"Investment Banking Aristocrat" CICC'S A-Share Debut: 4.93 Billion Capital "Fierce Battle" On The First Day Of Listing

The transaction volume of 4.93 billion yuan increased by 30.99%, and the first show of A-share of CICC, the leading securities industry, was settled.

On November 2, CICC was officially listed on the main board of Shanghai stock exchange with the company's securities code of 601995. This is also the fourteenth securities company in China to realize "a + H" listing. After the call auction stage, CICC's stock price quickly hit the limit board in the early trading stage, up 43.99%, and triggered a half-hour temporary suspension, which was 41.44 yuan / share before the suspension.

However, after the suspension, CICC quickly opened the trading limit. After that, the stock price fluctuated, remained at 38 yuan / share for most of the time, and finally closed at 37.70 yuan / share, up 30.99% on the first day of listing.

Trading limit board opened on the first day of listing

Before CICC went public, many investment and research institutions of securities companies had made predictions on the company's share price.

For example, Huachuang securities, combined with the third quarter report of CICC, predicts that its price to book ratio in 2020 will be 2.5 times, corresponding to the stock price of 35 yuan. Huatai Securities also gave a price to book ratio of 2.5 times, but the corresponding reasonable stock price after listing was 36.70 yuan. Haitong Securities gave CICC a valuation multiple higher than the industry average, corresponding to a reasonable value range of 32.01 yuan to 34.80 yuan.

Judging from the stock price performance on the first day of listing, CICC's closing price of 37.70 yuan / share has exceeded the upper limit predicted by market institutions.

The transaction data of the company on the same day is also the most eye-catching among peers. On November 2, the trading volume of CICC on the first day of listing reached 1.28 million, with a total turnover of 4.93 billion yuan per day, which was 1.05 billion yuan higher than that of CITIC Securities, ranking first among securities companies. On that day, the total market value of CICC reached 182 billion yuan.

But in the eyes of market participants, the company's first day of listing performance is still weak.

"The first day of listing failed to seal the trading limit, and the next day the stock price should not be able to rush up the limit board." Some senior investors in Beijing said that the performance of CICC, known as the "aristocrat of investment banks", was not satisfactory.

According to the issuance price of CICC 28.78 yuan / share, the floating profit of ordinary investors on the first day of listing is less than 10000 yuan.

"The previous advice to customers is that the first day of listing to take advantage of high clearance, premonition of the subsequent trend may be more unsatisfactory." There is a large domestic securities business department head said.

On the same day, the performance of CICC Hong Kong shares was not warm and tepid, and continued to fluctuate after opening high, and finally closed at HK $18.2/share, up only 0.89%.

"I personally feel that CICC's new share pricing is still slightly higher, with a premium of 80% compared with the Hong Kong stock price of the company at that time. It is not that there is a problem with the high price, but in the current market sentiment, the price of new shares is too high, and it is difficult for the follow-up market to come out. " The senior investors in Beijing said. The issuance price of CICC's 28.78 yuan / share corresponds to a price earnings ratio of 33.89 times, breaking through the hidden threshold of "23 times P / E ratio" in the past. On the first day of the closing, the company's premium of over 140%.

"Recently, the market sentiment of financial stocks or securities companies has been very poor. CICC's listing has not shown a good node. Neither the US election nor the ant group, which is likely to be listed this week, is not good news for CICC. Today, in addition to CICC, CITIC and China CITIC Construction Investment Co., Ltd. all performed very poorly. Guolian securities, which failed to merge with CICC, directly hit the drop limit. " The head of a private placement agency in Shanghai said.

On November 2, the share prices of many listed securities companies opened high and went low. By the end of the day, CITIC Securities fell 2.34%, China construction investment fell 4.81%, and Guolian securities was blocked on the limit.

