A few days ago, the performance of major listed brokers in 2020 was basically released, and their profitability was still divided. Many neck brokers' return on net assets is significantly ahead, and the performance of head brokers is affected by "bad debts". The average ROE of the 36 securities firms that have disclosed their annual reports in 2020 is 8.0 1%, with the ROE of 15.3% being the highest among them, and the ROE of CICC, Industrial Securities and Guangfa Securities also exceeding 10%.
Judging from the strategic direction disclosed in the 2020 annual report, the source of profit increase in the brokerage industry is spreading from the traditional brokerage business to wealth management, investment banking, FICC, OTC derivatives and other dimensions.
In 2020, the average return on equity will increase by 8.0 1%.
As of April 22nd, 36 A-share listed brokers have basically disclosed their 2020 annual reports, and major brokers such as CITIC Securities, Guotai Junan, Huatai Securities, China Merchants Securities, Guangfa Securities, Haitong Securities, CICC, CITIC Jiantou, Shenwan Hongyuan and Guo Xin Securities have all released them.
In 2020, the capital market will develop greatly, and the brokerage industry will benefit significantly. In 2020, the arithmetic average ROE of 36 securities firms was 8.0 1%, and the ROE of these 36 securities firms in 20 19 and 20 18 years were 5.98% and 3.6 1% respectively. Compared with the previous two years, the level of return on net assets of securities firms has increased significantly year by year. And the net profit will increase substantially in 2020, with a general growth rate of over 30% and a median growth rate of 37.64%.
Among them, CITIC Securities, which is highly sought after by the capital market, has indeed performed well at the ROE level, ranking first in the industry with a ROE of 15.3%; Secondly, Noble Investment Bank CICC also has 65,438+02.02% ROE in the forefront of the industry, Industrial Securities 65,438+065,438+0.09% and Guangfa Securities 65,438+00.6%, all of which are in the forefront of brokers. From the perspective of net assets, these brokers are not the first in the industry and belong to the neck brokers.
Among these brokers, CITIC Jiantou's profitability in recent years is in the forefront of the industry, with the ROE of 65,438+00.56% in 2065,438+09 and 6.76% in 2065,438+08. The same is true for CICC, with roes of 20 19 and 20 18 of 9.37% and 8.85% respectively, which are also ahead of the industry. GF Securities has performed well in recent years, with 8.55% in 20 19 and 5.06% in 20 18.
After experiencing the downturn of 20 18, Industrial Securities has been making continuous efforts to improve, and its profitability has gone out of the shadow of the previous equity pledge business. In 20 18, the return on net assets of Industrial Securities was only 0.4 1%, which increased to 5.27% in 20 19, and then greatly increased to 1 1% in 2020.
Citic Securities, a top brokerage, has a return on equity of 8.68% in 2020; The ROE levels of Haitong Securities, Guotai Junan and Huatai Securities, which have relatively large net assets, are almost all around 8%; In recent years, top brokers have failed to show top characteristics in terms of profitability.
Wang, an analyst at Ping An Securities, said that in 2020, all businesses of securities firms will blossom in an all-round way, the market will be suppressed first and then promoted, transactions will be active, the enthusiasm for investment and financing will be high, the reform of the capital market registration system will be promoted, and the scale of equity financing will increase substantially; Fund consignment business is booming, and financial management has also achieved initial results. Judging from the growth of various businesses, the growth rate of brokerage business and investment banking business is obviously higher than other businesses.
Several data can reflect the enthusiasm of the capital market in 2020. The Shanghai Composite Index rose by 13.87%, and the Growth Enterprise Market Index rose by 64.96%. The annual average daily turnover in the A-share market reached 907.2 billion yuan, a year-on-year increase of 62%; The balance between the two financial institutions reached 1.62 trillion yuan, an increase of 59% over the end of last year.
Yif Wang, assistant director of Everbright Securities Research Institute, said that ROE differences of different brokers are mainly reflected in two aspects: operating efficiency and leverage. "There are three main reasons for brokers with high ROE. First, benefiting from the improvement of the equity market, the income of traditional brokerage firms, investment banks and other channel businesses increased; Second, benefiting from the recovery of the stock market, the self-investment income increased; The third is the further improvement of operating leverage, mainly driven by the business of financial integration. "
However, although 2020 is a big year, the ROE level of brokers is still not high compared with other financial industries. Compared with banks and insurance, which are both financial industries, even though the banking industry is often troubled by "bad debt expectation", it still maintains a high ROE level. The average return on equity of 23 A-share listed banks that have disclosed the 2020 annual report is10.3%; The average return on equity of the five insurance companies that have published annual reports is as high as 14%.
