The Status Of Leading Companies Will Not Change, And The Single Index Of Securities Companies Will Overtake On The Curve

In 2020, the performance ranking of securities companies is set, and the net profit of industry revenue is increasing rapidly.

Recently, according to the audit data of securities companies, China Securities Association ranked 38 indicators such as asset scale and business income of securities companies, and released the ranking of operating performance indicators of securities companies in 2020.

Overall, by the end of 2020, the total assets of the industry were 8.78 trillion yuan, an increase of 22.32% compared with the end of the previous year. The annual performance of the securities industry reached the highest level in recent three years, with operating revenue of 439.815 billion yuan, up 24.93% year on year; The net profit was 170.778 billion yuan, with a year-on-year increase of 39.20%; The return on net assets also increased by 1.58 percentage points compared with that in 2019.

Among the single securities companies, "big brother" CITIC Securities still ranks first in terms of volume. By the end of 2020, its total assets and net assets reached 810.259 billion yuan and 157.657 billion yuan respectively. Among them, the total assets are nearly 300 billion yuan more than that of Huatai Securities. In 2020, the revenue and net profit of CITIC Securities also ranked first in the industry.

The top three revenue positions of the securities industry are stable

From the traditional revenue indicators, the top three positions of the securities industry will remain stable in 2020.

In 2019, CITIC Securities, Guotai Junan and Huatai Securities ranked among the top three in terms of revenue of the securities industry, and the status of the three securities companies will remain unchanged until 2020. However, the gap between the heads is also very obvious. Take CITIC Securities, which ranks first in revenue in 2020, as an example, its revenue scale will reach 34.13 billion yuan, which is far away from Guotai Junan's 10 billion yuan revenue.

After the first three, the competition among head brokers is slightly fierce. Among them, in 2020, CSCI ranked fourth with revenue of 20.153 billion yuan, up four places compared with that in 2019.

The performance of China Securities construction investment (CSCI) has a close relationship with the outbreak of investment banking business in 2020. According to the annual report, in 2020, the principal underwriting amount of CIC IPO was 83.2 billion yuan, with a year-on-year growth of 406.6%, ranking first in the industry; Its main underwriting amount of refinancing also reached 78.68 billion yuan, an increase of 261.4%, ranking second in the industry. Affected by this, the company's investment banking business income increased by 58.99% to 5.843 billion yuan.

On the other hand, CSCI also seized the tide of derivatives business. The company's over-the-counter option business increased by 246.49 billion yuan, and the income swap increased by 41.048 billion yuan. The company's self operated business income also increased by 96.8% to 8.67 billion yuan.

In addition, among the top ten securities companies in terms of revenue, China Merchants Securities advanced one to fifth, while CICC replaced Galaxy Securities to occupy the tenth place in the industry in terms of revenue.

Compared with the index of operating income, the net profit level of securities companies can better reflect the prosperity of the industry in 2020.

According to the data released this time, CITIC Securities, Guotai Junan, Haitong Securities, Huatai Securities and Guangfa Securities are all included in the "10 billion net profit club" of the securities industry. In contrast, only CITIC Securities has a net profit of more than 10 billion yuan in 2019.

It is worth mentioning that in 2020, when the investment banking business was suspended for a time, GF Securities still maintained the fifth net profit ranking, and the net profit scale reached 10.03 billion yuan, an increase of 2.5 billion yuan.

"The investment management business is the core driver of GF's performance growth." Some people in the securities industry commented that at present, GF Securities held 54.53% and 22.65% shares of GF fund and e fund respectively. The management scale of the two public offering subsidiaries was 763.4 billion yuan and 1.23 trillion yuan, respectively, with a year-on-year increase of 52% and 68%. The two public offering subsidiaries contributed 2.45 billion yuan of profits to the company, with a year-on-year increase of 55%. In terms of private fund management business, GF Xinde made a net profit of 921 million yuan, a year-on-year increase of 321%.