"It's hard for CICC to get rid of the industry and go out of the independent market," said the head of the private placement agency. The outbreak of listed securities companies needs to refer to the trading volume and index performance. "The daily turnover of Shanghai Stock Exchange should be at least 300 billion, and it should be maintained at this level. The index performance needs to surpass the high point of 3458 points in July. With the full efforts of securities companies, CICC's share price can be very large Improvement. "

First class ability to use balance sheet

Although the stock price of CICC is flat after A-share listing, the position of the company's leading securities firm is still difficult to shake.

According to the latest financial report data of the third quarter of CICC, from January to September 2020, the company realized 16.8 billion yuan of operating revenue, with a year-on-year growth of 50.1%. In the current period, the company's net profit attributable to shareholders of listed companies was 4.891 billion yuan, up 55.8% year on year.

In terms of major businesses, the company's investment banking business revenue in the first three quarters of 2020 increased by 49.66% year-on-year to 3.370 billion yuan. During the reporting period, the total amount of initial raised funds of the company was 46.075 billion yuan, with a market share of 12.18%; the number of IPOs was 27, with a market share of 7.83%, ranking first in the industry.

In the rest of the brokerage and asset management business, CICC also achieved revenue of 3.457 billion yuan and 574 million yuan in the first three quarters of this year, up 53.07% and 40.19% year-on-year.

"CICC is not ahead of the industry in terms of performance, but more importantly, its ability to use its balance sheet can be rated as first-class, and it is one of the domestic securities companies closest to international investment banks." There are securities companies, non bank analysts said.

According to the statistics of China Thailand securities, by the end of the first half of 2020, CICC is far ahead of CITIC Securities, Huatai Securities, Haitong Securities and Guotai Junan with leverage multiples of 7.50, which are 4.38 times, 3.71 times, 3.94 times and 3.67 times of those of CITIC Securities, Huatai Securities, Haitong Securities and Guotai Junan. High leverage also provides support for CICC's higher return on equity (ROE). According to the data, CICC's roe in 2019 is 9.6%, 3.3 percentage points higher than the average level of the industry, ranking first in the industry.

Specifically, OTC equity derivatives are the main business for CICC to use the balance sheet. In the first half of 2020, the trading equity assets of the company increased by 33.3% to 92.9 billion yuan compared with the beginning of the year, and more than 85% of its shares were hedging positions of customer demand business. In the view of Lu Yunting, chief non bank analyst of Zhongtai securities, equity derivatives is the most complex business of securities companies at present, because it is not only capital business, but also customer business, which tests the comprehensive ability of securities companies' platform as a whole.

On the other hand, CICC's fixed income business (ficc) has also led to the expansion of the company's balance sheet.

According to Lu Yunting, the typical business that customers need to use balance sheet includes investment bank clients issuing ABS. CICC's ficc department can choose to take the part with better risk weighted return into its own balance sheet, and then earn income by holding positions or provide liquidity market making for wealth management clients. For example, CICC's ficc department issues structured income certificates as the demand side of funds to provide customers with optional products.

In terms of financial data, due to the development of customer demand business, CICC's handling fees and commission income accounted for 20.4% of its revenue in the first half of 2020. Driven by customer demand business, the scale of CICC's debt position increased from 64.4 billion yuan in 2017 to 122.8 billion yuan in mid-2020.

However, CICC's development is not without weaknesses. Among the top brokers, CICC has been lacking in capital strength.

According to the data released by the Securities Industry Association, as of June 30, 2020, CICC's net assets were 41.9 billion yuan, ranking 13th in the industry. The net assets of Shenwan Hongyuan and Yinhe securities, belonging to Huijin system, reached 72.6 billion yuan and 70.4 billion yuan respectively, and the net assets of Everbright Securities were nearly 10 billion yuan higher than that of CICC.

Huang Zhaohui, CEO of CICC, has also said that all of the 13.198 billion yuan raised in the A-share listing will be used to increase the company's capital, supplement the company's working capital, and support the company's domestic and overseas business development. It includes improving the core business ability, expanding the scale of emerging business, further strengthening the investment in financial technology internationalization and other strategic fields, and timely grasping the opportunities of strategic merger and acquisition.

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