As Guosen Securities (002736.SZ) released its 2016 annual report last night, a total of 24 listed securities companies released their 2016 performance result. It is noteworthy that Guosen Securities ascended to the top ten securities companies in 2016 by net profit. In 2016, Guosen Securities recorded an operating revenue of 12.749 billion yuan. Its net profit attributed to shareholders was 4.556 billion yuan, ranking the ninth place, much higher than that of Everbright Securities (601788.SH) that ranked the tenth place.
According to statistics, the 24 listed securities companies gained a total of 243.976 billion yuan operating revenue and 85.429 billion yuan net profit last year. The ten most profitable securities companies earned a total of 190.977 billion yuan operating revenue and 66.085 billion yuan net profit last year. Their net profits accounted for 77.36 percent of the total net profit of the 24 listed securities companies, and the figure was 76.29 percent in 2015.
Top ten securities companies are unveiled, Huatai Securities ascends to fifth place
Compared with the top ten securities companies list in terms of net profit in 2015, the companies made the list in 2016 are the same as in 2015, yet the rankings have changed substantially.
Among them, Huatai Securities (601688.SH) rose most fast. In 2016, Huatai Securities earned a net profit of 6.27 billion yuan, ranking in the fifth place. It earned 862 million yuan net profit more than Shenwan Hongyuan Group (000166.SZ). The ranking of Guosen Securities saw the largest fall. In 2015, Guosen Securities earned a net profit of 13.949 billion yuan, ranking in the fourth place behind Guotai Junan Securities (601211.SH). Yet according to its 2016 annual report, Guosen Securities ranked in the ninth place with 4.556 billion yuan net profit.
In addition, the rankings of Guotai Junan Securities, GF Securities (000776.SZ), China Galaxy Securities (601881.SH) all moved up by one place from last year. The rankings of CITIC Securities (600030.SH), Shenwan Hongyuan Group, China Merchants Securities (600999.SH) and Everbright Securities did not change from the previous year.
Impacted the performance of the stock market, securities companies witnessed a sharp fall in operating revenue in 2016. Yet the revenue from investment banking business in some companies showed an upward trend on a yearly basis, becoming one of the few highlights in this year’s results. It is noteworthy that based on the current rankings, large securities companies are still main players in investment banking business.
Based on the above list, except Orient Securities (600958.SH), Industrial Securities (601377.SH) and Guosen Securities, the other seven securities companies ranked among the top ten in terms of net profit last year. Among them, CITIC Securities remained solid in its leading position in the industry. In 2016, its revenue from investment banking business recorded 5.389 billion yuan, a year-on-year increase of 23 percent, contributing 2 percent to its profit growth in 2016. And its proportion in its total operating revenue rose to 14 percent. The investment banking business in GF Securities made 16 percent contribution, the highest level in nearly seven years and representing a remarkable rise from a year earlier (6.32 percent contribution in 2015).
In addition, Everbright Securities also saw a significant increase in its proportion of investment banking business, which grew to 16 percent last year from 7 percent in 2015. Its net revenue from investment banking business grew 21 percent year on year. Everbright Securities explained that this benefited from the hot private placement market, the reform of corporate bonds and corporate bond issuance policies and fast pace of direct financing.
In fact, the new opportunities for investment banking business came from the faster pace of the initial public offering (IPO) since the end of 2016. Industry insiders believe that as regulators take efforts to resolve barriers for companies waiting for IPO, securities companies are likely to see investment banking business perform better. Securities companies that are largely engaged in IPO projects will directly benefit from the accelerating review process, which will drive up their performance.
Large amount of cash dividends, 10 Securities companies plan to give 24.3 billion yuan dividends
Dented by factors like sluggish performance of the stock market, both operating revenue and net profit of securities companies largely declined in 2016, but the ratio of cash dividend remains unchanged. For securities companies ranking top 10 in terms of net profit, their proposed cash dividends still all account for over 30 percent of the net profit earned in 2016. According to statistics made by the journalist, only China Merchants Securities of the aforementioned securities companies ranking top 10 in terms of net profit announced dividend in the middle of 2016. Combined with dividend proposed in end 2016, proposed cash dividends of the 10 securities companies in 2016 totaled around 24.291 billion yuan, taking up 36.77 percent of their total net profit in 2016.
Huatai Securities proposed the highest ratio of cash dividend. The company proposed a dividend of 5 yuan for every 10 shares (including tax) in recent three years. Based on this, the dividend proposed by the company in 2016 will reach 3.581 billion yuan, while the company recorded a net profit of 6.271 billion yuan in 2016, suggesting that cash dividend will take up 57.11 percent of net profit.
Everbright Securities ranked the last among the 10 securities companies with proposed cash dividend of 2 yuan for every 10 shares (including tax) in 2016. Based on this, cash dividend proposed by the company in 2016 reached around 922 million yuan, while the company recorded a net profit of 3.013 billion yuan in 2016, suggesting that cash dividend will take up around 30.6 percent of net profit and it is still higher than that of most listed companies.
Huatai Securities made the greatest progress in ranking. The company recorded a net profit of 6.27 billion yuan in 2016 and defeated Shenwan Hongyuan Securities to edge into top 5 companies in terms of net profit.
Translated by Coral Zhong and Jennifer Lu