CITIC Construction Investment (601066): Comprehensive securities firms leading investment banking business fully benefit from the reform of science and technology board

CITIC Construction Investment (601066): Comprehensive securities firms leading investment banking business fully benefit from the reform of science and technology board

Core Views Leading integrated brokerage firm for investment banking business.

The company’s predecessor was “CITIC Construction Investment Co., Ltd.”, which was established by CITIC Securities and China Construction Bank in 2005, and achieved rapid development based on the transfer of the original Huaxia Securities-related business. In 2016 and 2018, it successively landed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange.
In 2018, affected by the A-share secondary market, the company achieved operating income of 109.

1 ‰, at least -3.

50%; affected by the breakdown of the brokerage business, the credit business was impaired and accrued, and the net profit attributable to the mother was 30.

870,000 yuan, at least -23.

11%.

As of the end of 2018, the company has entered the top ten in the industry in terms of operating income, net profit, net capital and other 杭州桑拿 indicators, ranking the first echelon of domestic brokers. In terms of business, the company’s investment banking business is leading the industry.He has maintained the top three in the industry for a continuous period of time, and his profit is the first to defend his title. He is a veritable leader in local investment banking.

The investment banking business is leading the industry and will fully benefit from the reform of the science and technology board.

In 2018, under the environment of rigorous review and inactive market subscription, the company’s investment banking business market share has further increased, and many data rank among the top in the industry: 1) In terms of equity financing, the company’s equity underwriting company ranks second in the industry, The amount of lead underwriting ranks first in the industry; 2) in terms of bond underwriting, the number of lead underwriters and the amount of lead underwriting ranks second in the industry, of which corporate bonds rank first in the industry;Digital ranks first in the industry.

Looking ahead to 2019-2021, the short-term bond underwriting market is stable and improving. The medium-term equity underwriting has benefited from the reform of the science and technology board and the registration method. The increase is considerable. As a leading investment bank, the company will fully benefit:The economy is still facing some downward pressure. The structural loose monetary policy ensures relatively abundant liquidity, supports the slow fluctuation of the bond market, and ensures that the issuer is stable and better. 2) On the underwriting of equity, the science and technology board is expected to be officially traded in early July, adding value during the yearThe amount is still small, but with the normalization of the registration system of the science and technology board in the medium and long term, the reform experience will be promoted to the main board / second board market, and the direct increase in the expansion of investment bank business will gradually increase gradually; gradually, the follow-up of large investment bank business will become an important source of brokerage resources.The port can generate related business needs such as custody business, margin financing and stock lending, and stock pledged repurchase, which will have a magnifying effect of increased performance.

The secondary market is picking up, and brokerage and credit business will improve significantly.

In 2018, the performance of the equity secondary market was sluggish, with an average daily stock-based transaction volume of 3755 megabytes, -20 per year.

1%; the balance of funds from the two financial institutions is 749 billion yuan, -26.

7%; subject to this, the company’s wealth management business (brokering + credit) income decreased by -22.

8%, the combined credit impairment provision was made, and the profit increased by 95%.

1%.

Since 2019, the 19H1 market has picked up, and transactions have been active. During the period from January to May, the total A-share turnover has increased by +33.

9%, and the growing value will also gradually reverse the credit deduction value withdrawn in the previous period. Looking forward to 19H2, the macroeconomic development will gradually stabilize, the stocks with overlapping fundamentals will be low, and the downside risk will be limited.The foundation of the ten-year high growth rate of credit business.

Short-term estimates are high, and pressure to lift the ban and reduce holdings is high.

In terms of estimation, the company’s reasonable estimation interval is about 2.

2-2.

5 times PB, but finally closed on June 28, the company’s dynamic price-earnings ratio of 45.

0 times, the PB value reaches 3.

64 times, appraising 31 in the Shenwan Securities sector index over the same period.

3 times and 1.

60 times, even taking into account the premium of the new share transaction, there is a significant overestimation; in terms of shareholders lifting the ban, in June we ushered in the first IPO of about 26 shareholders.

800 million shares were lifted, of which CITIC Securities, a shareholder holding more than 5% of the shares, has planned to liquidate and reduce its holdings, which is expected to become an opportunity for a downward return in the short to medium term.

Earnings forecast and rating: The company’s EPS for 2019-2021 is expected to be 0.

61 yuan, 0.

66 yuan and 0.

74 yuan, the corresponding P / B ratio is 2.

99 times, 2.

73 times and 2.

49 times, taking into account the potential downside risks brought about by higher estimates, giving a “neutral” investment rating.

Risk warning: the reform of the science and technology board is not up to expectations; the secondary market is sluggish.