<Result first take>CITIC (6030 HK, BUY): 1H21 net profit posted +55% y-o-y and in-line
What’s new:
- CITIC (6030 HK, BUY) announced FY21 result which posted net profits of Rmb24.0bn, in line with CITIC’s previously guidance of expecting FY21 earnings to post up 54% y-o-y.
Our views:
- Representing 42% of total revenue, fee and commission income reached Rmb40.9bn in FY21, up 29% y-o-y, on strong sentiment in A-share market. Breaking down by business, brokerage, asset management, and investment banking fee income are the key drivers, representing 19%, 45% and 34% y-o-y growth respectively, primarily due to ample market liquidity, strong wealth management demand, and consistent benefit from registration-based listing reform.
- Interest income reached Rmb20.6bn in FY21, up 33% y-o-y, driven by the substantial growth of interest income from margin financing, which recorded a 11% y-o-y growth due to higher market sentiment.
- Investment income achieved a 27% y-o-y growth to Rmb22.7bn, due to more emphasis on equity investment under relatively high sentiment market in FY21.
- Risk control indices remain prudent with risk coverage ratio, liquidity ratio and capital leverage ratio stand at 175%, 141%, and 14%, much better than benchmarks. Overall recovery in earnings drive Annulised ROE to reach 12.0% in FY21, 3.2 ppt higher than in FY20
- Maintain BUY with TP of HK$27, implying 1.4x of FY21F P/B multiple.
