Company Ticker Rating (HK$) (HK$) Industry Note€¦ · We also project an increase in margin...
Transcript of Company Ticker Rating (HK$) (HK$) Industry Note€¦ · We also project an increase in margin...
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Industry Note
January 9, 2017
Wong Chi Man—Head of Research
(852) 3698-6317
Livy Lyu—Research Assistant
(852) 3698-6393
2017 Outlook: Limited Catalysts from Policy and Liquidity; Focus on Revenue Mix We don’t expect a major re-rating of the securities sector in 2017, since the policy outlook is
likely to remain stringent, while market liquidity will become tighter. Therefore, we believe a
strong recovery in the brokerage and margin financing businesses seems unlikely this year.
The investment banking and asset management businesses are less sensitive to trading
volume and still posted decent revenue growth in 2016. Therefore, we believe investors
should focus on companies with a diversified revenue mix and good ROE outlook. Taking
the latest valuations into account, we reiterate our BUY rating on GF Securities (GFS) and
HOLD ratings on CITIC Securities (CITICS) and Haitong Securities (HTS).
Both policy and liquidity look unfavourable in 2017. Policy direction clearly changed
after Liu Shiyu became chairman of the China Securities and Regulatory Commission
(CSRC) in Feb 2016. Given that the authorities’ focus is on the long-term healthy develop-
ment of the capital markets, we don’t believe there will be changes in stringent policy direc-
tion for at least the next six months. This suggests there will be limited room for financial
innovations. In addition, the chief economist of our A-share research team expects to see
tighter market liquidity this year because of inflation risk and interest rate hikes in the US.
Mild rebound in ADT and margin financing balance. Based on a conservative outlook on
policy and market liquidity, we expect average daily turnover (ADT) to rebound moderately
from RMB519bn in 2016 to RMB560bn in 2017E. We also project an increase in margin
financing from RMB940bn to RMB1.12trn in the same period. Taking the pressure on bro-
kerage commission rates into consideration, the outlook for brokerage business will be un-
exciting in 2017.
The investment banking and asset management businesses still maintained decent
growth. Although brokerage revenue in the industry dropped 63% YoY in 9M2016, revenue
from investment banking and asset management was less volatile, recording 52.5% and
12.3% growth YoY, respectively, in the same period. This suggests companies with a more
diversified revenue base will see less impact from the lacklustre brokerage business.
Waiting for an opportunity to re-enter. Following the share price rebound in the past two
weeks, the valuation of the sector does not look very appealing based on PBR. We main-
tain our HOLD ratings on CITICS (TP: HK$17, based on 1.23x 2017E PBR) and HTS (TP:
HK$14.90; based on 1.32x 2017E PBR). We reiterate our BUY rating for GFS (TP:
HK$20.7; based on 1.71x 2017E PBR) because of its diversified revenue base and higher
ROE. Its valuation premium narrowed in 2H16, which makes it looks more attractive.
China Securities Sector
Valuation Table
Source: CGIS Research estimates
Company Ticker Rating
(HK$) (HK$)
CITICS 6030 HK 16.1 17.0 HOLD
HTS 6837 HK 13.84 14.9 HOLD
GFS 1776 HK 16.56 20.7 BUY
Company PER PBR ROAA ROAE
(x) (x) (x) (%)
CITICS 13.87 1.17 2.21 8.68
HTS 14.15 1.23 1.73 8.95
GFS 11.66 1.37 2.46 12.22
Last Price TP
FY2017E
Sources: Company, CGIS Research
Updated as of January 6, 2017
Company Ticker Rating Price (HK$) Market cap (US$m) 2015 2016E 2017E 2015 2016E 2017E 2015 2016E 2017E
China Galaxy Securities 6881 HK Equity NR 7.32 8,950 5.9 12.8 13.1 1.01 1.04 1.02 5.4 2.3 2.3
CITIC Securities 6030 HK Equity HOLD 16.10 27,293 8.1 16.3 13.9 1.16 1.18 1.17 3.8 1.8 2.2
Haitong Securities 6837 HK Equity HOLD 13.84 23,911 8.3 16.0 14.2 1.22 1.25 1.23 3.9 1.9 2.1
GF Securities 1776 HK Equity BUY 16.56 18,087 7.9 13.4 11.7 1.35 1.41 1.37 5.8 3.0 3.4
Simple average 7.6 14.6 13.2 1.18 1.22 1.20 4.7 2.3 2.5
Weighted average 7.9 15.1 13.4 1.20 1.24 1.21 4.5 2.2 2.5
PER (x) PBR (x) Dividend yield (%)
2015 -2017E
Company Ticker 2016E 2017E CAGR (%) 2015 2016E 2017E 2015 2016E 2017E
China Galaxy Securities 6881 HK Equity (51.9) 3.0 (29.6) 22.9 8.2 8.3 4.1 1.7 1.9
CITIC Securities 6030 HK Equity (47.4) 23.6 (19.4) 16.6 7.4 8.7 3.7 1.8 2.2
Haitong Securities 6837 HK Equity (45.3) 19.0 (19.3) 18.0 7.9 9.0 3.4 1.5 1.7
GF Securities 1776 HK Equity (38.0) 21.0 (13.4) 22.5 10.5 12.2 4.0 2.1 2.5
Simple average (45.7) 16.7 (20.4) 20.0 8.5 9.5 3.8 1.8 2.1
Weighted average (45.1) 19.2 (19.1) 19.1 8.4 9.5 3.7 1.8 2.1
EPS Growth (%) ROAE (%) ROAA (%)
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Limited Catalysts from Policy and Liquidity
Policy direction clearly changed after Liu Shiyu became the chairman of the China Se-
curities and Regulatory Commission (CSRC) in February 2016. In his speech in March
2016, he stated that the first mission of the new chairman was strict, full-fledged super-
vision. A series of new policies were released following his speech, covering a wide
range of areas, such as risk management, lower leverage, more regulations on back-
door listings, punishment for fraudulent IPOs, and revised regulations on asset man-
agement. Since the authorities’ focus is on the healthy long-term development of the
capital markets, we don’t believe there is likely to be a change in the stringent policy
direction for at least in the next six months. This suggests there will be limited room for
financial innovations.
Date Major policies/actions
Feb 20, 2016 Liu Shiyu was appointed new chairman of the CSRC.
Apr 8, 2016 The CSRC proposed revising the Rules for the management of risk control indicators for
securities companies.
Apr 29, 2016 The CSRC released the Rules for securities investors protection fund to improve investor-
protection mechanisms.
May 26, 2016 The CSRC clarified the direction of supervision related to M&A and restructuring. The
regulator will apply the same standard to reviewing IPOs for backdoor listing approval.
May 31, 2016 The CSRC released Regulations on subsidiaries of securities investment fund manage-
ment companies and Guidelines on risk control indicators for specified client asset man-
agement subsidiaries under fund management companies.
