Dongfang Fortune'S Half Year Performance Spurts, Net Profit Doubles, And Its Market Value Exceeds CITIC Securities Four Times In The Year

Recently, Oriental Fortune (300059. SZ) released its 2021 semi annual report. During the reporting period, the company realized 5.78 billion yuan of operating revenue, with a year-on-year increase of 73.17%; The net profit attributable to the parent company was 3.727 billion yuan, with a year-on-year increase of 106.08%.

According to the latest performance ranking of securities companies in the first half of 2021 issued by the Securities Industry Association, Dongfang Fortune Securities, a subsidiary of Dongfang fortune, has realized a net profit of 2.071 billion yuan, ranking No.11 in the industry. The net profit scale of the company ranked 15th in the industry in 2020, and those who ranked ahead of Dongfang Fortune Securities were all leading securities companies in the traditional sense, As an internet securities company, it has an obvious momentum to catch up with and surpass.

For the performance of Dongfang fortune in the first half of 2021, a number of non bank analysts of securities companies gave a "beyond expectations" evaluation.

CITIC Securities believes that Dongfang fortune is the leading Internet financial service platform operator in China, with the advantages of flow and stickiness of basic people and retail investors.

It is worth mentioning that since the beginning of 2021, Dongfang fortune has surpassed CITIC Securities, the "big brother" of the securities industry, for four times in the total market value. The latest one happened on June 25, and in the more than one month since the closing on July 28, CITIC Securities still failed to take back the "throne" of listed securities companies with the largest market value.

On July 28, Dongfang fortune's share price closed at 30.49 yuan, exceeding the total market value of CITIC Securities (600030. SH) by 39.3 billion yuan.

Dongfang fortune is the leading Internet financial service platform operator in China, which has the advantages of flow and stickiness of basic people and retail investors. Visual China

Brokerage business broke out and raised funds increased

Since July, a number of securities companies have successively issued the announcement of performance increase in the first half of the year, and the industry as a whole is expected to continue the "bumper year".

According to the statistics of the Securities Industry Association, according to the non audited financial statements of securities companies, 139 securities companies realized operating revenue of RMB 232.414 billion and net profit of RMB 90.279 billion in the first half of 2021.

However, in terms of net profit growth, only Zhongyuan securities, Founder Securities and CAIDA securities have disclosed the performance forecast of the first half of the year. The net profit growth rate of the three small and medium-sized securities companies exceeds that of Dongfang fortune. However, the growth rate of net profit of the seven leading securities companies ranking ahead of Dongfang fortune is significantly lower than that of Dongfang fortune. For example, Guoxin Securities, the best performing securities company, is expected to increase its net profit by no more than 73% on a year-on-year basis.

For the reasons for the company's performance changes, Dongfang fortune explained that the main reason was that the stock trading volume and margin trading business scale of securities business increased significantly year on year, and the income related to securities business increased significantly year on year.

Looking back to the first half of 2021, the securities business and financial e-commerce services have indeed greatly contributed to the growth of Oriental wealth's performance, with the total revenue of the two businesses accounting for 97.23% of the company's total revenue.

In the securities business, the market share of Oriental Wealth brokerage business and Liangrong business increased significantly in the first half of the year. Among them, the net income of brokerage business increased by 50.5% to 1.91 billion yuan on a year-on-year basis, far higher than the growth rate of 10.95% in the industry.

Lu Yunting, chief non bank analyst of China Thailand securities, believes that if the current net commission rate of Dongcai securities is 10000, then it can be estimated that the market share of Dongfang fortune in the first half of the year has reached 4.12%, that is, the market share increased by 0.68% in half a year. What's more, in the past five years, the average annual market share of Oriental wealth has increased by 0.66 percentage points.

In addition, as of June 30, the balance of Dongfang wealth's financing and financing was 40.4 billion yuan, and its market share increased from 1.86% at the beginning of the year to 2.27% at present.

"Generally speaking, the development of the two financing businesses will lag behind the brokerage business." According to the head of the business department of domestic securities companies, Dongfang fortune began to raise large amount of funds in the second half of last year, and most of the funds were used for two financing businesses. In view of the expansion of the market share of Oriental Wealth brokerage business in the first half of the year, there is still room for improvement in the market share of the company's two financing businesses in the future.

In October 2020, on the night of issuing the third quarter report, Dongfang fortune announced a 15.8 billion convertible bond financing plan, of which no more than 14 billion yuan is planned to be used to accelerate the development of margin trading and other credit trading businesses, enhance market share, and further narrow the gap with the first class of securities dealers.

