Preparing For Heavy Assets Business Brokers Financing Demand Surges Merchants Securities Topped "Financing King"

Under the background of direct financing expansion, the demand for financing of listed securities companies has risen steeply.

Last Friday, at the shareholders' meeting of Hualin securities, the bill on public issuance of Switching Company bonds and listing scheme was deliberated and adopted. The proposed fund-raising will not exceed 2 billion yuan (including 2 billion yuan). It will be used for subsidiary capital increase and diversification, capital intermediary business and capital investment business.

This is only a part of the current financing intention of securities firms. Under the multiple factors such as heavy assets transformation and fierce competition, the financing demand of securities firms has been particularly strong in recent years.

According to incomplete statistics of twenty-first Century economic report, this year, the amount of equity financing and issuance of short-term financing bonds by brokerages increased substantially compared with the same period last year.

Wind data show that as of November 13th, the securities companies issued short-term financing coupons up to 145, the total size of the issue exceeded 355 billion 600 million yuan, more than two times the same period last year.

In addition, the demand for equity financing of listed brokerages is also increasing. As of the evening of November 13th, 4 listed brokerages issued a plan for issuing convertible bonds, together with 16 billion 600 million of the proposed financing. 5 listed brokerages issued a pre allotment plan, totaling 38 billion 805 million yuan, and 6 companies announced a fixed increase plan to raise the amount of funds up to 50 billion 960 million yuan.

"The logic behind the financing of securities companies such as short term financing and rights issue is that most leading securities companies make great efforts in heavy assets business. From the perspective of financial statements, it is mainly through the expansion of the balance sheet to obtain profits. For domestic brokerages, the development of credit business or credit business needs more capital. Therefore, securities companies need to raise capital operation capability through financing, including equity and debt." Liu Wenqiang, a non banking financial analyst at the Great Wall Securities Research Institute, said.

China Merchants Securities topped the "financing king"

Since the beginning of this year, with the incremental reform of the capital market and the support of regulation to increase the financing of securities dealers, the financing demand of securities companies has been developing rapidly.

So far, a total of 14 companies have disclosed plans for equity financing, including the issuance of convertible bonds, rights issue and fixed increase. The total amount to be raised is as high as 98 billion 365 million yuan (including CITIC Securities to issue 810 million shares to acquire Guangzhou securities, and the transaction price is set at 13 billion 460 million yuan).

It is worth mentioning that, compared to the active equity financing scheme launched by the securities companies, there are not many enterprises that have completed equity financing this year. Among them, Hualin securities and Hongta securities are listed on IPO respectively, with a total financing of 2 billion 236 million yuan, and Zhejiang securities completed the issuance of convertible bonds and financing 3 billion 500 million yuan.

But with this opportunity, the issuance of short-term financing bills has reached a new high.

According to Wind data, as of the evening of November 13th, the number of brokers issuing short-term financing bonds amounted to 29, with a total plan of 369 billion 600 million yuan in short financing and 355 billion 600 million yuan in issuance and financing, up 191.48% from 122 billion yuan in the same period last year.

"Mainly this year, the central bank has raised the upper limit of the upper limit of the short-term financing bonds of the head broker. During the year, the regulators continuously released the signal to supplement the liquidity for the securities companies. Compared with the corporate bonds, the short threshold is relatively low and the cycle is shorter. The central bank's deregulation has stimulated the enthusiasm of the securities companies to issue short financing, which is conducive to reducing the financing costs of the brokerages and improving their own profitability and competitiveness." A non banking analyst at a medium-sized brokerage in Southern China said.

Specifically, the number of enterprises with short financing times and the largest amount of financing is less than that of China Merchants Securities. Wind data show that it issued 16 short-term financing bills this year, and total financing was 51 billion yuan.

Earlier, since June 22nd, CITIC Securities, Guotai Junan Securities, Huatai Securities, Haitong Securities, GF Securities, Shen Wan Hongyuan, China Merchants Securities, CITIC construction investment, China Galaxy and other securities companies have announced that the central bank has received the central bank's notice to raise the upper limit of short-term financing bonds. Among them, the upper limit of the outstanding short-term financing bonds issued by China Merchants Securities is 31 billion 600 million yuan.

Wind data show that the short term financing bonds issued by China Merchants Securities are all issued for 3 months, and the short-term financing bills issued in 1-8 months have been fully reimbursed. At present, there are 5 financing which have not yet expired, 1 are being issued, and the total amount to be reimbursed is 21 billion yuan.

According to public information, all the short-term financing bills raised by China Merchants Securities are used to supplement liquidity.

It is worth mentioning that in addition to the issuance of short fuse, there is a pre allotment plan for China Merchants Securities to promote, and its proposed financing is not more than 15 billion yuan. Among them, the total amount of A shares allotment is estimated to be no more than RMB 12 billion 805 million yuan, and the total amount of H-share rights issue is estimated to be no more than RMB 2 billion 195 million yuan.

It is understood that after deducting the issuance cost of China Merchants Securities, there will be no more than 10 billion 500 million yuan raising funds to invest and diversify the distribution of subsidiaries, vigorously develop alternative investment business, give full play to the advantages of the international platform for licensing, expand international business, and actively consider and choose to implement the extension acquisition. In addition, the remaining funds will be used for capital intermediation and capital investment business and supplementary working capital.

More capital invested in heavy assets business

Brokerage firms with large demand for financing mainly invested heavily in heavy asset business.

If the amount of the increase is the highest, CITIC will invest no more than 13 billion yuan. After deducting the cost, it will be used to supplement the capital and working capital of the company, so as to expand the scale of business and enhance the market competitiveness and risk tolerance of the company.

Among them, the amount of CITIC investment to be used to develop capital intermediary business and investment trading business is no more than 5 billion 500 million yuan and 4 billion 500 million yuan, accounting for more than 70% of the amount of fund-raising.

CITIC believes that "in the current industry commission rate generally lower than the background, through the development of capital intermediary business, mining customer demand for integrated financial services, will further enhance the company's profitability and market competitiveness."

In addition, CITIC also pointed out that in recent years, investment and trading businesses of securities companies have become a force that can not be ignored in the market. The investment of securities companies is changing towards the direction of diversification and increasing diversified transactions. The overall investment strategy is more mature and stable, and the market competitiveness is increasing day by day.

This is not the only way to raise investment.

Nanjing securities also intends to raise funds of not more than 5 billion yuan to expand the scale of capital intermediary business and the scale of proprietary business investment, which accounts for more than 80% of the total amount of fund-raising. Zhongyuan securities intends to raise funds not exceeding 4 billion yuan for capital intermediary business and investment and trading business, and its total amount of funds is not more than 5 billion 500 million yuan. The first venture securities also intends to raise funds of not more than 4 billion 500 million yuan to expand the scale of investment and business transactions and credit business scale, accounting for 75% of the total amount of 6 billion yuan fund-raising.

Liu Wenqiang pointed out in the Great Wall securities research report that large scale refinancing of brokerages is mainly due to the needs of securities business transformation and upgrading and regulatory net capital requirements. The proportion of heavy capital business represented by self operated business, credit business and derivative business in the revenue of brokerage business is on the rise. Under the background of the gradual enrichment of the expected future derivatives, for the consumption demand of these businesses for capital consumption, it is inevitable to increase the capital strength of securities dealers through refinancing, and the financing channels for leading securities companies will also become more diversified.