Yuexiu Financial Holdings (000987): Guangzhou Securities accrues impairment and weighs on group performance optimistic about 2020 performance

Yuexiu Financial Holdings (000987): Guangzhou Securities accrues impairment and weighs on group performance optimistic about 2020 performance
Event: The company released a 2019 performance forecast, and the company expects profit in 2019: 11.2.5 billion?11.930,000 yuan, a year-on-year increase of 150%?165%.The main disclosures of the company are: 1.The operating results of non-performing asset management business and financial leasing business have improved significantly compared with the same period of the previous year; 2.The non-recurring gains and losses actually increased, mainly due to the sale of a 100% distribution of the wholly-owned subsidiary Guangzhou Friendship Group to realize investment income.520,000 yuan, the impact on the net profit return to mother is 9.4.1 billion.Performance growth is lower than expected (Democracy We expect the company’s net profit attributable to mothers to be about 18 in 2019.1.3 billion). According to the results of the announcement of the hub, the company’s profit center in 2019 is about 11.2.5 billion?11.93 ppm, corresponding to a single quarter profit of approximately -2 in 4Q19.1.6 billion?-1.48 ppm (compared to 1 in 4Q18).5.7 billion), a decrease of 3 per year.7.2 billion?3.04 billion.The main reasons for the lower-than-expected performance are: 1.Guangzhou Securities accrued provisions for credit impairment of financial assets and estimated liabilities.According to the announcement of the Air Force Company, the company pledged the shares of Modern Avenue respectively, and the “15 West King 01” bond made provision for credit impairment1.8.9 billion and 0.4.5 billion, and accrued estimated debt 0.53 ppm, the above impairment is expected to reduce profit maximization in 20192.8.7 billion, reducing net profit attributable to mothers by approximately 2.1.5 billion; 2.2019 is the transition year for CITIC Securities’ operation and integration of Guangzheng Securities, which will have an impact on business development and management expenses.At the same time, the group budget needs to bear the expenses of the headquarters of the listed company, and partly increase the operating expenses in the fourth quarter; 3.We expect Yuexiu Leasing and Guangzhou Assets to report a net profit of 8, respectively, in 2019.200 million and 3.500 million, an annual increase of 32.4% and 25.9%, the performance of the diversified financial sector maintained rapid growth. CITIC Securities accelerated the integration of Guangzhou Securities, and opened CITIC Securities’ South China subsidiary.We expect the listed company and Financial Control Limited to make a price of 134.6 ppm sells divest Guangzhou Futures 99 to CITIC Securities.03% equity, Golden Eagle Fund 24.01% equity of Guangzhou Securities 100% equity, and at the same time holding shares of CITIC Securities6.26% of the shares are expected to be completed on June 30, 2020.On January 14, 2020, CITIC Securities issued an announcement saying that Guangzhou Securities had been transferred to the company and its wholly-owned subsidiaries and had been renamed CITIC Securities South China Co., Ltd.CITIC Securities South China is positioned as a professional subsidiary of CITIC Securities’ wealth management business in South China, with business areas covering Guangdong Province (Canton Fair), Guangxi Zhuang Autonomous Region, Hainan Province, Yunnan Province and Guizhou Province.CITIC Securities released its 2019 performance report: It is expected to achieve a total revenue of 431.7.7 billion, an annual increase of 16.0%, the net profit of the mother is 122.8.8 billion yuan, a year-on-year increase of 30.9%, the revised ROE for the reporting period is 7.8%, increase by 1 every year.6 points.We expect CITIC Securities to achieve net profit attributable to mothers 122-2019 respectively.8.8 billion, 164.63 ppm, 205.98 ppm, an increase of 30 in ten years.9%, 34.0%, 25.1%, ROE is expected to be 7 in 2019-2021.8%, 9.4%, 10.6%. Investment suggestion: It is expected that the company’s net profit attributable to its parent from 2019 to 2021 will be 11 respectively.90, 16.74 and 27.72 ppm (previous forecast was 18.13, 17.56 and 27.7.2 billion) over a ten-year growth rate of 164.6%, 40.7% and 65.6%, the current sustainable corresponding PB from 2019 to 2021 are 1 respectively.5, 1.4 and 1.3 times, although the performance forecast is slightly lower than expected, considering that Guangzhou Securities has officially renamed CITIC Securities South China Company, the leasing and 杭州桑拿 AMC performance in 2019 will continue to grow rapidly. In the context of regulatory intention to create an aircraft carrier brokerage company, we are optimistic about the company’s 2019Annual performance and long-term development in the future. Maintain BUY rating. Risk reminder: The progress of major asset restructuring has gradually exceeded expectations, and the macroeconomic recovery has exceeded expectations, dragging down capital market prices

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