Jun 16, 2016 The CSRC announced the Decisions on revisions related to management of risk control
indicators for securities companies. It introduced a capital leverage ratio to limit the gearing
level.
Jul 15, 2016 The CSRC released Regulations on the operations of private equity management business
under securities and futures companies. The regulations lower the upper limit of leverage
for financial products and clarify the asset-ratio limit of asset-management schemes.
Sep 8, 2016 The CSRC announced the Decisions related to the revisions of rules on major asset re-
structurings of listed companies. The announcement highlighted the responsibilities of
listed companies and financial intermediaries.
Sep 30, 2016 The Shanghai and Shenzhen Exchanges promulgated Guidelines for implementing book
building records for issuing corporate bonds. The guidelines highlighted the importance of
full and accurate information disclosure.
Oct 13, 2016 The State Council released proposals to regulate the internet finance business.
Oct 21, 2016 The CSRC released Working guidelines on on-site inspection for issuers of corporate
Nov 11, 2016 The CSRC and the Ministry of Finance jointly released Regulations on futures investors
protection fund.
Nov 18, 2016 The CSRC penalized the first case of market manipulation through Shanghai Stock Con-
Dec 2, 2016 The CSRC launched a consultation on Rules on compliance for institutions operating secu-
rities funds.
Figure 1: Major policies and regulatory action in 2016
Sources: CSRC, CGIS Research
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Aside from the policy perspective, the chief economist of our A-share research team
expects liquidity in 2017 to become tighter and monetary policy to shift to a more neu-
tral stance because of (i) potential inflation pressure driven by a rebound in commodity
prices; and (ii) the combination of an interest rate upcycle in the US and pressure on
RMB depreciation limiting room for monetary easing.
Sources: WIND Info, CGIS Research
We Assume ADT at RMB560bn in 2017 Following a crazy 2015 with an ADT of RMB1.05trn, ADT in 2016 dropped 50.5% YoY
to RMB519bn. Trading velocity (full market-cap basis) fell from 5.64x in 2015 to 2.44x
in 2016. As we expect relatively tight liquidity this year, we assume ADT will increase
only moderately from RMB519bn in 2016 to RMB560bn in 2017. This implies trading
velocity will increase slightly from 2.44x in 2016 to 2.56x in 2017.
1.50
1.70
1.90
2.10
2.30
2.50
2.70
2.90
3.10
3.30
3.50
Figure 2: Yield-to-maturity of China 10-year government bond (%)
Sources: WIND Info, CGIS Research
442
615
479410
483602569
429
569579 486
540
791
1,062
885
580
976
1,223
1,740
1,552 1,427
944
503
636
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2016
-12
2016
-11
2016
-10
2016
-9
2016
-8
2016
-7
2016
-6
2016
-5
2016
-4
2016
-3
2016
-2
2016
-1
2015
-12
2015
-11
2015
-10
2015
-9
2015
-8
2015
-7
2015
-6
2015
-5
2015
-4
2015
-3
2015
-2
2015
-1
Average Daily Turnover (RMB bn)
Figure 3: ADT of A-share market
173129
197
303
1045
519560
-
200
400
600
800
1,000
1,200
2011 2012 2013 2014 2015 2016 2017E
Figure 4: ADT of A-share market (annual)
Sources: WIND Info, CGIS Research
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Sources: WIND Info, CGIS Research
End-2017E Margin Financing Balance: RMB1.12trn
The margin financing and securities lending (MFSL) balance dropped substantially
from RMB1,174bn at end-2015 to RMB909bn at end-January 2016 because of market
turmoil triggered by the circuit-breaker mechanism. The balance continued to decline in
1H16 and eventually stabilized at about RMB830bn. It gradually rebounded to
RMB940bn at end-2016, but still dropped 20% YoY. We expect only a moderate recov-
ery in 2017 to RMB1.12trn at year-end after taking tighter market liquidity into account.
Our end-2017E MFSL balance is equivalent to 2% of the total A-share market cap, up
from 1.85% at end-2016.
Figure 5: Total market cap of A-share market
Sources: WIND Info, CGIS Research
Figure 7: MFSL balance of A-share market Figure 8: MFSL balance/A-share total market cap
Sources: WIND Info, CGIS Research
38.5
40.8
47.7
56.3
62.7
58.5
50.5
43.8
42.0
47.7
50.4
53.1
40.439.7
45.4 44.8 44.946.3 46.6
49.248.5
50.5
53.1
50.8
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
Total Market Cap (RMB trn)
1.761.41
1.99
2.43
5.64
2.44 2.56
-
1
2
3
4
5
6
2011 2012 2013 2014 2015 2016 2017E
Figure 6: Trading velocity of the A-share market (x)
Sources: WIND Info, CGIS Research
1,132 1,158
1,494
1,840
2,080 2,049
1,339
1,059
907
1,033
1,196 1,174
909853 881 859 829 854 867 904 872 912
977 940
0
500
1,000
1,500
2,000
2,500
Margin Financing Balance (RMB bn)
2.94%2.84%
3.13%
3.27%3.31%
3.51%
2.65%
2.42%
2.16%2.17%
2.38%
2.21% 2.25%2.15%
1.94%
1.92%1.85%
1.84%1.86%
1.84% 1.80% 1.81% 1.84%1.85%
1.50%
2.00%
2.50%
3.00%
3.50%
Margin Financing Balance/Total Market Cap
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2016 Performance Review
The share price of major securities companies generally followed the same direction in
2016; all of them posted a negative return because of the sharp correction in January
triggered by the circuit-breaker incident. However, HTS was the best performer, drop-
ping only 2.9% on a full-year basis. With the highest PBR in the sector, GFS was the
weakest of the three, although it posted one of the highest ROEs among its main
peers. We believe the weak performance of CITICS was attributable partly to a de-
rating process, as the company no longer enjoys a valuation premium, based on its
unexciting ROE outlook and more IPOs of securities companies in Hong Kong, i.e.
more choices.
Figure 9: Relative performance
Sources: Capital IQ, CGIS Research
-32.00%
-27.00%
-22.00%
-17.00%
-12.00%
-7.00%
-2.00%
3.00%
8.00%
13.00%
CITIC Securities Company Limited (SEHK:6030) - Share PricingGF Securities Co., Ltd. (SEHK:1776) - Share PricingHaitong Securities Co., Ltd. (SEHK:6837) - Share Pricing
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Stock Recommendation: Focus on Revenue Mix
As we don’t expect to see a strong recovery in the brokerage and MFSL businesses
this year, we believe investors should focus on stocks with a more diversified revenue
mix. As shown in Figure 10, revenue from the brokerage business is highly sensitive to
market trading volume. Brokerage revenue for the whole industry dropped 63% YoY in
9M2016. Revenue from investment banking and asset management, in contrast, is
much less volatile and still recorded 52.5% and 12.3% growth YoY, respectively, in the
corresponding period.
