Huatai Securities (601688) Commentary Report: Investment Expectations Exceed Expected Financial Management, IPO Highlights

On the evening of March 29, 2019, Huatai Securities released the 2018 annual report, and the company realized operating income 161 within the report.

08 million yuan, a decline of 23 per year.

69%; net profit attributable to mother 50.

3.3 billion, down 45 before.

75%; net profit deducted from non-mother 10

09 billion, a year-on-year decrease of 17.

01%.

Investment points: Investment failure, contraction of brokers, and increase in accrual drag down performance: The company’s 2018 performance was lower than expected, mainly due to three reasons.

In terms of investment, the company’s investment income (including changes in fair value) was only 32.

500,000 yuan, exceeding the actual budget of 59.

52%, underperforming.

The sharp retreat of the equity market is the core reason for the drag on the business, and the implementation of the new financial instrument specifications has further led to an increase in investment income growth (the book value of 170 last year).

AFS equity investment of USD 2 billion was transferred to FVTPL); in terms of brokerage, the company’s role as a brokerage trading leader was affected when the market was sluggish, and the stock-based trading volume dropped by 24.

95% to 14.

27 trillion, volume declines and price stability leads to a decrease in business income 19.
.

57%; in terms of accrual, the allocation of pledge risk continued to escalate in 2018, so the company significantly accrued credit impairment losses8.

6.3 billion yuan (of which 6 in the fourth quarter.

3ppm), 2 before 2017.

The 59 trillion yuan asset impairment loss increased by 233%, and profits were compressed, but asset risk tended to be cleared.

Wealth management advantages remain, Fintech + AssetMark: Even if the brokerage transaction volume and income have increased significantly, the company’s market share is still as high as 7.

12%, continue to maintain the top spot.

At the same time, the company continues to promote the wealth management of its business model. The financial technology construction represented by “Zhangle Wealth Link” is still the biggest bright spot. The average monthly activity of this brokerage app in 2018 was 663.

690,000 (the end of the year has reached 712.

880,000), an annual increase of 13.

65%, No. 1 in four years, customer viscosity, activity continued to increase.

On this basis, the sales of consignment products have improved, and revenue has grown against the trend23.

06% to 1.

US $ 7.4 billion, of which funds and trust products have tripled and 3 respectively.

7 times scale growth.

In addition, the company’s overseas subsidiary AssetMark performed well, terminating the platform AUMDA448 at the end of 18 years.

$ 5.5 billion, an annual increase of 5.

83%, with a market share of 10.

20%, continues to rank third in the North American TAMP industry, and domestic and foreign wealth management linkage is expected.

Investment bank, asset management remained stable, and IPO ranked second: In 2018, Huatai United achieved investment bank business income.

4.9 billion, down 4 every year.

41%, previous industry.

The size of the IPO is as high as 187.
7.5 billion yuan to 13.
The 66% market share rose to the second in the industry (behind CICC), showing outstanding performance, and the projects involved included many high-quality innovative companies such as WuXi PharmaTech, Mindray Medical, etc., demonstrating the strength of science and technology reserves.

In terms of asset management, the company achieved 24.

$ 7.3 billion in business revenue, an increase of 7 per year.

26%.

Despite the scale of fiduciary management scale14.

88% to 776.8 billion, but the business structure has been significantly optimized, and the proportion of targeted asset management has decreased by 6.

18 pct to 75.

01%, the proportion of collective asset management increased by 2.

57 pct to 14.

52%, the active management transformation is gradually promoted.

Investment advice and profit forecast: In 2018, the company raised funds through non-public issuance of A shares 142.

US $ 0.1 billion, mainly for expanding credit business, increasing capital for foreign companies, creating FICC and upgrading information systems, and simultaneously releasing strategic investors such 无锡夜网 as Alibaba and Suning Tesco, with enhanced capital strength and business layout.

In 2019, the company’s GDR release is expected to land. At the same time that the supplementary capital of 500 million US dollars will also open up overseas markets, and further open up the development space.

The current market recovery has driven the sector into a positive feedback cycle of estimates and performance. Under the background of accelerated capital market reforms, the company, as a leading securities firm, is expected to fully benefit from the policy dividend, and the performance conversion can be expected. It is estimated that there is still room for upside.

It is expected that the company’s net profit attributable to its parent for the year 2019/2020/2021 will be 79.

68/95.

19/109.

48 trillion, an increase of 58 each year.

33% / 19.

46% / 15.

01%, BVPS is 13 respectively.

29/14.

16/15.

14 yuan, the current total corresponding to PB is 1.

69/1.

58/1.

48 times, maintain “Buy” rating.

Risk reminders: Macroeconomic continues to decline; policy supervision exceeds expectations; tight liquidity of funds; trading sentiment falls