China Galaxy shareholders are strong and have a broad business layout. The company's predecessor, China Galaxy Securities Co., Ltd., was formed by integrating various banks' trust companies, securities business departments and other institutions. In January 2007, China Galaxy Financial Holdings established China Galaxy Securities Co., Ltd. as the sponsor and acquired the relevant business of the original company, and listed on H shares and A shares in 2013 and 2017, respectively. The actual controller of the company is Central Huijin. The shareholders are strong, providing more resources and strong support for the company's development.
The company expands its own business layout and enhances the company's market competitiveness by building a “five in one” business model.
The company operates steadily, and many indicators are at the forefront of the industry. As of the end of the third quarter of 2023, the company's assets were 676.32 billion yuan, ranking 5th in the industry, up 1 place from 2022. At the same time, the company's operating income scale and net profit scale are ranked 4th in the industry, up 5 and 6 places respectively from 2017, and the financial leverage ratio and ROE are ranked 6th in the industry. Compared with 2017, they are 16 and 25, respectively. Compared with 2017, the advantages over the industry are becoming more and more prominent.
The company's main business is developing well, and has significant advantages in credit, self-employment and brokerage business. According to the company's financial report, (1) The company relies on many sales departments to deeply cultivate economically developed regions. As of 2023H1, the number of sales departments in the company reached 479, ranking first in the industry. Among them, Guangdong, Zhejiang, Beijing and Shanghai sales departments account for 47%. Focusing on regions with many high-net-worth customers can provide a foundation for development of various businesses. (2) The market share of the two finance business is stable, and the rate is advantageous. 2023Q1-3's net interest income was 3.32 billion yuan, ranking first in the industry. According to 2023H1 data disclosure, the two finance business contributed the most, maintaining a market share of more than 5% of the business scale. The handling fee ratio has an advantage over the same industry, effectively increasing the company's interest income. (3) The scale of investment assets has been steadily expanding, driving revenue growth from proprietary businesses. The company's investment assets have grown at an annualized rate of 28.1% in the past 5 years. Among them, bond assets account for the highest proportion. Against the backdrop of large fluctuations in the equity market, the yield stability of the company's own business has improved. (4) Focus on developing shortcoming businesses and improving the company's market competitiveness. China Galaxy Investment Bank's business development goal is to build a first-class domestic investment bank by 2025 and strengthen the company's shortfall business.
Investment advice: Strong shareholders and a large company to help China Galaxy develop its business and gradually enhance its market competitiveness. It is estimated that in 2023-2025, the company's net profit to mother will be 80/98/11.5 billion yuan, EPS will be 0.76/ 0.93/1.09 yuan, and the corresponding PB valuation will be 1.09x/ 0.94x/0.82x, giving a “buy” rating for the first time.
Risk warning: The company's performance falls short of expectations, capital market performance falls short of expectations, etc.