Xingye Securities (601377): Steady Reform and Synergy
Promote synergy and branch reform from top to bottom, optimistic about the long-term development value. Industrial Securities is backed by the Fujian Provincial Finance Bureau. At the end of 2018, its net assets ranked 16th in the industry and belonged to high-quality medium-sized securities companies.
The company’s ROE elasticity and leverage are higher than the industry average, and its capital revitalization capacity is replaced.
After the 2017 leadership renewal meeting, it proposed the strategic goal of building a first-class financial group, and actively promoted the related business of the headquarters and customers to sink to the branch. The current reform gradually realized the transformation.
The incentive mechanism is diversified and market-oriented, and the business layout is stable and balanced.
We believe that the company has steadily promoted the synergy of the group from the top down, merged branch reforms, and prospected strategic layout to play its long-term development value.
We expect the company to behave reasonably in the future.
37 yuan, the first coverage given an overweight rating.
Positioning: High-quality medium-sized securities companies, Fujian and Shanghai have an advantageous layout. Industrial Securities was formerly known as Industrial Bank’s securities business department, and the restructuring was officially decoupled 杭州桑拿 from Industrial Bank to become an independent securities company.
The company was listed and traded on the main board of the Shanghai Stock Exchange in October 2010, and has gradually consolidated its capital strength through the forms of fixed increase, rights issue, and listing of subsidiaries.
The company operates across Fujian and Shanghai. The largest shareholder and actual controller is the Fujian Provincial Department of Finance, which has clear regional advantages.
At the end of 2018, the company’s total assets ranked 14th in the industry and its net assets ranked 16th. It belongs to high-quality medium-sized brokers.
ROE flexibility is relatively competitive in the industry, and leverage is higher than the industry average.
Core competitiveness: Reform and transformation help long-term development. After the leadership change in 2017, we proposed the strategic goal of building a first-class financial group, and actively reformed the decision-making and deployment of the operating management system, strengthened group coordination, and promoted branch reform.
The company’s reforms promoted the related business and customers of the headquarters to sink to the branch, and determined the rights and responsibilities, profit distribution and sharing mechanism of each subject from the scale design to maximize the benefits. The current reform has been gradually realized.
The deepening of reforms in the future will further strengthen the customer-oriented business model, tap the demand for comprehensive services, and strengthen customer stickiness.
In addition, the company’s research strength remains at the forefront of the industry and is incorporated into the important foundation of institutional business.
In 2016, we took the lead in implementing the employee stock ownership plan, and market-oriented incentives first build a healthy development gene.
Business dismantling: comprehensive business layout highlights competitive advantages. The number of brokerage business outlets is widely distributed, and it is prioritized in developed regions such as Fujian Province and the Yangtze River Delta.
At the end of 2017, the company opened a branch to reform its operations, and the share of the stock exchange market steadily increased.
In addition, institutional clients have distinctive characteristics, and the company’s brokerage income stability and development potential can be improved in the context of market institutionalization.
The investment banking business has distinctive regional characteristics, and was successfully divided among the first batch of listed companies on the science and technology board to welcome the business.
In the credit business, margin trading and securities lending have steadily increased with market risk appetite and brokerage market share; stock quality has been optimized to shrink after risk exposure, and the current risk has been mitigated as a whole.
The investment business is premised on fixed-income investments, with a stable operation and a balance between risks and returns.
The proportion of active management in asset management business rose, and the subsidiary Xingquan Fund’s brand effect became prominent, becoming an important source of revenue contribution.
Goal Goal 7.
37 yuan, given an “overweight” rating based on model calculations, it is expected that the EPS in 2019-21 will be 0.
38 yuan, corresponding PE is 22/20/19 times; BPS is 5 respectively.
45 yuan, the corresponding PB is 1.
According to Wind ‘s consensus expectation, the average PB of comparable medium-sized securities companies in 2020 will be 1.35 times, with reference to comparable securities firms’ estimates, and taking into account the results of the company’s reform, give the company PB 1 in 2020.
6 times, corresponding to reasonable expectations 7.
The first coverage was given an overweight rating.
Risk warning: market fluctuation risk, interest rate risk, policy risk, technical risk.