Introduction to this report:
In the context of the continuous strengthening of the financial services real economy, the company continues to enhance its ability to grasp the needs of industrial customers to enhance the competitiveness of risk management business; the company is an industry leader with leading profitability and is committed to building a leading derivatives investment bank.
Key points of investment:
For the first time, coverage was given an “increase in holdings” rating, with a target price of 20.03 yuan. The forecast revenue for 2023-2025 is 256.00/306.15/35.139 billion yuan, -26.39%/+19.59%/+14.78%; net profit is 7.91/9.39/1,022 billion yuan, +17.59%/+18.74%/+8.80%, corresponding EPS is 0.54/0.65/0.70 yuan, and BVPS is 8.62/9.12/9.58 yuan. We conservatively chose the relative valuation of P/E, 36.87 times P/E as the company's valuation, corresponding to a reasonable valuation of 20.03 yuan, covering the “increase in holdings” rating for the first time.
Under the position of the financial services real economy, future risk management business has great potential; the company's stronger ability to grasp the needs of industrial customers is expected to drive performance beyond expectations. 1) The Central Financial Work Conference emphasized the need to adhere to the real economy of financial services as the fundamental purpose, and in this context, there is huge potential for risk management services for industrial customers; 2) Thanks to its deep insight into industrial customers, the company is expected to continue to consolidate and improve its ability to meet the needs of industrial customers, drive the competitiveness of its own risk management business, and accelerate the growth in overall performance beyond expectations.
The company is a leading futures company in the industry with leading profitability. ROE continues to be higher than the industry average, mainly due to Zhejiang's location advantages and better grasping the needs of industrial customers to drive rapid growth in its own risk management business. 1) The company is a leading domestic futures company, committed to building an industry-leading and unique derivatives investment bank, and the ROE level continues to be higher than the industry average; 2) the continued increase in risk management business revenue is the main cause of the company's profitability growth, contributing more than 100% to the company's adjusted operating income (excluding the cost of goods sold) in 2020 and 2021; 3) the increase in the company's risk management business is mainly due to the company's location advantages in Zhejiang Province to acquire a large number of high-quality industrial customers, and has effectively grasped the opportunities for the growth in risk management requirements of industrial customers.
Catalyst: The risk management demand of industrial customers has increased steadily.
Risk warning: Demand for risk management has fallen short of expectations, and the scale of futures market transactions has fluctuated greatly.