However, the industry's bumper years can not hide the embarrassment of individual bond business performance. According to the statistics of China Securities Association, there will be a total of 11 securities companies losing money in 2020. Among them, Pacific Securities lost 760 million yuan. Last year, the company was affected by the large amount of withdrawal of stock pledge business, and its net profit ranked the bottom of the industry. Huaxing securities and Chuancai securities are also affected by the provision of stock pledge, while Wangxin securities has some problems such as the uncertainty of continuous operation and the default of buyout repo bonds, resulting in losses. The rest of JP Morgan, Nomura orient and other securities companies have not yet made profits due to their short time of establishment.

CICC's leverage ratio ranks first in the industry

In addition to the traditional revenue net profit index, the two indicators of "financial leverage ratio" and "return on net assets" are also worthy of attention.

"Due to the increasing demand for financing and investment businesses of securities companies and the decrease of debt financing costs, the debt financing scale of listed securities companies in 2020 is far higher than that of previous years, with a year-on-year increase of 78%. The head securities companies have strong financing ability relying on the advantages of listing platform, shareholders' background and their own capital scale, and have significant leverage advantages." Wanlian securities non bank analyst Hu Jiang said.

In terms of financial leverage ratio, CICC, which ranks the 10th in the industry in terms of financial leverage ratio, is the first in the industry. The financial leverage ratio is increased from 4.68 in 2019 to 5.08 in 2020. CICC has also become the only securities company in China with financial leverage more than 5. On the whole, the financial leverage ratio of head securities companies will increase in 2020, and the top six securities companies will all be more than 4 times. In contrast, only CICC's leverage ratio reaches more than 4 times in 2019.

"CICC's most typical characteristics among domestic securities companies are high leverage and high roe." Some senior executives of securities companies in Beijing said that CICC's heavy asset business, especially equity derivatives investment, performed well. According to the data of the annual report, by the end of 2020, the balance of derivative financial assets of CICC reached 12.31 billion yuan, an increase of 173% over the same period of last year. The nominal principal of equity derivatives reached 301.15 billion yuan, a year-on-year increase of 150%. The increase in customer transaction demand has driven the development of derivatives business of CICC.

Cao Haifeng, a non bank financial analyst at UBS Securities, once said that the leverage ratio of the domestic securities industry is between 3-4 times, which is lower than that of overseas. More foreign securities companies entering the domestic market can better play their advantages in the process of A-share institutionalization. QFII, derivatives and other businesses also deserve attention.

Zhang Youjun, chairman of CITIC Securities, also expressed his willingness to increase leverage at the annual performance conference in 2020“ Although the total assets of CITIC Securities exceed 1 trillion yuan, it is far from enough to meet the needs of the future development of the capital market. The company has a lot of ideas and plans in the overseas market, and will expand and finance as needed. "

Orient fortune's roe level is leading

"Adding leverage helps to improve ROE (return on net assets). For example, CICC has good risk control ability, balance sheet utilization ability and customer demand asset acquisition ability at the same time of high leverage." There are small and medium-sized securities companies in Beijing, non bank analysts said.

However, according to the data released by the China Securities Association, the return on net assets of CICC is 12.02%, ranking only fifth in the industry. At the top of the list is the emerging Internet brokerage, Dongfang fortune, with a return on net assets of 15.46%.

On the whole, the securities business of Oriental Fortune has developed rapidly under the guidance of the Internet wealth management ecosystem. In 2020, the company's securities business revenue will reach 4.982 billion yuan, with a year-on-year increase of 81.11%, which is the company's largest source of revenue. Wang Fenghua, a non bank financial analyst of Northeast Securities, believes that Dongfang fortune has realized the integrated online and offline wealth management mode by giving full play to the core competitive advantages and overall synergy effect of Internet wealth management ecosystem and massive users.