Figure 10: Sub-segment revenue growth of the securities industry
Sources: WIND Info, CGIS Research
-100.0%
-50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
2012 2013 2014 2015 9M2016
Brokerage IBD Asset management
0.0805%0.0781% 0.0786%
0.0665%
0.0498%
0.0391%
0.0300%
0.0400%
0.0500%
0.0600%
0.0700%
0.0800%
0.0900%
2011 2012 2013 2014 2015 9M2016
Figure 11: Average brokerage commission rate of the industry
Sources: WIND Info, CGIS Research
CITIC Securities Haitong Securities GF Securities Huatai Securities China Galaxy Securities CICC Everbright Securities CMS China Securities
Ticker 6030 6837 1776 6886 6881 3908 6178 6099 6066
Revenue (RMB m) 22,464 17,395 13,835 11,448 9,218 3,168 6,474 8,688 8,557
YoY change -39.5% -37.9% -42.0% -45.2% -46.4% -34.7% -49.1% -57.5% -27.2%
Recurring net profit (RMB m) 5,242 4,264 4,031 2,841 2,255 574 1,515 2,242 2,777
YoY change -58.0% -58.0% -52.1% -57.4% -60.0% -49.5% -68.9% -69.4% -34.8%
Total assets (RMB m) 570,059 542,332 357,609 402,679 256,289 107,572 173,734 245,264 175,248
Total equity (RMB m) 136,220 105,087 73,599 78,802 54,730 17,037 38,412 47,812 32,606
Half-year ROE (%) 3.8% 4.0% 5.3% 3.6% 4.0% 3.4% 3.8% 4.7% 8.9%
Net commission rate (bps) 3.97 3.97 3.87 2.46 4.43 8.15 5.82 5.77 4.9
Change HoH (bps) (0.12) (0.57) (0.90) (0.17) (0.70) (0.72) 0.29 (0.62) (0.08)
Brokerage market share (1H16) 5.68% 4.67% 4.88% 8.45% 4.95% 0.66% 2.50% 3.67% 2.93%
Brokerage market share (2015) 6.43% 4.98% 4.71% 8.35% 5.09% 0.50% 2.81% 4.11% 3.18%
Net revenue breakdown
Brokerage 28.7% 29.7% 28.1% 40.6% 47.6% 30.9% 40.0% 47.3% 33.4%
Investment banking 18.0% 14.6% 13.9% 11.7% 7.5% 36.9% 18.5% 18.8% 27.6%
Asset management 19.1% 2.4% 19.8% 0.7% 3.3% 11.7% 6.9% 10.5% 7.8%
Others 3.2% 5.7% 0.9% 2.9% 3.2% 2.5% 6.9% 3.9% 0.7%
Commission and fee income 69.0% 52.4% 62.6% 55.9% 61.7% 82.0% 72.2% 80.5% 69.4%
Net interest income 6.0% 20.6% 1.6% 21.8% 17.1% -7.2% 16.8% 5.4% 12.6%
Net investment gains 25.4% 28.3% 35.3% 24.9% 21.2% 25.2% 9.9% 14.0% 18.0%
Others -0.3% -1.3% 0.5% -2.6% 0.0% 0.0% 1.1% 0.2% 0.0%
Figure 12: Peer comparison based on 1H16 data
Sources: Bloomberg, CGIS Research
7
The latest valuations of major securities companies do not look very attractive, as the
PBR has been relatively stable recently, while trading velocity has been falling. We
prefer to wait for better timing. On individual stock calls, we maintain our HOLD ratings
for CITICS and HTS and BUY rating for GFS, on the back of its stronger ROE and di-
versified revenue base. We lowered our target PBR for GFS from 1.94x to 1.71x to
reflect a more conservative medium-term ROE outlook (from about 13% to 12.3%),
based on the latest conditions of the China equity market.
Figure 13: Stock recommendation
Source: CGIS Research
Figure 14: Peer valuations
Sources: Bloomberg, CGIS Research
Company HTS CITICS GFS
Ticker 6837.HK 6030.HK 1776.HK
Rating HOLD HOLD BUY
Beta 1.36 1.43 1.43
Cost of equity 9.7% 10.1% 10.1%
Medium-term ROE 10.6% 10.8% 12.3%
Growth rate 7% 7% 7%
PBR = (ROE-g)/(COE-g) 1.32 1.23 1.71
Target price (HK$) 14.9 17.0 20.7
Upside 7.3% 5.5% 25.2%
Company Ticker Rating
Price
(Local
currency)
Market
cap
(US$m)
2015 2016E 2017E 2015 2016E 2017E 2015 2016E 2017E 2015 2016E 2017E
China securities companies
CITIC 6030 HK Equity HOLD 16.10 27,293 8.1 16.3 13.9 1.16 1.18 1.17 16.6 7.4 8.7 3.7 1.8 2.2
Haitong 6837 HK Equity HOLD 13.84 23,911 8.3 16.0 14.2 1.22 1.25 1.23 18.0 7.9 9.0 3.4 1.5 1.7
China Galaxy 6881 HK Equity NR 7.32 8,950 5.9 12.8 13.1 1.01 1.04 1.02 22.9 8.2 8.3 4.1 1.7 1.9
Guangfa 1776 HK Equity BUY 16.56 18,087 7.9 13.4 11.7 1.35 1.41 1.37 22.5 10.5 12.2 4.0 2.1 2.5
HTSC 6886 HK Equity NR 15.28 17,538 7.5 14.1 11.3 1.13 1.16 1.08 17.5 8.4 10.1 3.0 1.6 2.0
CICC 3908 HK Equity NR 10.90 3,223 7.9 15.6 12.9 1.28 1.30 1.16 16.0 8.4 9.9 2.7 1.3 1.7
Everbright 6178 HK Equity NR 12.52 10,028 4.7 13.7 11.5 n.a. 1.08 1.01 23.1 7.7 8.7 4.9 1.8 2.3
China Merchants 6099 HK Equity 12.08 15,044 5.2 12.2 10.1 n.a. 1.22 1.13 24.3 9.8 10.9 4.5 2.1 2.6
Simple average 7.0 14.3 12.3 1.19 1.20 1.15 20.1 8.5 9.7 3.8 1.7 2.1
PER (x) PBR (x) ROE (%) ROA (%)
8
Figure 15: PBR range of CITICS
Sources: Bloomberg, CGIS Research
0.9 1.1 1.3 1.5 1.7 1.9 2.1 2.3 2.5 2.7 2.9
Feb-
12
May
-12
Aug-
12
Nov
-12
Feb-
13
May
-13
Aug-
13
Nov
-13
Feb-
14
May
-14
Aug-
14
Nov
-14
Feb-
15
May
-15
Aug-
15
Nov
-15
Feb-
16
May
-16
Aug-
16
Nov
-16
Rolling forward PBR (x) Average
+1 Standard deviation -1 Standard deviation
8.0
13.0
18.0
23.0
28.0
33.0
38.0
43.0
48.0
Feb-
12
May
-12
Aug-
12
Nov
-12
Feb-
13
May
-13
Aug-
13
Nov
-13
Feb-
14
May
-14
Aug-
14
Nov
-14
Feb-
15
May
-15
Aug-
15
Nov
-15
Feb-
16
May
-16
Aug-
16
Nov
-16
Rolling forward PER (x) Average
+1 Standard deviation -1 Standard deviation
