Another Kind Of "Good Business" For Securities Companies

On the occasion of the second anniversary of the operation of the science and technology innovation board, the first batch of stocks invested by securities companies also ushered in the lifting of the ban. Originally as a compaction of the responsibility of securities companies, the "sponsor + follow investment" system of the science and technology innovation board is becoming a major growth point of the profit source of securities companies.

According to the statistics of all media reporters of Nanfang finance and economics, since July 22, a total of 25 securities companies listed on the science and technology innovation board have been lifted from the ban, with a cumulative market value of 4.289 billion yuan and a floating profit of 2.915 billion yuan.

However, after the lifting of the ban on these stocks, there was no obvious trend of reduction. As of August 3, most of the stocks had a rise or fall of no more than 10%, and the latest market value was 4.209 billion yuan.

According to wind data, securities companies have generally achieved considerable floating earnings in the following two years, with a total yield of 155% and a cumulative floating profit of more than 25 billion yuan, which may be the reason why they are not in a hurry to reduce their holdings.

In addition, Chen Mengjie, chief strategic analyst of YueKai Securities Research Institute, pointed out that as institutional investors, securities companies pay more attention to long-term investment in strategic placement. The main factors to be considered include the yield of lifting the ban, future market expectation and recognition of the company's long-term value.

Only one of the first batch of companies with investment lost money, and the highest rate of return on investment reached 671%

Since the opening of the science and technology innovation board in July 2019, the share prices of 14 of the first 25 listed companies have doubled, and the share prices of 9 companies have increased by more than 300%.

The co investment mechanism of sponsor institutions is a major innovation measure of the science and technology innovation board, which requires the securities companies to use their own funds to follow the investment in the stocks of the science and technology innovation board through alternative subsidiaries. According to the relevant regulations, the proportion of follow-up investment may be 2% - 5%, and the lock-in period is 2-3 years.

Unlike ordinary investors who have to draw lots to rely on luck to make a new venture, the science and technology innovation board with investment business is becoming a "good business" for securities companies with considerable profits and stable profits.

In terms of data, 13 of the first batch of companies released the ban made profits of more than 100 million yuan. CITIC Securities is still a well deserved "first brother" in terms of follow-up investment. It has recommended and invested three first batch of Sci-tech Innovation Board companies, with a floating profit of 534 million yuan; Second and third were Haitong Securities and CITIC, with 2 and 6 companies respectively, with floating profits of 382 million yuan and 363 million yuan respectively.

The highest rate of return on investment is the semiconductor chip concept stock Anji Technology (688019. SH). Shenyin Wanguo innovation Securities Investment Co., Ltd. invested 26.02 million yuan. As of August 3, the market value of this part was 201 million yuan, with a floating profit of 175 million yuan. The return on investment reached 671%.

It is worth noting that only one of the 25 first batch of science and Technology Innovation Board companies has some floating losses. That is, China Communications (688009. SH), which is sponsored by CICC, has invested 211 million yuan and accumulated losses of 12.6566 million yuan.

Financial industry analyst Wang Chikun told reporters, "the follow investment mechanism is similar to the green shoe mechanism, which are specific measures to ensure the success of IPO. On the one hand, securities companies can bring certain funds to IPO companies and improve the listing success rate; On the other hand, if the quality of the companies that the securities companies tutor is not high, the fall of the stock price will lead to the damage of their own interests. Therefore, it will objectively ensure and promote the overall quality of the IPO of the science and technology innovation board. "

The overall profit is considerable, and this year's reduction is weaker than that of last year

The listing and investment system that originally matched the science and technology innovation board has gradually become an important source of profit and income for securities companies. According to the statistics of the following investment data of securities companies in the past two years, it can be found that more and more securities companies have joined the layout, and the existing securities companies have been constantly refinancing to expand their capital. The good growth of the science and technology innovation board has made investors from all walks of life continue to increase their capital.

As the "experimental field" of A-share market reform, the Sci-tech Innovation Board expanded from the first batch of 25 companies to 311 in just two years. The IPO financing amount exceeded 380 billion yuan, accounting for more than 40% of the A-share financing amount in the same period. The market value of the board started from zero, and now it has exceeded 5 trillion yuan. The number of listed companies and the overall operation situation have been steadily improved.

From the business point of view, the total number of companies listed on the science and technology innovation board by securities companies has reached 328. These companies have been allocated 16.383 billion yuan of investment, and the securities companies have achieved a floating profit of 25.4 billion yuan, achieving a return on investment of 155% in two years.

Specifically, CITIC Securities, CICC and Haitong Securities Co., Ltd. ranked among the top three, with floating profits of 3.746 billion yuan, 3.494 billion yuan and 3.352 billion yuan respectively.

