Incident: On December 25, Compass announced the incident. The company bid for 34.2076% of the shares of Pioneer Fund held by United Venture Group Co., Ltd. at a price of 110211594.5 yuan.
It is intended to become the single largest shareholder of Pioneer Fund by auctioning its own funds to obtain shares in Pioneer Fund:
Compass held the 19th meeting of the 13th board of directors on December 22, 2023, and authorized the management to participate in the judicial auction of Pioneer Fund Management Co., Ltd.'s shares with their own funds, and to bid for 34.2076% of Pioneer Fund held by United Venture Group Co., Ltd. at a price of 110211594.5 yuan on December 25. After winning shares in Pioneer Fund this time, the company plans to become the single largest shareholder of Pioneer Fund. Pioneer Fund was founded in 2016. Its business scope includes fund raising, fund sales, asset management, specific customer asset management, and other businesses approved by the China Securities Regulatory Commission. According to Wind information, as of December 26, 2023, the company's management scale was 3.43 billion yuan, of which 87.84% of the debt base.
The funds used to participate in this auction are all the company's own funds and are not expected to adversely affect the company's finances and operations.
Compass is creating a new “one, two wings” business development pattern and is committed to improving financial market coverage: this transaction will help Compass form a new “one, two wings” business development pattern with the original financial information services as the main body, securities services and public fund services as the two wings, laying a solid foundation for the company to continue to strengthen its comprehensive wealth management capabilities. In addition, through Compass's data advantages, technical advantages and customer resource advantages in the field of financial information services over the years, Pioneer Fund can also increase the market coverage of financial services, enhance customer stickiness, and further expand and deepen the company's specialized service capabilities and level in the financial field.
Focusing on financial information services for 22 years, Compass is leading the way for investors: The Compass brand was founded in 1997 and is one of the first domestic enterprises engaged in financial information services for securities investment. Since its establishment, the company has focused on securities analysis and securities information services. It is one of the early information operators authorized by Shenzhen Stock Exchange Level 2 and Shanghai Stock Exchange Level 2 data. It is also the first joint stock company in China to establish financial services for individual investors. The company has been deeply involved in the financial information service industry in China's capital market for more than 20 years, focusing on small and medium-sized investors. Currently, with its good corporate image and strong securities research technology and product development capabilities, it has become a comprehensive large-scale financial information service joint stock enterprise. By the end of 2021, Compass had accumulated more than 15 million registered customers and more than 1.5 million paying customers. In 2022, Compass acquired Netcom Securities and became the second Internet company with an A-share brokerage license after Dongfang Wealth.
The popularity of the Internet and the growth of investors have spawned huge market opportunities: the company is in the midst of a booming trend of digitalization and financial integration. In recent years, China's Internet penetration rate and number of Internet users have increased markedly. According to the 52nd “Statistical Report on China's Internet Development”, by the end of June 2023, the number of Internet users in China reached 1,079 billion, and the Internet penetration rate was 76.40%. The Internet has gradually become a part of daily life. At the same time, the number of Chinese securities investors is also showing a significant growth trend. According to China Securities Registration and Settlement Co., Ltd. investor statistics, the number of Chinese securities investors grew from 154 million to 220 million from June 2019 to June 2023, mainly natural investors, which provided Compass with huge market opportunities in financial instruments and consulting services.
Deep business collaboration and technological innovation jointly build core competitiveness: Based on nearly 20 years of experience in financial information services, Compass has successfully built the advantage of deep business collaboration through close interaction with investors. The strategic acquisition of McGow Securities perfectly combines fintech with securities trading expertise, realizes automated and intelligent upgrades, and is committed to providing users with more accurate and diversified financial solutions.
The company's ability to integrate resources was also outstanding. The significant growth in customer base and traffic entry points showed the effect of integrating resources. In terms of technological innovation, the company has made remarkable achievements in mobile app development and cutting-edge financial analysis tool research and development, and continues to promote new R&D projects to strengthen product usage stickiness and investor decision support.
Profit forecast and investment rating: It is predicted that the company will achieve revenue of 1,139 billion yuan, 1,599 billion yuan, and 2,272 billion yuan in 2023-2025; net profit to mother of 117 million yuan, 345 million yuan, 534 million yuan; EPS 0.29, 0.84, 1.30, PE 197.4X, 67.3X, 43.5X. We are based on the following aspects: (1) the company was involved in securities investment and financial information services earlier, and has a good first-mover advantage and industry experience; (2) benefiting from the popularity of the Internet and the increase in the number of natural investors, the company can continue to thoroughly cover new individual investors in the market by targeting financial services for individual investors; (3) the C-side traffic advantage of the compass is expected to empower McGo Securities and Pioneer Fund, linking investors and financial institutions to create a new pattern of “one and two wings” financial services development. The first coverage gives an “gain” rating.
Risk warning: Industry competition intensifies; industry prosperity falls short of expectations; policy implementation falls short of expectations; technological innovation progress falls short of expectations.