Figure 16: PER range of CITICS
Sources: Bloomberg, CGIS Research
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
Apr-
12
Jul-1
2
Oct
-12
Jan-
13
Apr-
13
Jul-1
3
Oct
-13
Jan-
14
Apr-
14
Jul-1
4
Oct
-14
Jan-
15
Apr-
15
Jul-1
5
Oct
-15
Jan-
16
Apr-
16
Jul-1
6
Oct
-16
Rolling forward PBR (x) Average
+1 Standard deviation -1 Standard deviation
Figure 17: PBR range of HTS
Sources: Bloomberg, CGIS Research
5.0
10.0
15.0
20.0
25.0
30.0
35.0Ap
r-12
Jul-1
2
Oct
-12
Jan-
13
Apr-
13
Jul-1
3
Oct
-13
Jan-
14
Apr-
14
Jul-1
4
Oct
-14
Jan-
15
Apr-
15
Jul-1
5
Oct
-15
Jan-
16
Apr-
16
Jul-1
6
Oct
-16
Rolling forward PER (x) Average
+1 Standard deviation -1 Standard deviation
Figure 18: PER range of HTS
Sources: Bloomberg, CGIS Research
0.5
1.0
1.5
2.0
2.5
3.0
Apr
-15
Jun-
15
Aug
-15
Oct
-15
Dec
-15
Feb-
16
Apr
-16
Jun-
16
Aug
-16
Oct
-16
Dec
-16
Rolling forward PBR (x) Average
+1 Standard deviation -1 Standard deviation
Figure 19: PBR range of GFS
Sources: Bloomberg, CGIS Research
5.0
7.0
9.0
11.0
13.0
15.0
17.0
Apr
-15
Jun-
15
Aug
-15
Oct
-15
Dec
-15
Feb-
16
Apr
-16
Jun-
16
Aug
-16
Oct
-16
Dec
-16
Rolling forward PER (x) Average
+1 Standard deviation -1 Standard deviation
Figure 20: PER range of GFS
Sources: Bloomberg, CGIS Research
9
Figure 21: PBR range of CGS
Sources: Bloomberg, CGIS Research
Figure 22: PER range of CGS
Sources: Bloomberg, CGIS Research
Figure 23: A-share market trading velocity and PBR of CITICS and HTS
Sources: Bloomberg, CGIS Research
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
May
-13
Aug
-13
Nov
-13
Feb-
14
May
-14
Aug
-14
Nov
-14
Feb-
15
May
-15
Aug
-15
Nov
-15
Feb-
16
May
-16
Aug
-16
Nov
-16
Rolling forward PBR (x) Average
+1 Standard deviation -1 Standard deviation
3.0
5.0
7.0
9.0
11.0
13.0
15.0
May
-13
Aug
-13
Nov
-13
Feb-
14
May
-14
Aug
-14
Nov
-14
Feb-
15
May
-15
Aug
-15
Nov
-15
Feb-
16
May
-16
Aug
-16
Nov
-16
Rolling forward PER (x) Average
+1 Standard deviation -1 Standard deviation
0
1
2
3
4
5
6
7
8
9
0
0.5
1
1.5
2
2.5
3
3.5
PBR of CITICS (x) (LHS) PBR of HTS (x) (LHS) Trading velocity (annualized 20-day average turnover/total A-share market cap)
10
Key financials CITIC Securities (6030.HK)
Income Statement
(RMB'000, except for per share amount)
Year ended 31 Dec 2013 2014 2015 2016E 2017E 2018E
Investment banking 2,217,436 3,516,440 4,563,090 5,494,297 6,284,341 7,259,279
Brokerage 6,493,275 10,365,206 22,713,891 11,507,069 11,726,755 11,906,216
Trading 398,525 230,864 287,057 574,114 688,937 826,724
Asset management 1,489,344 4,503,850 6,449,325 6,966,755 7,599,892 8,306,636
Others 100,255 298,998 239,160 300,000 400,000 450,000
Commission and fee income 10,698,835 18,915,358 34,252,523 24,842,235 26,699,924 28,748,856
Interest income 4,089,746 7,850,808 15,621,547 12,264,776 12,332,191 13,659,048
Net investment gains 5,259,499 10,204,336 19,510,014 7,699,160 11,311,477 13,460,962
Total revenue 20,048,080 36,970,502 69,384,084 44,806,172 50,343,593 55,868,865
Other income and gains 230,657 375,356 3,537,585 3,000,000 3,000,000 3,000,000
Total revenue and other income 20,278,737 37,345,858 72,921,669 47,806,172 53,343,593 58,868,865
Staff cost (5,076,588) (9,463,242) (14,797,624) (11,664,586) (13,076,272) (14,800,824)
Commission and fee expenses (1,060,676) (1,798,997) (4,621,076) (2,485,201) (2,393,331) (2,374,965)
Interest expenses (3,260,336) (6,900,792) (12,830,544) (9,905,540) (10,656,357) (11,765,911)
Others (4,246,060) (6,569,743) (14,033,038) (9,513,157) (9,782,477) (9,985,701)
Operating expenses (13,643,660) (24,732,774) (46,282,282) (33,568,484) (35,908,437) (38,927,400)
Operating profit 6,635,077 12,613,084 26,639,387 14,237,688 17,435,155 19,941,466
Share of profits of associates 166,360 638,022 664,352 300,000 350,000 400,000
Share of profits of JCEs 44,654 (8,616) (18,821) 3,000 - -
Exceptional items - 2,179,457 2,226 189 - -
Income before tax 6,846,091 15,421,947 27,287,144 14,540,877 17,785,155 20,341,466
Income tax expense (1,538,044) (3,560,448) (6,926,800) (3,635,219) (4,446,289) (5,085,366)
Minority interests (64,130) (524,305) (560,551) (490,755) (466,860) (533,963)
Net income 5,243,917 11,337,194 19,799,793 10,414,903 12,872,006 14,722,136
Recurring net income 5,243,917 9,702,601 19,797,567 10,414,714 12,872,006 14,722,136
EPS (RMB) 0.476 1.029 1.634 0.860 1.062 1.215
Recurring EPS (RMB) 0.476 0.881 1.634 0.860 1.062 1.215
DPS (RMB) 0.150 0.310 0.500 0.258 0.319 0.365
A-share average daily turnover 196,668,908 303,014,286 1,045,302,582 519,090,730 560,000,000 600,000,000
Brokerage market share CITICS 6.2% 6.5% 6.3% 5.9% 5.9% 5.9%
Margin f inancing balance 33,420,286 72,101,290 74,010,000 65,747,430 78,096,086 90,178,202
Staff cost-to-income 31.8% 33.0% 26.7% 32.9% 32.5% 33.1%
