Introduction to this report:
Thanks to the strong empowerment of shareholders and management, the company's position in the industry has skyrocketed over the past few years. Currently, the merger and acquisition of Minsheng Securities has entered a substantial stage. Starting again from a new starting point, it is worth looking forward to becoming better and stronger.
Key points of investment:
Investment advice: Give an “gain” rating, with a target price of 11.29 yuan. Profits are expected to be under pressure in the short term due to capital market fluctuations, compounded by strategic investment such as talent promotion. Without considering the impact of Minsheng Securities, the 2024-2026 revenue of Guolian Securities is estimated to be 2.52/2.73/2.98 billion yuan, -14.6%/8.2%/8.9%; net profit to mother was 0.62/0.71/0.82 billion yuan, respectively, -7.6%/+15.1%/15.4%, corresponding EPS was 0.22/0.25/0.29 yuan, and BPS was 6.36/6.50/6.65 yuan. We carefully selected the valuation results of the PE valuation method, which has a slightly lower valuation level, gave the company a target price of 11.29 yuan, and gave it an “increase in wealth” rating.
Small and medium-sized brokerage firms break the example, and their governance advantages enable growth. 1) Since 2019, the company has continued to expand and strengthen through business transformation, capital addition, and mergers and acquisitions, and its position in the industry has continued to improve, and its comprehensive strength has gradually increased from 50-60 in the industry to 30-40 in 23 years; 2) The reason behind this is that compared to other small and medium-sized brokerage firms, it has outstanding advantages at the corporate governance level. First, the Wuxi State-owned Assets Administration Commission and the controlling shareholder, the League of Nations Group, provided strong resource support. For example, in 23, a 9.1 billion bid was used to bid 30.3% of Minsheng Securities's shares, and the second was to use professional manager reforms to introduce senior executives from leading brokerage firms such as Ge Xiaobo to strengthen the company with forward-looking strategy and execution.
Mergers and acquires Minsheng Securities and starts again from a new starting point. On the evening of May 14, the company announced a plan to acquire all shares of Minsheng Securities, marking that the integration process has entered the actual progress stage. As a medium-sized brokerage firm with distinct investment banking business characteristics, Minsheng Securities is comparable in size to Guolian Securities. It is expected that the synergy between the two will be regional complementarity and business complementarity after merger. More importantly, through the merger of Minsheng Securities, the comprehensive strength of Guolian Securities may rise to the top 20 in the industry. On this basis, the company's governance advantages are expected to be further exploited, preparing for long-term development, and looking forward to the results of the merger.
Catalyst: Promoting mergers and acquisitions with Minsheng Securities
Risk warning: The equity market fluctuates greatly; mergers and acquisitions are progressing less than expected.