Orient Securities (600958): Enlarging asset management capabilities Β Advantages Wealth management Enhance Α capabilities
Positive feedback fermentation, and overall business growth.
In the first quarter of 2019, the company realized a net profit of 1.3 billion (YoY + 191%), operating income of 4.1 billion (YoY + 109%), and EPS 0.
18 yuan / share, ROE 2.
41% (+ 1% year-on-year.
58pt), adjusted leverage ratio 2.
Orient Securities has an investment transaction and asset management expertise. In Q1, where capital efficiency has been greatly improved, the company seized the positive feedback from fully expanding the market to achieve double growth in profits and revenue.
2019Q1 Orient Securities investment income, asset management business, brokerage business, investment banking business, revenue income contributed 39% (+8 points YoY) / 10% 杭州桑拿 (32 points YoY) / 9% (11 Points YoY) / 7% ((YoY)-6pt) / 5% (YoY + 28pt).
Investment elasticity amplifies the results of the bull market.
In 2018, Oriental Securities’ proprietary trading business accounted for 38% of total assets, a year-on-year increase of + 6pt; however, the stock + fund accounted for only 8%, YoY-13pt, the high flexibility of equity ratio, and the high proportion of proprietary businessRatio, which gives Orient Securities a high beta.
Since this year, market sentiment has heated up. In the first quarter of 2019, the Shanghai Composite Index rose 24%, the Shenzhen Stock Exchange Index rose 37%, and the GEM Index rose 35%.
Orient Securities seized business opportunities and estimated a total investment income of 1.6 billion, a year-on-year increase of + 159%.
Thoroughly, the company steadily promoted the innovative transformation of the FICC business, rapidly developed the commodity business, actively carried out foreign exchange business, and constantly improved the business model of sales transactions.
With the bottom of the economy, financial supply-side reforms being promoted, and the long-term rights and interests being created, Oriental Securities will continue to give play to its investment advantages and expand positive market feedback.
The credit business continued to adjust its structure, and interest margins helped increase net income.
Benefiting from market sentiment, the company’s dual-finance business rapidly improved, and the amount of capital raised was 121 trillion at the end of the reporting period, an increase of 18% earlier.
However, the stock pledge business is still cautious. Wind data show that the company’s new stock pledge in the first quarter of 2019 was 24.24 million yuan, -99% year-on-year; at the same time, the accrual of credit impairment losses increased.
Based on the above, the company’s interest income of 1.5 billion yuan, after restatement -4% per year.
However, benefiting from quality control and rising interest margin, the company’s net interest income reached 1.
700 million per year after restatement + 17%.
The institutional client structure is stable, and the brokerage and asset management business is slightly shortened.
The brokerage business is dominated by institutional clients (77% of the brokerage agency clients in 2018), the transaction flexibility is small, and the commission confirmation time is different, so the brokerage business income was 400 million US dollars, a slight decrease of 6%.
The asset management business cooled down and realized a net income of 400 million US dollars, a year-on-year decrease of 52%; considering the long-term advantages of the company’s asset management business, it is committed to achieving repair and growth in the later stage.
Improve the institutional business chain and acquire all equity of Oriental Citi.
The company is currently pursuing the acquisition of Oriental Citi 33, held by Citi Asia.
33% equity, the company will wholly-owned Oriental Citi after the completion of the acquisition.
It is reported that Oriental Citi achieved 1 billion IPOs in 2019Q1 (0 in 2018Q1), refinancing 7 billion (YoY + 134%), and debt financing of 15.2 billion (YoY + 833%).
After a wholly-owned holding of Oriental Citi, it will improve and optimize the company’s operating structure, improve operating efficiency and performance stability.
Enjoy β increase α, maintain “Recommended” rating.
As an outstanding leader in the transformation of big asset management, as a trading partner with investment flexibility, Orient Securities will benefit from the β market in the long bull market; at the same time, the company will actively deploy wealth management, enhance the advantages of investment banks, and further improve its operational stabilityAlpha returns.
The company is expected to have PB1 in 2019.
5 times, maintaining the “recommended” level.
Risk Warning: The policy advances less than expected, and the market fluctuates greatly.