Cost-to-income 58.4% 56.0% 52.0% 59.8% 56.7% 55.4%
Cost-to-income (ex-impairment) 56.2% 53.9% 47.5% 57.0% 55.0% 53.9%
Growth Rates:
Commission and fee income 50.9% 76.8% 81.1% -27.5% 7.5% 7.7%
Interest income 88.3% 92.0% 99.0% -21.5% 0.5% 10.8%
Net investment gains 44.2% 94.0% 91.2% -60.5% 46.9% 19.0%
Total revenue and other income 55.1% 84.2% 95.3% -34.4% 11.6% 10.4%
Recurring EPS 23.8% 85.0% 85.5% -47.4% 23.6% 14.4%
Margins and Ratios:
Adjusted operating margin 40.7% 43.3% 44.5% 34.7% 38.7% 40.6%
Adjusted net margin 33.8% 36.2% 39.2% 33.6% 35.8% 36.6%
Effective tax rate 22% 23% 25% 25% 25% 25%
Sources: Company data, CGIS Research estimates
11
Key financials CITIC Securities (6030.HK)
Balance Sheet Finance Ratios
(RMB'000 , except for per share amount)
As at 31 Dec 2013 2014 2015 2016E 2017E 2018E 2013 2014 2015 2016E 2017E 2018E
Financial assets 121,176,514 214,302,052 264,784,357 273,265,686 316,121,569 350,786,275 PER(x) 26.8 14.4 8.1 16.3 13.9 12.5
Advances to customers 34,301,932 74,135,256 75,523,403 66,947,430 79,296,086 91,378,202 EPS grow th (%) 24 85 86 47- 24 14
Others 12,181,898 22,007,589 17,930,312 31,000,000 36,150,000 36,250,000 Yield (%) 1.2 2.4 3.8 1.8 2.2 2.4
Cash held on behalf of customers 40,125,321 96,840,688 143,553,897 112,031,656 122,458,134 131,205,144 Payout ratio (%) 31.5 30.1 30.6 30.0 30.0 30.0
Bank balances and cash 27,684,624 37,967,189 68,906,892 36,830,682 24,063,696 20,000,000 PBR(x) 1.61 1.41 1.16 1.18 1.17 1.12
Total current assets 235,470,289 445,252,774 570,698,861 520,075,454 578,089,485 629,619,620 Total asset/equity (x) 3.09 4.84 4.43 4.00 4.15 4.21
Non-client asset/net asset (x) 2.53 3.74 3.29 3.08 3.21 3.26
PPE, net 3,637,404 1,222,324 3,856,121 3,781,332 3,555,240 3,313,147 ROAA (%) 2.41 2.72 3.72 1.83 2.21 2.30
Financial assets 13,009,348 10,863,766 12,508,463 21,489,474 24,681,818 27,774,163 ROAE (%) 6.0 10.4 16.6 7.4 8.7 9.3
Others 19,237,208 22,287,586 29,044,797 28,636,835 29,086,835 29,586,835
Total non-current assets 35,883,960 34,373,676 45,409,381 53,907,641 57,323,893 60,674,145 Revenue breakdown (%)
Investment banking 11.1 9.5 6.6 12.3 12.5 13.0
Total assets 271,354,249 479,626,450 616,108,242 573,983,095 635,413,378 690,293,765 Brokerage 32.4 28.0 32.7 25.7 23.3 21.3
Trading 2.0 0.6 0.4 1.3 1.4 1.5
Accounts payable 45,196,159 101,845,838 150,456,676 122,031,656 132,458,134 141,205,144 Asset management 7.4 12.2 9.3 15.5 15.1 14.9
Financial assets sold under repo 55,704,255 124,914,446 127,788,537 147,000,000 168,000,000 185,500,000 Others 0.5 0.8 0.3 0.7 0.8 0.8
Due to banks and other f inancial institutions 4,710,000 11,751,000 18,033,000 8,000,000 12,000,000 12,000,000 Commission and fee income 53.4 51.2 49.4 55.4 53.0 51.5
Others 47,097,184 89,053,707 103,934,854 74,432,538 84,621,948 85,165,163 Interest income 20.4 21.2 22.5 27.4 24.5 24.4
Total current liabilities 152,707,598 327,564,991 400,213,067 351,464,195 397,080,082 423,870,307 Net investment gains 26.2 27.6 28.1 17.2 22.5 24.1
Bonds payable 26,177,108 43,167,363 67,835,803 70,000,000 75,000,000 75,000,000
Others 3,067,448 7,762,611 6,322,274 5,934,598 6,534,598 23,230,262
Total non-current liabilities 29,244,556 50,929,974 74,158,077 75,934,598 81,534,598 98,230,262
Total liabilities 181,952,154 378,494,965 474,371,144 427,398,793 478,614,680 522,100,570
Shareholders' equity 87,688,485 99,098,670 139,137,787 143,494,237 153,241,772 164,102,306
Minority interests 1,713,610 2,032,815 2,599,311 3,090,066 3,556,926 4,090,889
Book value per share (HK$) 10.03 11.42 13.89 13.62 13.82 14.36
Dupont analysis (as % of average total assets)
Investment banking 1.0% 0.9% 0.8% 0.9% 1.0% 1.1%
Brokerage 3.0% 2.8% 4.1% 1.9% 1.9% 1.8%
Trading 0.2% 0.1% 0.1% 0.1% 0.1% 0.1%
Asset management 0.7% 1.2% 1.2% 1.2% 1.3% 1.3%
Others 0.0% 0.1% 0.0% 0.1% 0.1% 0.1%
Commission and fee income 3.0% 5.0% 6.3% 4.2% 4.4% 4.3%
Interest income 1.1% 2.1% 2.9% 2.1% 2.0% 2.1%
Net investment gains 1.5% 2.7% 3.6% 1.3% 1.9% 2.0%
Other income and gains 0.1% 0.1% 0.6% 0.5% 0.5% 0.5%
Total revenue and other income 5.6% 9.9% 13.3% 8.0% 8.8% 8.9%
Operating expenses -3.8% -6.6% -8.4% -5.6% -5.9% -5.9%
Operating profit 1.8% 3.4% 4.9% 2.4% 2.9% 2.6%
Income tax expense -0.4% -0.9% -1.3% -0.6% -0.7% -0.7%
Recurring net profit (ROAA) 2.4% 2.7% 3.7% 1.8% 2.2% 2.3%
Leverage (x) 2.5 4.0 4.6 4.2 4.1 4.2
Non-client asset/net asset (x) 2.5 3.7 3.3 3.1 3.2 3.3
ROAE 6.0% 10.4% 16.6% 7.4% 8.7% 9.3%
Sources: Company data, CGIS Research estimates
12
Key financials
Haitong Securities (6837.HK)
Income Statement
(RMB'000, except for per share amount)
Year ended 31 Dec 2013 2014 2015 2016E 2017E 2018E
Equities 4,228,623 5,939,819 15,852,454 6,547,794 6,470,166 6,344,565