"In the context of the recovery of the capital market in 2020, the return on equity of the industry has increased by more than 1 percentage point compared with 19, which is the highest in the past four years. In the future, with the further reform of the capital market and the enhancement of equity allocation by investors such as institutions and residents, the ROE center of the brokerage industry is expected to increase slightly and steadily. " Yif Wang said.
Brokers with leading profitability
Investment bank+wealth management is outstanding.
Although the ROE level of the overall profitability of the brokerage industry has been continuously improved in the past few years, the differentiation within the industry is still obvious. Even though the market is improving in recent years, the profits of some brokers are still very low. Behind this is the gap between the operational capabilities and business development models of different brokers. Brokers with strong profitability in 2020 have outstanding performance in investment banking and wealth management.
While maintaining strong profitability with securities firms such as CITIC Jiantou and CICC, we also see that the ROE of central china securities, Jinlong, Huachuang Yangan and Guohai Securities has been in a downturn in recent years. From 20 18 to 2020, the ROE of Huazhong Securities was lower than 1% for three consecutive years, that is, the net assets of 100 yuan per year could not earn 1 yuan, which was lower than buying money funds. Jinlong, which owns zhongshan securities and Dongguan securities, has a return on equity of 1.96% in 2020, 2.08% in 20 19 and negative 5.06% in 20 18.
Backward brokers have their own problems, and leading brokers have obvious advantages in important business sectors. It coincides with the promotion of the registration system and the great development of the capital market. In 2020, the equity financing business developed rapidly, and CITIC Jiantou and CICC performed strongly in investment banking and wealth management, which was an important factor leading ROE. The head of CITIC Securities, although there was a large impairment loss in 2020, and the credit impairment loss was as high as 6.58 billion yuan, still had a revenue of 54.4 billion and a net profit of 654.38+0.49 billion in that year, and the ROE was above 8%.
CITIC Jiantou Securities is a strong investment bank, catching up with the registration system, and its growth rate will be very high in 2020. In 2020, the company's investment banking business realized a revenue of 5.843 billion yuan, a year-on-year increase of 58.99%; The company completed 68 equity financing projects throughout the year, with the lead underwriting amount of1618.78 million yuan, ranking second in the industry. Some brokerage analysts said that CITIC Jiantou Securities' investment banking project has abundant reserves and is expected to further release the investment banking performance with the opportunity of registration system reform. As an investment banking aristocrat, benefiting from the deepening of the reform of the registration system, the upsurge of listing Chinese stocks in Hong Kong and the company's own international investment banking capabilities, CIC achieved a net income of 5.96 billion yuan in investment banking CICC 2020, a year-on-year increase of 40%.
Major brokers are also making efforts in wealth management. In 2020, CITIC Jiantou's wealth management income was 5.439 billion yuan, up 33.07% year-on-year, including 4.34 billion yuan from securities trading business, 540 million yuan from sales of wealth management products, up 276.4% year-on-year, and the company's margin financing and securities lending balance was 556.5438+52 million yuan, up 88.34% year-on-year. After the acquisition of CIC, CIC's wealth management business grew rapidly. In 2020, the net fee income of brokerage business was 46 1 100 million yuan, up 55% year-on-year, and the operating profit of wealth management business was185 million yuan, up 74% year-on-year. By the end of 2020, the number of customers reached 3.694 million, and the total assets of customers reached 2.6 trillion yuan.
New business model may push the return on net assets up.
Judging from the strategic direction disclosed in the 2020 annual report, the source of profit increase in the brokerage industry is spreading from the traditional brokerage business to wealth management, investment banking, FICC, OTC derivatives and other dimensions. In the eyes of the industry, the depth and breadth of new business expansion of different brokers are different, and their core competitiveness is also different. Leading brokers are expected to win the top spot.
Taking wealth management business as an example, its transformation path is gradually transforming from traditional commission mode to service commission mode, and fund investment will become an important starting point for wealth management transformation. Judging from the industry situation last year, the wealth management business that has been deposited for several years is gradually contributing income to brokers, which is expected to become a new profit growth point for brokers to get rid of the "looking at the sky and eating" model in the future.
The person in charge of the investment and care business of Guotai Junan Fund believes that the continuous advancement of the fund investment and care service model will bring innovative historical opportunities for domestic asset allocation services. However, investing in publicly issued funds is not a single service. Brokers need to provide customers with comprehensive solutions, and Public Offering of Fund investment is an important part of comprehensive financial solutions.
