as follows: (1) Zhejiang Province has high-quality corporate and retail customer resources, active private capital and strong venture capital capacity, which is conducive to supporting the long-term development of the company's investment banking + investment, big wealth management and other businesses. In 2022, the company has the first number of business departments in Zhejiang Province, the second in the province of stock-based transactions, the first in the number of IPO projects in the province, and the third in the province in the scale of bond underwriting. (2) the Yongan futures and Zheshang assets in which the company participates provide a stable profit contribution, with an average profit contribution of 15% in 2020-2022. Yong'an Futures is the leader of the futures industry. From 2013 to 2021, ROE maintained more than 13%, and gross profit in Zhejiang Province accounted for 81%. Yongan Futures is expected to fully benefit from the favorable policies of the futures industry. Zhejiang Merchants assets are the largest local AMC,ROE in Zhejiang Province, maintaining an upward trend, with ROE reaching 14% in 2022.
The market share of new accounts has increased, the advantages of capital management and fixed income are outstanding, and they work closely with BABA Group.
(1) the growth rate of the number of customers and asset scale of the company outperformed the market. At the end of 2022, the number of customers reached 2.86 million, + 15% year on year. The market share of new accounts continued to increase, of which the number of online accounts continued to grow. The number of new online accounts reached a six-year high in 2022, an increase of 46% over the same period last year. (2) the income of the company's asset management business ranked sixth in the industry in 2021, and the public offering AUM ranked third in the licensed asset management of securities firms at the end of 2022. In 2022, the financial management ROE reached 27%, and the public debt base AUM2017-2022 5-year CAGR reached 250%. (3) the company cooperates closely with BABA Group, which also belongs to Zhejiang Province, and the digital reform is advancing steadily. With the tripartite diversion policy or landing, the company's business is expected to be the first to benefit from the Alipay flow dividend.
Risk hints: market fluctuations affect the performance reward of asset management; the landing and impact of the three-party diversion are uncertain.