Investment banking 736,777 1,309,095 1,644,980 2,354,704 2,704,583 3,123,865
Asset management 731,324 1,202,203 2,465,127 1,613,900 1,982,400 2,279,000
Futures/derivatives 461,784 404,187 479,974 871,900 1,001,735 1,151,995
Others 592,680 660,866 1,370,081 1,845,451 2,304,364 2,762,177
Commission and fee income 6,751,188 9,516,170 21,812,616 13,233,750 14,463,247 15,661,602
Interest income 3,670,965 7,699,971 18,322,037 17,419,477 18,222,510 20,186,666
Net investment gains 2,150,038 5,708,662 11,057,133 5,478,764 7,562,024 9,055,797
Total revenue 12,572,191 22,924,803 51,191,786 36,131,991 40,247,782 44,904,065
Other income and gains 230,543 742,063 4,093,767 5,000,000 5,000,000 5,000,000
Total revenue and other income 12,802,734 23,666,866 55,285,553 41,131,991 45,247,782 49,904,065
Staff costs (2,621,465) (4,131,308) (7,829,712) (6,421,485) (7,217,064) (7,948,972)
Commission and fee expenses (848,704) (1,295,519) (3,842,160) (2,133,295) (2,225,045) (2,320,830)
Interest expenses (1,484,370) (4,340,189) (13,566,443) (13,435,192) (13,918,793) (15,455,311)
Others (2,510,387) (3,646,790) (9,409,814) (7,923,600) (8,399,450) (8,882,114)
Operating expenses (7,464,926) (13,413,806) (34,648,129) (29,913,572) (31,760,351) (34,607,227)
Operating profit 5,337,808 10,253,060 20,637,424 11,218,418 13,487,430 15,296,838
Share of profits of associates 116,940 167,334 481,445 410,120 449,701 472,186
Non-recurrent items - - - - - -
Income before tax 5,454,748 10,420,394 21,118,869 11,628,538 13,937,132 15,769,024
Income tax expense (1,173,754) (2,301,371) (4,277,553) (2,325,708) (2,926,798) (3,311,495)
Minority interests (245,970) (408,400) (1,022,465) (651,198) (715,672) (809,739)
Net income 4,035,024 7,710,623 15,818,851 8,651,633 10,294,662 11,647,790
Recurring net income 4,035,024 7,710,623 15,818,851 8,651,633 10,294,662 11,647,790
EPS (RMB) 0.421 0.804 1.375 0.752 0.895 1.013
Recurring EPS (RMB) 0.421 0.804 1.375 0.752 0.895 1.013
DPS (RMB) 0.120 0.250 0.450 0.226 0.269 0.304
A-share average daily turnover 196,668,908 303,014,286 1,045,302,582 519,090,730 560,000,000 600,000,000
Brokerage market share of Haitong (%) 4.8 4.8 5.0 4.7 4.8 4.8
Net commission rate of Haitong (%) 0.072 0.061 0.043 0.037 0.033 0.030
Margin f inancing balance 19,848,211 57,169,592 60,659,240 43,205,454 52,435,944 53,551,602
Staff cost-to-income (%) 25.0 22.9 20.7 25.1 24.8 24.7
Cost-to-income (%) 49.0 43.1 45.5 56.1 53.7 52.4
Cost-to-income (ex-impairment) 49.0 43.1 45.5 56.1 53.7 52.4
Growth Rates:
Commission and fee income 30% 41% 129% -39% 9% 8%
Interest income 28% 110% 138% -5% 5% 11%
Net investment gains -11% 166% 94% -50% 38% 20%
Total revenue and other income 19% 85% 134% -26% 10% 10%
Operating profit 31% 92% 101% -46% 20% 13%
Recurring net income 33% 91% 105% -45% 19% 13%
Recurring EPS 33% 91% 71% -45% 19% 13%
Margins and Ratios:
Adjusted operating margin 49.9% 55.0% 49.0% 30.2% 35.2% 38.0%
Adjusted net margin 41.8% 47.0% 49.9% 45.2% 45.7% 45.9%
Effective tax rate 22% 22% 20% 20% 21% 21%
Sources: Company data, CGIS Research estimates
13
Key financials Haitong Securities (6837.HK)
Balance Sheet Finance Ratios
(RMB'000 , except for per share amount)
As at 31 Dec 2013 2014 2015 2016E 2017E 2018E 2013 2014 2015 2016E 2017E 2018E
Financial assets 56,908,653 111,149,516 162,916,629 159,745,770 178,245,770 194,745,770 PER(x) 26.1 13.5 8.3 16.0 14.2 12.9
Advances to customers 26,531,096 64,883,359 76,324,967 64,354,185 75,699,548 79,141,567 EPS grow th (%) 33 91 71 45- 19 13
Others 20,019,422 41,889,579 71,333,111 77,497,043 86,888,365 96,937,885 Yield (%) 1.1 2.3 3.9 1.9 2.1 2.3
Cash held on behalf of customers 33,777,588 62,592,458 112,066,661 83,341,055 90,865,600 97,356,000 Payout ratio (%) 29 31 33 30 30 30
Bank balances and cash 18,809,405 23,111,153 51,124,559 62,476,396 61,210,043 62,721,469 PBR(x) 1.71 1.53 1.22 1.25 1.23 1.18
Total current assets 156,046,164 303,626,065 473,765,927 447,414,449 492,909,326 530,902,691 Total asset/equity (x) 2.7 5.2 5.4 5.1 5.3 5.4
Non-client asset/net asset (x) 2.0 3.8 3.8 3.9 4.0 4.1
PPE, net 1,171,604 1,210,145 1,317,178 1,307,937 1,258,302 1,208,219 ROAA (%) 2.73 2.96 3.41 1.52 1.73 1.78
Financial assets 5,074,255 9,024,602 33,522,971 41,517,747 47,437,747 53,357,747 ROAE (%) 6.7 11.9 18.0 7.9 9.0 9.5
Others 6,831,580 38,761,337 67,842,816 74,016,622 85,014,077 97,062,264
Total non-current assets 13,077,439 48,996,084 102,682,965 116,842,306 133,710,126 151,628,230 Revenue breakdown (%)
Equities 33.6 25.9 31.0 18.1 16.1 14.1
Total assets 169,123,603 352,622,149 576,448,892 564,256,755 626,619,453 682,530,921 Investment banking 5.9 5.7 3.2 6.5 6.7 7.0
Asset management 5.8 5.2 4.8 4.5 4.9 5.1