On the other hand, the Internet fund sales business of Oriental Fortune also achieved rapid growth. In 2020 and the first quarter of 2021, the sales business income of Dongcai fund increased by 139.7% and 115.9% respectively to 2.96 billion yuan and 1.4 billion yuan, accounting for 39.5% and 48.5% of the company's revenue, respectively. The annual sales fund scale of its Tiantian fund platform in 2020 also increased by 97% to 1.3 trillion yuan.

Dongfang securities asset management business income

Specific to each line of business, in 2020, brokerage, investment banking, investment and other traditional business will be dominated by head brokers.

In terms of brokerage business, CITIC Securities ranked first in the industry with a business income of 8.776 billion yuan, with a year-on-year growth of 77.51%; In terms of investment banking business, China CITIC construction investment ranked first in the industry with 5.261 billion yuan of underwriting and recommendation business income, and the related business income of three traditional investment banks, namely, CITIC Securities, CICC and Haitong Securities, all exceeded 3 billion yuan; In terms of investment business, with more than 10 billion securities investment income, CITIC Securities has shaken off the second place, with nearly 2.5 billion yuan of revenue of China CITIC construction investment, which ranks first in the industry.

However, in the field of asset management business income, CITIC Securities, the "leading" securities company, can only occupy the second place, and Dongfang securities, a medium-sized securities firm, ranks first with the revenue of 2.364 billion yuan.

In the view of industry insiders, since 2020, securities companies' large asset management business, including public funds, private equity funds and securities companies' asset management, has contributed to the new growth momentum of securities business performance.

Take Dongfang securities as an example. Huitianfu fund, which holds 35% of its shares, and its wholly-owned subsidiary, Dongzheng asset management, ranks the second and twentieth in the industry in terms of the scale of non commodity base. In 2020, huitianfu and Dongzheng asset management respectively contributed 33.4% and 29.8% of the net profit of Dongfang securities. According to the estimation of Tianfeng securities, the reasonable market value of large asset management business of Dongfang securities is 59.3 billion, accounting for 96.9% of the total market value of the company.

Xia Changsheng, chief non bank analyst of Tianfeng securities, pointed out that under the background of unified supervision of asset management industry, it has become a consensus for securities companies to enhance their active management ability. After three years of adjustment, the scale of securities companies' asset management has been continuously compressed, and the income has stabilized and recovered.

It is worth mentioning that on July 31, 2020, China Securities Regulatory Commission (CSRC) solicited public opinions on the supervision and management measures for managers of public offering securities investment funds (Draft) and related supporting rules. The new regulations optimize the public offering license system, appropriately relax the restriction of "one participation and one control", allowing the same subject to control a fund company and a public offering licensed institution at the same time. This means that the application for public offering license of securities companies' asset management will be released.

"Broadening the business chain of public funds has become one of the important driving forces for the transformation of securities companies' asset management business." Xia Changsheng said.

According to the incomplete statistics of 21st century economic report, the number of securities companies holding public fund license has increased to 14, including Huarong securities, Shanxi securities, Guodu securities, Dongxing securities, Beijing Gaohua, BOC securities, as well as Dongzheng asset management, Zhejiang business asset management, Bohai Huijin, CAITONG asset management, Changjiang asset management, Huatai asset management, Zhongtai asset management, and so on Guotai Junan asset management company has 8 securities companies.

In 2021, CITIC Securities, CITIC construction investment and CICC announced their plans to set up asset management companies and applied for public offering licenses. Others such as Minmetals securities, Huajin securities and Zhongyuan securities are also seeking public offering licenses.

Cui Xiaoyan, chief analyst of Huajin securities finance industry, said that the proportion of securities companies' public offering scale has increased from 6.05% in 2017 to 7.59% in 2019, mainly due to the transformation of wealth management. With the increase of household savings and the scale of public funds, the disclosure of ownership data can effectively enhance the attention of securities companies to tail Commission. Under the promotion of the settlement mode of securities companies, public funds pay more and more attention to the channels of securities companies. As a key link in the transformation of securities companies' wealth management, fund consignment has a certain contribution to the volatility of their ironing performance.

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