<Result first take>Huatai (6886 HK, BUY): FY21 net profit posted +25% y-o-y and in-line our/consensus forecast
What’s new:
- Huatai Securities (6886 HK, BUY) announced FY21 result which posted net profits of Rmb13.9bn, up 25% y-o-y, representing 98%/98% of ours/consensus FY21F earnings estimate.
Our views:
- The in-line earnings was primarily driven by the higher-than-peers margin financial business, which achieved 48% growth in revenue.
- Fee and commission income to achieved Rmb22.3bn in FY21, up 21% y-o-y. Brokerage business fee income achieved 17% y-o-y after high base in FY20 and accounted for 48% of total fee income.
- Investment banking business achieved 21% y-o-y growth in FY21, implying the company seized the opportunities presented in the registration-based listing system reform. In FY21, the company led underwriting of 32 IPOs, 35 SPOs, and 1766 bond issuances, with total amount of Rmb701.2bn.
- Interest income reached Rmb14.7bn in FY21, up 34% y-o-y, driven by the substantial growth of interest income from margin financing, which recorded a 48% y-o-y growth due to higher market participation
- Investment income achieved a 11% y-o-y growth to Rmb11.3bn, driven by the gain of equity investment.
- Risk control indices remain prudent with risk coverage ratio, liquidity ratio and capital leverage ratio stand at 246%, 170%, and 16%, well better than benchmarks. Overall strong earnings drove ROE to reach 9.0% in FY21, 1 ppt higher than in FY20.
- Maintain BUY with TP of HK$15.15, implying 0.8x of FY22F P/B multiple.