Accounts payable to brokerage clients 40,429,567 80,766,843 129,026,336 94,865,747 103,250,240 110,482,400 Futures/derivatives 3.7 1.8 0.9 2.4 2.5 2.6
Financial assets sold under repo 26,111,914 59,807,864 90,951,854 68,470,347 84,819,501 85,307,213 Others 4.7 2.9 2.7 5.1 5.7 6.2
Due to banks and other f inancial institutions 6,916,395 34,077,574 32,799,527 48,000,000 53,500,000 59,000,000 Commission and fee income 53.7 41.5 42.6 36.6 35.9 34.9
Others 13,200,026 46,471,975 83,244,832 85,645,375 100,428,348 120,281,456 Interest income 29.2 33.6 35.8 48.2 45.3 45.0
Total current liabilities 86,657,902 221,124,256 336,022,549 296,981,469 341,998,089 375,071,069 Net investment gains 17.1 24.9 21.6 15.2 18.8 20.2
Bank and other borrow ings - 4,537,684 9,330,007 10,000,000 12,000,000 14,000,000
Others 18,360,543 54,696,006 114,168,665 136,220,549 143,151,783 154,621,141
Total non-current liabilities 18,360,543 59,233,690 123,498,672 146,220,549 155,151,783 168,621,141
Total liabilities 105,018,445 280,357,946 459,521,221 443,202,018 497,149,872 543,692,210
Shareholders' equity 61,506,991 68,364,431 107,694,545 111,170,413 118,869,585 127,428,976
Minority interests 2,598,167 3,899,772 9,233,126 9,884,324 10,599,996 11,409,735
Book value per share (HK$) 8.09 9.06 11.33 11.12 11.29 11.74
Dupont analysis (as % of average total assets)
Equities 2.9% 2.3% 3.4% 1.1% 1.1% 1.0%
Investment banking 0.5% 0.5% 0.4% 0.4% 0.5% 0.5%
Asset management 0.5% 0.5% 0.5% 0.3% 0.3% 0.3%
Futures/derivatives 0.3% 0.2% 0.1% 0.2% 0.2% 0.2%
Others 0.4% 0.3% 0.3% 0.3% 0.4% 0.4%
Commission and fee income 4.6% 3.6% 4.7% 2.3% 2.4% 2.4%
Interest income 2.5% 3.0% 3.9% 3.1% 3.1% 3.1%
Net investment gains 1.5% 2.2% 2.4% 1.0% 1.3% 1.4%
Other income and gains 0.2% 0.3% 0.9% 0.9% 0.8% 0.8%
Total revenue and other income 8.7% 9.1% 11.9% 7.2% 7.6% 7.6%
Operating expenses -5.1% -5.1% -7.5% -5.2% -5.3% -5.3%
Operating profit 3.6% 3.9% 4.4% 2.0% 2.3% 2.3%
Income tax expense -0.8% -0.9% -0.9% -0.4% -0.5% -0.5%
Recurring net income (ROAA) 2.9% 3.1% 3.6% 1.6% 1.8% 1.9%
Leverage (x) 2.5 4.0 5.3 5.2 5.2 5.3
Non-client asset/net asset (x) 2.0 3.8 3.8 3.9 4.0 4.1
ROAE 6.7% 11.9% 18.0% 7.9% 9.0% 9.5%
Sources: Company data, CGIS Research estimates
14
Key financials
GF Securities (01776.HK)
Income Statement
(RMB'000, except for per share amount)
Year ended 31 Dec 2013 2014 2015 2016E 2017E 2018E
Equities 3,439,400 4,949,900 13,803,088 5,192,873 5,125,394 5,044,387
Investment banking 308,100 1,552,300 1,441,856 2,299,576 2,656,083 3,007,585
Futures and options 279,300 230,500 320,170 300,000 320,000 340,000
Asset management 205,100 1,124,500 3,597,426 4,276,914 5,033,015 5,896,558
Others 167,500 360,100 883,900 1,035,543 1,206,883 1,401,790
Commission and fee income 4,399,400 8,217,300 20,046,440 13,104,907 14,341,376 15,690,320
Interest income 2,349,217 4,324,638 12,336,200 8,421,094 8,451,347 9,671,174
Net investment gains 2,525,131 3,604,956 10,396,215 6,911,830 8,984,400 10,616,600
Total revenue 9,273,748 16,146,894 42,778,855 28,437,831 31,777,123 35,978,093
Other income and gains 58,114 16,581 (46,040) 20,000 50,000 50,000
Total revenue and other income 9,331,862 16,163,475 42,732,815 28,457,831 31,827,123 36,028,093
Staff costs (2,947,619) (4,345,926) (10,913,683) (6,656,854) (7,371,791) (8,064,485)
Commission and fee expenses (105,542) (240,813) (461,441) (327,623) (358,534) (392,258)
Interest expenses (1,378,567) (2,757,676) (8,942,914) (7,736,843) (8,133,749) (9,526,280)
Others (1,815,828) (2,507,650) (4,898,877) (3,114,808) (2,965,558) (3,232,015)
Operating expenses (6,247,556) (9,852,065) (25,216,915) (17,836,129) (18,829,633) (21,215,039)
Operating profit 3,084,291 6,311,430 17,515,900 10,621,702 12,997,490 14,813,055
Non-recurrent items - - - - - -
Income before tax 3,477,313 6,648,595 17,805,712 10,998,966 13,328,052 15,160,145
Income tax expense (664,747) (1,503,082) (4,193,359) (2,474,767) (3,065,452) (3,486,833)
Minority interests (65) (122,945) (411,339) (340,968) (359,191) (408,566)
Net income 2,812,501 5,022,568 13,201,014 8,183,231 9,903,409 11,264,746
Recurring net income 2,812,501 5,022,568 13,201,014 8,183,231 9,903,409 11,264,746
EPS (RMB) 0.475 0.849 1.732 1.074 1.299 1.478
Recurring EPS (RMB) 0.475 0.849 1.732 1.074 1.299 1.478
DPS (RMB) 0.200 0.200 0.800 0.430 0.520 0.591
A-share average daily turnover 196,668,908 303,014,286 1,045,302,582 519,090,730 560,000,000 600,000,000
Brokerage market share of GFS (%) 4.0 4.3 4.7 4.7 4.8 4.8
Net commission rate of GFS (%) 0.086 0.070 0.051 0.037 0.033 0.030
Margin f inancing balance 19,945,100 64,356,200 66,951,690 53,067,569 63,592,527 73,430,821
Staff cost-to-income (%) 37.6 33.0 32.7 32.6 31.6 30.9
Cost-to-income (%) 60.7 52.1 47.4 47.9 44.3 43.3
Cost-to-income (ex-impairment) 59.2 50.9 46.6 47.2 43.7 42.7
