Can the reorganization of senior management bring about a turnaround?

Investor Network - Cui Yuechen

Recently, there has been a significant personnel upheaval in the management of SDIC SEC.

Three core management members of the Brokerage - CFO Yang Chengsheng, Deputy General Manager and Board of Directors Secretary Liu Chunliang, and Deputy General Manager Wei Feng, collectively submitted their resignations on the same day.

It is worth noting that these three executives were all promoted during the tenure of the former General Manager Wang Lianzhi, with an average tenure of over 7 years. This collective resignation comes just over two months after the new General Manager Wang Suwang took office, and this timing has drawn widespread attention and speculation.

On the other hand, SDIC SEC has faced pressure from declining performance in recent years, with Net income dropping by 38.29% and 25.98% year-on-year in 2022 and 2023 respectively, while in the first half of 2024, Net income continued to decline by 22.24% year-on-year. In this context, the frequent changes in senior management may further exacerbate market uncertainty and also reflect the company's strategic adjustments in addressing current challenges.

As the new leadership team gradually comes into place, can SDIC SEC emerge from its difficulties and achieve revenue growth?

Major changes in senior management.

On the morning of December 23, the senior management personnel list announced on the SDIC SEC official website included the names of Yang Chengsheng, Wei Feng, and Liu Chunliang; however, by the afternoon, their information had been removed from the list, and the executive team that originally consisted of 7 members is now down to 4.

Looking back at the resumes of these three executives, it is not difficult to find that they held important positions in the business landscape of SDIC SEC.

Public information shows that Liu Chunliang has worked at SDIC SEC for more than 7 years, with nearly 12 years in the SDIC system. In September 2008, Liu Chunliang joined SDIC UBS Fund, serving as deputy general manager and then general manager; in 2017, he joined SDIC SEC (formerly known as Anxin Securities), holding the positions of deputy general manager and Board of Directors secretary, while also serving as a director at SDIC SEC International Financial Holdings Co., Ltd., playing an important role in the company's international layout.

Yang Chengsheng has been working at SDIC SEC since October 2014, with more than 10 years of service, coming from a finance background, and serving as CFO before leaving. Prior to that, Yang Chengsheng worked at the National Development Investment Corporation, SDIC Finance Co., Ltd., and other institutions, possessing rich experience in financial management.

Wei Feng is a senior female securities professional, having worked at CICC Wealth, SDIC SEC (formerly known as Anxin Securities), and Anxin Fund, serving as deputy general manager at SDIC SEC before leaving. The cumulative service time at SDIC SEC amounts to more than 9 years. During her tenure at SDIC SEC, Wei Feng was in charge of wealth management business and was a key driver for the company's transformation in Retail Trade.

Regarding the reasons for the resignations of these three executives, the controlling shareholder of SDIC SEC, SDIC Capital (600061.SH), stated that Yang Chengsheng is resigning due to a job transfer, while Liu Chunliang and Wei Feng left for personal reasons. In addition, SDIC Capital also mentioned that based on the needs of business development and the actual situation of the leadership team, the candidates for the SDIC SEC leadership team have been determined and will assume their duties after fulfilling relevant procedures.

It is worth mentioning that the executive turnover at SDIC SEC has been frequent in recent years.

In July 2023, Wang Suwang entered SDIC SEC through market recruitment and later took on the role of deputy general manager. As an executive selected through market-oriented recruitment, Wang Suwang has an extensive career background: he has accumulated rich investment banking experience at leading brokerages like CITIC SEC and China Merchants, and later served as director and deputy general manager at China Merchants Jinling Shipyard.

In November of the same year, the former Chairman Huang Yanxun reached retirement age, and was succeeded by Duan Wenyu, the Party Secretary and Chairman of SDIC Capital, the controlling shareholder of CITIC SEC.

Entering 2024, the pace of personnel changes accelerated further. On April 10, Wang Lianzhi, who had served as the General Manager of CITIC SEC for ten years, was dismissed, and Vice General Manager Wang Suwang took over the responsibilities of General Manager. This change occurred against the backdrop of the company's performance declining for two consecutive years, and the outside world generally believes this may be an important measure taken by the management to respond to challenges. Just six months later, on October 10, Wang Suwang was officially promoted to General Manager.

The collective departure of the three senior executives came just over two months after the new General Manager Wang Suwang took office, and the timing of this choice has attracted widespread attention from the market, leading to various speculations about its future development direction.

The decline in performance may be the fundamental reason.

According to publicly available information, CITIC SEC was originally named Anxin Securities. Based on strategic positioning and brand planning needs, in December 2023, 'Anxin Securities Co., Ltd.' was officially renamed 'CITIC SEC Co., Ltd.'.

From a financial data perspective, CITIC SEC has faced the issue of weak revenue growth in recent years, and net income has also declined for two consecutive years.

Specifically, in 2022, CITIC SEC achieved total revenue of 14.358 billion yuan, a decrease of 3.16% compared to the previous year; net income fell to 2.619 billion yuan, a substantial decrease of 38.3% year-on-year. The performance decline during this period is believed to be affected by the market environment and also reflects the challenges faced by the company in business development and internal management.

By 2023, although CITIC SEC achieved a slight increase in operating revenue, reaching 14.39 billion yuan, net income further decreased to 1.939 billion yuan, a decline of 25.96%. In that year, multiple main business areas of the company, such as brokerage services, investment banking, and asset management, experienced varying degrees of contraction.

In the first half of 2024, SDIC Securities' performance continued to face pressure, achieving total revenue of 5.481 billion yuan, a decrease of 21.44% compared to the same period last year; net income was 1.181 billion yuan, a decrease of 22.24% compared to the same period last year.

Looking at the sponsored project situation, the number of projects sponsored by SDIC Securities in 2024 showed a significant decrease compared to the same period in 2023, and the proportion of withdrawn projects also increased. Relevant data shows that in 2024, SDIC Securities promoted a total of 17 sponsored projects, a drop of 66.67% compared to the 51 projects in the same period of 2023.

Looking at the development of SDIC Securities in recent years, it is not difficult to see that the company is facing relatively severe operational challenges, especially encountering resistance in revenue growth and profit maintenance.

As the new leadership team gradually takes office, SDIC Securities may undergo a deep strategic transformation. For example, after officially changing its name to 'SDIC Securities' in December 2023, the company began to practice the 'One SDIC' principle, more closely serving the core business of SDIC Group, supporting the group in fulfilling national strategic missions, and striving to become a world-class capital investment enterprise.

This also means that SDIC Securities is no longer just a traditional financial service provider, but is gradually transforming into a professional consulting role focused on specific industries, seeking to carve out a new development path and find new performance growth points in fierce market competition.

In the future, will SDIC Securities be able to overcome current difficulties, escape from the predicament, and achieve performance growth? 'Investor Network' will continue to follow up. (Produced by Thinking Finance)■