In terms of overseas business, in June this year, Dongfang Fortune International Securities Co., Ltd. was officially renamed as Hafu Securities Co., Ltd. In the first half of the year, the operating revenue of Dongfang fortune, mainly Hafu securities, increased by 158.6% year-on-year to 88.18 million yuan, which is expected to become a new growth point of the company's performance.

In order to meet the business development in Hong Kong, in June, Dongfang fortune also issued a US $1 billion overseas bond through Dongfang Fortune Securities, which is intended to be used to enrich the capital of overseas subsidiaries, supplement the working capital of the company and its domestic and foreign subsidiaries, repay debts, and pay domestic and overseas investment funds.

However, in June, Dongfang wealth securities also issued a five-year corporate bond with a scale of 12 billion yuan. The announcement showed that the purpose of issuing the corporate bonds was to repay the old debts due.

"It should be said that in the process of rapid development, the capital of Oriental wealth is still a little tense. Although the company's brokerage business has a good momentum of development, the market share has steadily increased, and the possibility of further decline in the level of commission is relatively low. But in the end, it depends on the weather. The company's development in recent years is inseparable from the A-share environment. The company may also consider these problems and issue bonds in a large scale, on the one hand, to support business development, on the other hand, to leverage some heavy capital business. " Some domestic small and medium-sized securities analysts said.

Residents' financial needs boost fund sales revenue to double

In addition to the securities business, the financial e-commerce service of "another wing" of Oriental Fortune's performance growth in the first half of the year has also made good achievements.

The financial e-commerce service business of Dongfang fortune mainly provides fund third-party sales services for users through its Tiantian fund.

According to the semi annual report data, during the reporting period, the company's financial e-commerce service revenue reached 2.397 billion yuan, up 109.77% year-on-year. As of the first half of 2021, the company's Internet financial e-commerce platform has realized 180 million fund subscription (application) and regular quota purchase transactions, with fund sales of 975.304 billion yuan. Among them, the daily average number of active users visited by the daily fund service platform was 3.3799 million, and the growth rate of the company's fund sales far exceeded that of the securities business. Huachuang Securities said that "the one-stop financial management platform improves customer stickiness, and the growth of residents' financial demand promotes the performance rise".

"Tiantian fund's operation still shows strong innovation ability. On the one hand, it has recently increased its investment in b-end business such as institutional link and securities lending, forming linkage with securities business. On the other hand, it has launched seed fund and other businesses to continue to cultivate the habit of C-end customers holding closed fund, and at the same time, it has increased the drainage range of investment adviser housekeeper."

According to Lu Yunting's estimation, as of June 30, the market share of daily fund non basic insurance volume was 3.85%, 0.55 percentage point higher than the 3.30% at the beginning of the year. It is estimated that the income of daily fund will increase by 64.2% to 4.864 billion yuan in 2021.

While Dongfang fortune released the 2021 interim report, it also announced the 2021 restricted stock incentive plan. A total of 818 employees will be granted 50 million equity incentives, including four senior executives of the company, namely, Zheng Likun, vice chairman and general manager, Chen Kai, vice chairman and deputy general manager, Huang Jianhai, director, deputy general manager and chief financial officer, and Cheng Lei, deputy general manager. Four senior executives are proposed to be granted 7.1 million shares of equity incentive.

However, it is worth noting that the grant price of the stock incentive plan is set at 34.74 yuan. In recent days, the shares of Dongfang fortune are all lower than this level. As of July 28, the company's share price closed at 30.49 yuan / share, 12% discount from the equity incentive grant price.

In fact, on the day of the issuance of the stock incentive plan, Dongfang fortune stock closed at 34.12 yuan per share, lower than the grant price of 34.74 yuan. Since then, the share price of Dongfang fortune went down sharply, falling for four consecutive trading days, with a cumulative decline of more than 10%.

"Since the second quarter, the trend of Dongfang fortune stock has been good, and the management did not expect that after the release of the semi annual report on the rapid growth of the company's performance, the share price will fall sharply, and the grant price is set higher." The above non bank analysts believe that.

Although many securities analysts understand the high exercise price of Dongfang fortune stock incentive plan as "highlighting the long-term sustainability of the company's strategy and the confidence of sustained high growth in the future". But in the view of the above-mentioned non bank analysts, the exorbitant exercise price and the recent market shock may lead to the company's employees unable to exercise their rights.

According to the public information, the appraisal year of restricted stock granted by the incentive plan is three accounting years from 2021 to 2023, and the first vesting period of the first grant is 2021, which requires that the growth rate of the company's net profit in the current year is not less than 40% compared with that in 2020. Since then, the growth rate of net profit in 2022 is no less than 80% compared with that in 2020, and that in 2023 is no less than 120% compared with that in 2020.

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