Guotai Junan (601211): Expected Q119 net profit to exceed + 60%
The investment highlights released the 2018 annual report, which is basically consistent with the performance express report.
Monarch’s 2018 operating income was 227.
2 ‰, at least -4.
6%; deducted non-net profit 58.
1 ppm, -36 throughout the year.
8% (vs. industry -41%), expecting an average ROE5.
42% (down from CITIC’s 6).
20%; higher than Haitong’s 4.
Dividends for every 10 cash shares2.
The decrease in the company’s current profit was mainly affected by the decrease in brokerage, self-employment, investment bank income, increase in management expenses and increase in credit impairment losses.
Expected Q119 net profit + 60% per year.
The market was active in March and had more trading days than in February. The two factors overlap. We expect the net profit of Monarch’s parent company in March to reach a net profit of more than 2 billion in a month, about + 120% month-on-month and more than + 75%.
Based on the financial data released in January and February and the expected value in March, we expect the company’s first quarter net profit to have previously been + 60%.
Revise up 2019-21 profit forecast.
The stock boom is better than we expected.
According to the latest market environment, we adopt relatively neutral industry assumptions. 1) The average daily turnover in 2019 is 600 billion (vs. the original assumption is 400 billion, and the year-to-date is 553.1 billion); 2) the industry’s two financial industries are both maximized and averaged.
2 trillion (vs. 900 billion originally assumed, current balance is 888.3 billion).
Affected by the assumption increase, we will increase the company’s net profit in 2019-21 by 18% / 14% / 11%, and increase the 2019E BVPS by 1.
After the increase, the company’s net profit will be + 61% and + 19% for 2019 and more than 20 years.
The companies 2019-20E ROE are 8 respectively.
35% and 9.
Investment suggestion: raise target price to 24.
72 yuan, maintain “Buy” rating.
We continue to use the PB / ROE method for estimation.
With reference to the company’s ROE capabilities and taking into account that the market sentiment has risen as the overall assessment level of securities companies has moved upwards, we have raised the company’s target PB to 1.
Based on the adjusted 2019E BVPS, a target price of 24 is given.
72 yuan, maintain BUY rating.
Risk warnings: the stock market is recovering more than expected; the intensified competition in the industry has caused the commission 武汉夜生活网 rate to fall, and the credit business interest rate has fallen more than expected; the strengthening of supervision has caused business transfers and regulatory defaults; and the credit business bad debt rate has exceeded expectations.