Growth Rates:
Commission and fee income 10% 87% 144% -35% 9% 9%
Interest income 52% 84% 185% -32% 0% 14%
Net investment gains 50% 43% 188% -34% 30% 18%
Total revenue and other income 28% 73% 164% -33% 12% 13%
Operating profit 33% 105% 178% -39% 22% 14%
Recurring net income 28% 79% 163% -38% 21% 14%
Recurring EPS 28% 79% 104% -38% 21% 14%
Margins and Ratios:
Adjusted operating margin 38.8% 47.9% 52.6% 52.0% 55.6% 56.7%
Adjusted net margin 36.1% 39.1% 40.8% 41.8% 44.1% 44.8%
Effective tax rate 19% 23% 24% 23% 23% 23%
Sources: Company data, CGIS Research estimates
15
Key financials
GF Securities (01776.HK)
Balance Sheet Finance Ratios
(RMB'000 , except for per share amount)
As at 31 Dec 2013 2014 2015 2016E 2017E 2018E 2013 2014 2015 2016E 2017E 2018E
Financial assets 46,783,207 71,531,551 174,926,020 176,450,000 203,880,000 229,193,000 PER(x) 27.7 15.4 7.9 13.4 11.7 10.6
Advances to customers 20,490,654 64,695,844 68,969,706 55,067,569 65,592,527 75,430,821 EPS grow th (%) 28 79 104 38- 21 14
Others 10,652,117 30,234,496 42,709,314 21,388,391 23,452,865 25,314,028 Yield (%) 1.5 1.5 5.8 3.0 3.4 3.8
Cash held on behalf of customers 25,227,415 48,995,919 88,640,516 82,293,339 90,138,675 96,577,152 Payout ratio (%) 42 24 46 40 40 40
Bank balances and cash 6,146,696 18,203,433 17,609,937 13,868,347 13,223,082 11,462,791 PBR(x) 2.25 1.95 1.35 1.41 1.37 1.30
Total current assets 109,300,089 233,661,243 392,855,493 349,067,645 396,287,149 437,977,792 Total asset/equity (x) 3.4 5.8 5.3 4.7 4.9 4.9
Non-client asset/net asset (x) 2.5 4.1 3.8 3.5 3.7 3.8
PPE, net 1,043,274 1,287,461 1,579,745 1,424,172 1,482,957 1,535,105 ROAA (%) 2.72 2.81 4.01 2.05 2.46 2.51
Financial assets 3,634,831 2,747,766 20,184,887 21,500,000 22,200,000 22,900,000 ROAE (%) 8.3 13.5 22.5 10.5 12.2 12.8
Others 3,313,977 2,403,306 4,476,890 7,181,437 7,547,000 7,929,090
Total non-current assets 7,992,082 6,438,533 26,241,522 30,105,609 31,229,956 32,364,195 Revenue breakdown (%)
Equities 37.1 30.7 32.3 18.3 16.1 14.0
Total assets 117,292,171 240,099,776 419,097,015 379,173,254 427,517,105 470,341,987 Investment banking 3.3 9.6 3.4 8.1 8.4 8.4
Futures and options 3.0 1.4 0.7 1.1 1.0 0.9
Accounts payable to brokerage clinets 31,609,231 71,465,563 118,137,085 97,151,673 106,222,843 113,667,332 Asset management 2.2 7.0 8.4 15.0 15.8 16.4
Financial assets sold under repo 19,399,797 50,717,726 85,395,761 70,000,000 75,000,000 80,000,000 Others 1.8 2.2 2.1 3.6 3.8 3.9
Due to banks and other f inancial institutions 5,300,000 1,123,000 1,750,000 - - - Commission and fee income 47.4 50.9 46.9 46.1 45.1 43.6
Others 14,202,625 42,223,828 57,975,624 58,849,008 59,632,381 63,300,826 Interest income 25.3 26.8 28.8 29.6 26.6 26.9
Total current liabilities 70,511,653 165,530,117 263,258,470 226,000,681 240,855,224 256,968,158 Net investment gains 27.2 22.3 24.3 24.3 28.3 29.5
Bank and other borrow ings 11,979,740 26,030,664 72,270,186 70,000,000 97,000,000 116,000,000
Others 57,802 7,161,539 3,747,530 2,778,362 2,278,362 2,278,362
Total non-current liabilities 12,037,542 33,192,203 76,017,716 72,778,362 99,278,362 118,278,362
Total liabilities 82,549,195 198,722,320 339,276,186 298,779,043 340,133,586 375,246,520
Shareholders' equity 34,604,666 39,610,880 77,519,274 77,751,688 84,381,805 91,685,187
Minority interests 138,310 1,766,576 2,301,555 2,642,523 3,001,714 3,410,280
Book value per share (HK$) 7.37 8.50 12.31 11.73 12.10 12.75
Dupont analysis (as % of average total assets)
Equities 3.3% 2.8% 4.2% 1.3% 1.3% 1.1%
Investment banking 0.3% 0.9% 0.4% 0.6% 0.7% 0.7%
Futures and options 0.3% 0.1% 0.1% 0.1% 0.1% 0.1%
Asset management 0.2% 0.6% 1.1% 1.1% 1.2% 1.3%
Others 0.2% 0.2% 0.3% 0.3% 0.3% 0.3%
Commission and fee income 4.2% 4.6% 6.1% 3.3% 3.6% 3.5%
Interest income 2.3% 2.4% 3.7% 2.1% 2.1% 2.2%
Net investment gains 2.4% 2.0% 3.2% 1.7% 2.2% 2.4%
Other income and gains 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
Total revenue and other income 9.0% 9.0% 13.0% 7.1% 7.9% 8.0%
Operating expenses -6.0% -5.5% -7.7% -4.5% -4.7% -4.7%
Operating profit 3.0% 3.5% 5.3% 2.7% 3.2% 3.3%
Income tax expense -0.6% -0.8% -1.3% -0.6% -0.8% -0.8%
Recurring net income (ROAA) 2.7% 2.9% 4.1% 2.1% 2.5% 2.6%
Leverage (x) 3.1 4.8 5.6 5.1 5.0 5.1
Non-client asset/net asset (x) 2.5 4.1 3.8 3.5 3.7 3.8
ROAE 8.3% 13.5% 22.5% 10.5% 12.2% 12.8%
Sources: Company data, CGIS Research estimates
16
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BUY share price will increase by >20% within 12 months in absolute terms :
SELL share price will decrease by >20% within 12 months in absolute terms :
HOLD no clear catalyst, and downgraded from BUY pending clearer signal to reinstate BUY or further downgrade to outright SELL :