Brokerage Three Quarterly Report Recovery: Insider Trading, Brokerage Business Warming Up

As the first accounting cycle since the start of the science and technology board, the three quarterly report of the securities industry has shown a strong recovery.

In twenty-first Century, according to the economic report reporters' statistics, the 27 brokerage shares (excluding shadow stocks) that had been published in the three quarterly reports in the Wind data showed that nearly half of the brokerage's net profit in the first three quarters increased more than doubled, and four of the small and medium brokerage shares increased by more than 2 times in the first three quarters.

In the industry, this year, the A shares have warmed up, and the factors such as the opening of the science and technology board, the expansion of margin trading and other factors have brought a continuous positive stimulus to the securities industry, stimulating the performance of securities companies to go up quickly.

However, reporters found that some brokerages' agent buying and selling securities business accounted for a lot of net income. Some analysts believe that in the current rate of gradual decline, the future securities dealers may face pressure of transformation.

As the first accounting cycle since the start of the science and technology board, the three quarterly report of the securities industry has shown a strong recovery. - Song Wenhui diagram

Risks behind recovery

In twenty-first Century, according to the statistics of 27 listed brokerages newly published in the three quarterly report, according to the latest statistics released by the economic report reporters, 13 of the 13 brokerages in the first three quarters of the previous year accounted for more than 100% of the net profit of the parent company, and the three institutions of China Sea Securities, Shanxi securities and Pacific Securities were ranked the top three of the securities companies by 354.63%, 337.82% and 326.28% respectively.

In the industry view, the revival of brokerages has benefited from the re - enhancement of market activity during the year, as well as the two financial expansion and the opening of the science and technology board.

"The overall recovery of the performance of brokerages is mainly due to the improvement of the market activity in the whole year, plus the favorable expansion of the two financial targets and the opening of the science and technology board. If the market does not appear to be substantially adjusted in the four quarter, this trend is expected to be maintained throughout the year." Beijing, a medium-sized broker, a non bank financial analyst pointed out.

A shares turnover increased significantly compared with last year. Data show that from early 2019 to October 30th, the closing volume of Shanghai and Shenzhen two cities was as high as 106 trillion and 130 billion yuan, which has exceeded 89 trillion and 640 billion yuan last year.

However, insiders pointed out that the stock pledge risks of some brokerages still need to be vigilant.

Specifically, in the past three years in various brokerages' pledge business (excluding swap debt pledge and information management business), there are more than 50% of the "doubtful market value" of 11 brokerages, such as net letter, Hengtai, Kyushu, Huaxin, Zhongtian, Hongxin, Great Britain, Huarong, Shanxi, Guo Rong and the Great Wall, in the market value of the unresolved trading market, of which Huarong's largest market value is up to 22 billion 642 million yuan.

"Some brokerages have offset some bad debts with profits in the reports, and some bad debts are actually hidden in financial means." A brokerage firm in China, a credit financing business, said, "the quality of real assets of some brokerages is not as healthy as that on the reports, but the advantage is that some brokerages have gradually contracted this kind of business. The purpose is to wash out this part of assets through annual performance, and after a long cycle, some related pledge stocks may also go back."

New differentiation and challenges

With the rapid recovery of business performance, the performance characteristics of different brokerages have begun to differentiate further.

For example, in the income of some brokerages, the traditional brokerage business accounts for the higher net income of the agent buying and selling securities business. Among the 27 listed securities dealers who have disclosed three quarterly reports, the net income of the 8 brokerages of founder, Guoxin, Hualin, Guoxing, galaxy, Changjiang, Huaxi and Nanjing all exceeds or nearly 30%, and the proportion of Founder's income is as high as 43.72%.

"Some mature market countries have zero Commission, brokerage business downtrend is an inevitable trend." A brokers in Beijing, a listed brokerage firm, said, "the future brokerage business is likely to move from a scale to a transaction count model, when brokerage firms with higher dependence on brokers will be hit."

However, some industry insiders pointed out that under the background of the transformation of wealth management by brokerages, brokers with the leading brokers are more capable of realizing the transformation of new businesses such as wealth management and investment.

"These brokerages are characterized by more outlets and more customers, which can be transformed into customer resources for future wealth management clients, so as to achieve cross selling." "A brokerage business transformation does not mean that the brokerage network is not important. The resource network will become more important," he said. "In the future, we will have a larger customer base when the pilot opens the business of financial services such as behalf of the Shanghai".

In contrast to the relatively high proportion of brokerage business in some brokerages, some brokerages have made a higher income share in information management, investment banking and other businesses.

Taking investment banking as an example, statistics show that the net income of the underwriting business in CITIC's first three quarters amounted to 2 billion 532 million yuan, accounting for 26.11%, while the less known Dongxing securities accounted for a relatively high net income of underwriting business this year, which earned 688 million yuan, accounting for 24.49%.

"Although Dongxing's overall plate is not large, this proportion is relatively high in the securities business." The above non bank financial analysts said.

"The registration system reform of the" Chuang Chuang board "overlay the gem is expected that the market space for the future investment banking business may be bigger and bigger. This time, we will have more advantages to seize the market opportunity. A Shanghai brokerage investment bank said, "some head organizations may rely on outlets and teams to realize the strength of the whole business chain, but some brokerages may focus more on investment banking at the current time."

For example, in the information management business, the first venture has earned a net income of 528 million yuan, accounting for nearly 30% of its operating income, while the financial net income of CAITONG securities accounts for 22.32%.

"Judging from the differentiation of the proportion of business, the securities companies whose business structure is similar in the past is beginning to exert their strength towards their respective advantages." The above non bank financial analysts said, "in the future, this kind of business may be more and more good at a certain type of business, and this differentiation will become more obvious."

As mentioned above, there are not many brokerages with outstanding performance in investment banking, information management and other vertical sectors. Statistics show that as of October 30th, three quarterly reports of 27 brokerages, 7 or more, as many as 19 brokerages underwriting net income accounted for less than 10% of the operating income; and up to 21 brokerage firms accounted for no more than 10% of the net income management, of which 9 of the broker's net capital net income ratio is less than 3%.