At the same time, with the gradual enlargement of the investment scale of various institutions in information technology, the advantages of financial technology enabling wealth management have gradually emerged. Judging from the data of the annual report, the official APP of Huatai Securities has developed into a high-quality client with monthly activity of over 10 million. The scale of wealth management products sold by China Merchants Securities through small programs exceeded 654.38+0.7 billion yuan. Many brokers provide customers with full life cycle and one-click asset management and configuration services through intelligent investment layout.
A few days ago, Citigroup upgraded orient securities's rating to "buy rating" because it saw the potential market of China's asset management industry. Data show that China's wealth and asset management industries are still very underdeveloped. By the end of 20 19, the total asset management scale was only HK$ 86 trillion, while the estimated investable assets of China households reached HK$ 200 trillion. Mainland families are increasingly using fund investment to increase their exposure to the stock market, and the demand for investment advice and asset allocation from professional wealth and asset management companies is also increasing.
According to the research report of Citigroup, the market value of Internet brokers represented by Oriental Fortune has greatly increased, which is based on the valuation given by channels. Judging from the buying rating given to orient securities by Citibank, the main reason is that "the market may underestimate orient securities's ability in wealth management". Obviously, the wealth management business of brokers represented by orient securities is winning new valuations for listed brokers.
At the same time, the development of investment banking is expected to usher in a golden age and become an important source of profit for brokers. CICC pointed out that a series of reforms in the capital market, such as the pilot GEM registration system, are expected to make the equity underwriting business of securities firms achieve substantial growth; The relaxation of trading mechanism and the listing of more new economic enterprises are expected to boost trading activity and increase brokerage-related business income; The launch of the science and technology innovation board and the implementation of the GEM registration system have made the exit channels of primary market investment smoother, and the direct investment business of brokers and venture capital enterprises is expected to benefit.
In addition, the development of innovative businesses with high value and light assets, including derivatives business and FICC, will also become a new profit growth point for brokers in the future.
Yif Wang pointed out that benefiting from the further reform and opening up of the capital market, securities companies will have broad business development space in the future. Specifically, we believe that the ROE level can be improved in overseas business, derivatives business and direct investment business in the future.
According to the data of Securities Industry Association, in 2020, the nominal principal of OTC financial derivatives business of domestic securities companies increased by 4.76 trillion yuan, and the total transaction volume was 1 10000. Among them, the cumulative nominal principal of income swaps in 2020 is 2. 16 trillion yuan, and the cumulative nominal principal of OTC options in 2020 is 2.6 trillion yuan.
Most people in the industry point out that derivatives are the key to the differentiated competition of securities firms and a tool to improve the efficiency of capital utilization of securities firms. Expanding the balance sheet to strengthen the profit center is a short-term competitive path for the brokerage industry. The relevant person in charge of the derivatives investment department of China Merchants Securities said, "Compared with traditional businesses such as brokerage, investment banking, investment research and self-management, OTC derivatives business can better meet the personalized investment and risk avoidance needs of institutional customers, which is conducive to increasing the stickiness of brokerage institutional customers, thus enriching their income sources and improving their comprehensive service capabilities and comprehensive competitiveness.
On the new FICC track, major brokers also began to compete for new market cakes. Judging from the recent progress of securities financing projects, with the development of capital intermediary business, the market competition of FICC business has also started. For example, Hongta Securities disclosed an 8 billion rights issue plan, of which 4 billion will develop FICC business; Previously, Haitong has continuously invested more than 654.38 billion yuan in FICC business.
Shen Juan, an analyst at Huatai Securities, pointed out that the core of FICC business is to provide comprehensive financial services across risk categories for institutional customers. FICC business will improve the whole industry chain of brokers, and will connect the buyer's business and seller's business of brokers in series by broadening business boundaries, focusing on capital business and building industry barriers to help high-level transformation. FICC business conforms to the general development of the capital market and is expected to become the core breakthrough for domestic securities firms to innovate their formats. "Brokers need to speed up the construction of seven core competitiveness: capital strength, product creation, trading, investment, risk control, technology and business collaboration, and compete for the world with professional strength."
Yif Wang said that the current average valuation of A-share brokerage industry is about 1.6 times PB, which is lower than the historical center. In the future, there will be catalysts such as capital market reform and further opening of business, so the investment value is high.
Reporter observation:
Selection of light and heavy assets in brokerage mode
China Fund News reporter Zhang Li
Many people will wonder why the brokerage industry, which has always been called the "bull market standard bearer", can't escape the influence of periodic market fluctuations for a long time. What business is changing after so many years of industry transformation?
Answering these questions actually needs to be observed from the business model of the securities industry itself. Behind the profit performance of various branches and lines of securities firms, the different path choices of light asset business and heavy asset business are profoundly affecting the overall valuation and profit level of the industry.
