China Galaxy (601881) Annual Report Comment: Customer Structure Optimization Returns to Capital Management Origin Transformation

Investment points: Strengthen quantitative trading platforms, PB systems, etc., and optimize customer structure; regional coordinated development and integration strategy; vigorously develop “enterprise-centric” service-oriented investment banking business; actively manage the proportion of revenue to continue to rise and return to the transformation of capital managementobvious.

Reasonable value range 11.

65-12.

34 yuan, raised to “excellent than the market” rating.

[Event]China Galaxy realized operating revenue of 9.9 billion yuan in 2018, -13% for half a year; net profit attributable to mothers was 2.9 billion yuan, -27% per year; corresponding to EPS 0.

28 yuan.

In the fourth quarter, it realized operating income of US $ 3.6 billion, + 48% for the whole year; net profit attributable to mothers was US $ 1 billion, + 70% per year.

Accrued credit impairment losses of 4 megabytes.

In 2018, brokerage / underwriting / asset management / index / investment income accounted for 35% / 5% / 8% / 35% / 10% of operating income respectively.

Strengthen quantitative trading platforms, PB systems, etc., and optimize customer structure.

Realizing brokerage income of 35 trillion, -21% a year.

720,000 new customers and 1354 million new assets.

The company has continuously strengthened the promotion of professional strategic trading services such as quantitative trading platforms, PB systems, and Kim Dae-jong, and its customer trading structure has been significantly optimized.

As of the end of December, the balance of Liangrong was 40.2 billion, with a market share of 5.

33%, the market accounted for a small margin in ten years.

The market value of unpledged stocks was 148.1 billion, an increase of + 51% over the previous 17 years, and self-financed finance contributed US $ 37.4 billion, an increase of + 3%.

Regional coordinated development integration strategy, vigorously develop “enterprise-centric” service-oriented investment banking business.

Realize underwriting income of 50,000 yuan, 5% for the whole year.

The stock and debt underwriting scales are + 157% and + 22% each year, respectively.

Utilize the advantages of the channel network to develop key customers and the scale of equity underwriting 97.

2.7 billion; 2 IPOs, 1.9 billion underwriting; 4 refinancing, 7.9 billion underwriting.

Accurately grasp the issuance window period, and actively expand the scale of bond underwriting, with the 西安耍耍网 bond underwriting scale of 87.5 billion; financial bonds and corporate bonds underwriting scales of $ 41.6 and 25.3 billion respectively.

There are 22 IPO reserve projects, including 5 main boards, 1 small and medium board, and 2 GEM.

The proportion of active management income continued to rise, and the return to the origin of asset management was clearly transformed.

Realize asset management income of 70,000 yuan, + 8% per year.

The scale of entrusted asset management is 2555 trillion, -23% a year, ranking 14th in the industry; of which, the collective asset management scale is 48 billion yuan, the targeted asset management scale is 2001 trillion, and the special asset management scale is 75 trillion.

The proportion of active management business income continued to increase.

In the self-employed sector of equity, solid income products ranked high.

The company’s accounting standards have been adjusted to take into account other claims and 1.2 billion interest income from debt investment. In 18 years, it realized a net investment income of 2.1 billion, replacing 6%.

For the fixed-increasing varieties held by the company’s equity-type self-operating shareholders, the equity-type self-operating investment decreased.

Bond self-employed businesses actively grasped the market rhythm and achieved good returns.

The corporate bond pledged quotation repurchase business (“Tiantianli”) continued to maintain its leading position, and its business scale and number of customers ranked first in the market.

[Investment recommendation]We expect the company’s EPS in 2019-21E to be 0.

40, 0.

45, 0.

48 yuan, BVPS is 6 respectively.

85, 7.

19, 7.54 yuan.

We give it 1 of 2019.

70-1.

80x P / B, corresponding to a reasonable value interval of 11.

65–12.

34 yuan.

Considering that the highest performance in 18 years is smaller than that of its peers, and the market has rebounded significantly in 19 years, we expect the performance in 19 years to rebound significantly and upgrade to the “large market” rating.

Risk Warning: The continued downturn in the market will lead to the expansion of business scale and further strengthening of market supervision.