Huatai Securities (601688) Third Quarterly Report Comment: Self-operated Investment Elasticity, Big Tech Venture Board Pushes Investment Banking Business Margins Better

Summary and recommendations: Huatai Securities released three quarterly reports, achieving revenue of 178 billion in the first three quarters of 2019, an increase of 41 year-on-year.

8%, realized net profit of 64 billion yuan, an increase of 43.

8%, the company’s 3Q single-quarter net profit of 24 billion, an increase of 80.

5%.

Since the beginning of this year, the equity market has generally improved, and the company’s self-operated investment has shown 武汉夜网论坛 better flexibility. The transaction volume of its transformation market has increased, and the company’s brokerage business income has grown rapidly.

Against the background of the new regulations on asset management, the company’s asset management business has been trending better.

However, under the background of industry equity financing this year, the company’s investment banking business income has declined, but 3QYOYO turned positive, it is estimated that it is related to the promotion of science and technology board related business.

In terms of credit business, the company controls potential risks, actively reduces the size of equity pledges, and the revenue side is reduced by factors that the company actively controls.

The company actively embraces the Internet and technology, and the overall fundamentals are better. The related GDR arbitrage space has disappeared and is currently estimated to be reasonable.

To sum up, we give a “Buy” rating.

The first three quarters achieved a net profit of 6.4 billion, a year-on-year increase of 43.

8%: Huatai Securities released three quarterly reports. In the first three quarters of 2019, it realized revenue of 17.8 billion yuan, an increase of 41 year-on-year.

8%, realized net profit of 64 billion yuan, a year-on-year increase of 43.

8%, the company’s 3Q single quarter net profit reached 2.4 billion, an increase of 80.

5%.

The self-operated investment side is flexible: From the perspective of the income side, self-operated investment has been the main driving factor for the elasticity of performance since this year: 1-3Q2019 self-invested investment income was 60 billion, a year-on-year increase of 104%, of which 2.5 billion in the third quarter,Up 86.

2%, the investment side continued to improve in 3Q.

The company’s brokerage and asset management business maintained rapid growth. Net income from brokerage business in the first three quarters of 2019 increased by 21%.

9% to 3.2 billion, of which 3Q single quarter increase of 24.

9%, 1-3Q net income of asset management business YOY increased by 18.

8% to 2.2 billion, of which 3Q single-quarter increase of 19.

0%, under the background of the new rules of asset management, the company’s revenue still achieved rapid growth.

Huatai Investment Bank and credit business came under slight pressure this year: 1-3Q investment bank business net income YOY decreased by 4.

4% to 1.2 billion, but 3Q saw some recovery indicators, 3Q single quarter increase of 33.

2%, it is estimated to be related to the related incremental business brought by the science and technology board; in terms of credit business, due to the company’s initiative to adjust the distribution pledge scale, the net income of 3Q single quarter credit business fell 40% to 400 million, and the first three quarters of this year’s credit businessNet income YOY fell by 17.

1% to 1.7 billion.

GDR currently has no arbitrage space: the company has continued to be under some pressure from the GDR cash-back repurchase factor, but from the current situation, the relevant arbitrage space has disappeared: as of October 29, Huatai Securities A shares must be 17.

5 yuan / share, GDR is 24.

54 US dollars / 10 shares, almost no difference between each other, the relevant arbitrage space has disappeared, and the gradual suppression factor is weakening.

Earnings forecast and investment advice: At present, the supervisors clearly and vigorously develop direct financing and increase capital market transformation. We believe that the fundamental Huatai Securities will be a better target.

Overall, the company’s performance is in line with our expectations.

We expect the company to achieve a net profit of 7.2 billion and 8.8 billion in 2019 and 2020, a year-on-year increase of 42.

3%, 22.

3%, the company currently supports PE21.

0X, 17.

3X, PB1.

31X, 1.

27X, estimated budget, the company actively embraces the Internet, more technology applications, and become a strategic investor in Internet companies.From a business perspective, the company’s market-oriented operation is better than its peers (the implementation of the professional manager system reform).

At present, the company’s GDR has basically no arbitrage space with A shares, and there is little pressure to cash.

Overall, we still give “buy” investment advice.

Risk Warning: Macroeconomic Downward Expectation