The so-called light asset business mainly refers to businesses that rely on brokerage licenses to achieve profitability, including brokerage business, investment banking business and asset management business. In the past, the core business model of the financial industry was mostly regarded as "license business", and securities companies realized market expansion with the help of commission model, forming an obvious business model of "depending on the weather".
"Not open for three years, open for three years" is a vivid portrayal of the periodic performance of traditional brokerage business. It is not difficult to find out from the changes in the A-share market and financial statements in previous years that this law has also become an important indicator for investors to judge the valuation space of brokerage stocks.
After the bull market of 20 15 turned over, brokerage institutions gradually began to realize that the profit margin of the traditional commission model was getting thinner and thinner. This is because the license management restrictions are liberalized, and the scarcity of brokerage business is no longer, leading to crazy price wars and fierce industry competition.
Some brokerage investment bankers once said with emotion: "Even leading brokers have a lot of price-fighting in investment banking projects, which means that the homogenization competition in the industry behind the traditional light asset model is very serious. Who can make money from such a project? ! "
From March 20 10 to May 20 13, the pilot business of margin trading and stock pledged repo in the capital market enabled brokers to start a new business model, and their balance sheets also expanded rapidly. At the same time, the profit model began to experience an obvious capitalization process. The increase in the proportion of capital intermediary and equity investment business undoubtedly proves that the brokerage model has gradually changed to "asset-oriented".
The so-called asset-oriented business refers to the business that brokers rely more on the expansion of their balance sheets to obtain profits, such as self-operation, market-making, direct investment, and fund intermediary business. According to the operating data of the securities industry in 2020 released by China Securities Association, the industry revenue and net profit in 2020 increased by 24.45438+0% and 27.98% respectively. By the end of 2020, the total assets and net assets of the industry will increase by 22.50% and 14. 10% respectively.
In this round of asset expansion of securities firms, the contribution of capital intermediary and investment business has soared rapidly. For example, in the 28 billion rights issue plan announced by CITIC Securities, most of the financing will be invested in capital intermediary and other businesses. At the same time, in the refinancing plans announced by Guohai Securities, Dongxing Securities and Guolian Securities, the scale of credit transactions such as margin financing and securities lending also serves as an important foothold for capital expansion.
CITIC Securities clearly stated: "Capital intermediary business is characterized by a wide range of customers, rich products, stable spreads and controllable risks, which is the key business direction of the company in recent years." In the eyes of the industry, at present, brokers raise funds through various means and make financial preparations, which will help to improve their profits and increase their business income in the future.
At the same time, under the profound influence of the registration system reform, the "investment bank+direct investment" model has gradually formed in the process of competing for IPO projects; At the same time, industrial funds and M&A funds around the needs of listed companies have also become the extension direction of investment banking business, and the layout of these businesses will also mean huge capital investment. Judging from the current situation of the industry, CITIC Securities, CICC and CITIC Construction Investment have outstanding advantages, and the financing speed is also accelerating year by year.
Even the Oriental fortune securities, which is dominated by asset-light strategy, has begun to put forward the strategic goal of attaching importance to heavy asset business such as margin financing and securities lending in the past two years. In 2020, its parent company, Oriental Fortune, issued bonds for financing twice, with a cumulative financing scale of 2.3/kloc-0.0 billion yuan, of which 20.5 billion yuan was invested in credit trading business, expanding financial services and other heavy asset businesses.
Regarding the financing reasons, Oriental Fortune said that with the rapid expansion of the business scale of Oriental fortune securities, there is a big gap between the net capital index of Oriental fortune securities and comparable brokers with similar brokerage business scale. At the same time, the short board of insufficient capital scale further limits the debt financing ability of Oriental fortune securities, which leads to the serious restriction of the business expansion of Oriental fortune securities by the capital bottleneck.
In the process of recapitalization, the valuation methods of securities firms will also be adjusted. According to the research and analysis of Guosen Securities, the asset-heavy business not only improves the operating leverage of securities firms, but also reduces the ROA level of the industry, which is generally reflected in the decline of ROE elasticity. The valuation method applicable to the industry is determined by the business model. Under the asset-oriented model, profits come from the expansion of the balance sheet, so the volume of net assets basically determines its profitability, and the valuation of brokerage industry will undoubtedly be more suitable for PB valuation method. "The company's low valuation level and clear strategic positioning are the main logic for us to recommend the brokerage sector."
In addition, referring to the development history of overseas investment banks, the leverage ratio of brokerage institutions has increased, and the mode of recapitalization has become an industry trend. The gradual capitalization of brokerage business model and the gradual development of capital intermediary business and institutional trading business mean that the ROE level of the industry will usher in an obvious turning point in the future, and the head brokerage will become the focus of capital attention.