As far as individual stocks are concerned, there are three enterprises with a yield of more than 10 times. Specifically, the two-year yield of CITIC Securities Co invested nano micro technology (688690. SH) reached 1176%, that of GF Securities Co invested Medici (688202. SH) reached 1168%, and that of Dongxing securities (688390. SH) reached 1145%.

Of course, in terms of investment, there are gains and losses. There are also six securities companies with a loss of more than ten million yuan in the following investment projects, but on the whole, they are still "making more and losing less". Among them, CITIC Securities, which also had the largest loss on a single share, subscribed 111 million yuan on Kaisai biological (688065. SH), and had a floating loss of 18.83 million yuan; Huatai United Securities Co invested 60 million yuan in Sansheng Guojian (688336. SH), with a floating loss of 16.96 million yuan; China Merchants Securities followed jiuri new materials (688199. SH) for 74.16 million yuan, with a floating loss of 14.31 million yuan.

"In the international market, in fact, many investment banks have the practice of sponsor project IPO." Hong Hao, chief financial scientist of China Financial think tank, told reporters, "participating in the follow-up investment tests the professional ability of securities companies, and in the course of several years of guidance, the securities companies have a very deep understanding of the following investment enterprises. In this case, the probability of profit of the follow-up investment will be relatively increased. If the investment loss is caused by the wrong judgment, then they can only bear the loss by themselves."

In addition, some insiders of securities companies pointed out that due to the difference in the number of IPO participants and revenue scale of different securities companies behind the science and technology innovation board, there is also an obvious "Matthew effect" in the follow-up investment market, that is, the number of projects of large securities companies comprehensively crush small securities companies.

Another feature of this year is that since the second quarter of the science and technology innovation board, the money making effect has been good, which makes the strength of the securities companies to lift the ban when they are due this year is obviously weaker than that in the same period of last year.

For example, the 50 component index of sci tech Innovation Board of Shanghai Stock Exchange has been rising continuously since its establishment in 2020, reaching the highest level of 1726 points in July 2020. This month is also the first anniversary of the lifting of the ban by some shareholders of the science and technology innovation board. As a result, there has been a wave of share reduction, which also causes the index to continue to fluctuate and drop by 24% in just two months.

Wind information shows that from July to September this year, the corresponding market value of lifting the ban was 235.571 billion yuan, 136.278 billion yuan and 59.984 billion yuan respectively. Among them, the market value of the ban lifting in July accounted for nearly a quarter of the total market value of the science and technology innovation board in 2021, second only to the scale of 352.737 billion yuan in the same period of 2020, becoming the second largest lifting peak since the opening of the science and Technology Innovation Board.

However, compared with the same period last year, the overall situation of the science and technology innovation board is better this year, with considerable floating profits of securities companies following investment, and there has not been a wave of securities companies reducing their holdings.

Cao Liulong, a senior strategist at GF Securities, pointed out that the lifting of the ban is not very important because it does not mean reducing holdings. According to the calculation, the current reduction ratio of the science and technology innovation board after the lifting of the ban is about 3%. On the whole, the reduction of industrial capital is relatively stable, and there is no prevailing situation after the lifting of the ban.

With investment mechanism to promote business transformation, securities companies intensively "add equipment" during the year

In recent years, data show that the proportion of major securities companies' light asset business income has gradually decreased, while the proportion of asset heavy business income has gradually increased. However, at present, the proportion of heavy assets business of domestic securities companies is much lower than that of international counterparts. The net assets scale of American investment banking giants can reach 10 times of that of domestic securities companies, and there is still a big gap in scale.

Chen Mengjie pointed out that compared with the business development of foreign securities companies, the current investment banking business of China's securities companies is a relatively independent business department parallel to brokerage business, proprietary business and asset management business. The system of follow-up investment in the science and technology innovation board has stimulated the transformation needs of securities companies and accelerated the remodeling of internal organizational structure. It is necessary to explore investment banks, research institutes, research institutes, investment banks, investment banks, research institutes, investment banks, etc Other investment subsidiary companies and other departments of comprehensive cooperation. The development of asset heavy business is the only way for domestic securities companies to enhance their international level. Asset heavy business, driven by assets and liabilities, can strengthen the core position of securities companies in the capital market, but it also means that securities companies are facing greater market risks and capital requirements.

From the perspective of various types of heavy asset business of securities companies, the overall risk control and rich floating profit of the science and technology innovation board co investment business is also one of the directions of the transformation of securities companies. At present, it is becoming the business that various securities companies invest a lot of resources to develop.

Xu Jianfeng, an analyst at Dongguan securities, said that the initial setting up of the co investment policy was intended to allow the sponsor institutions to conduct a prudent study on the pricing of the issuer's share price. Today, the floating profit of the follow-up investment is generally considerable, which also makes more and more securities companies start to set up wholly-owned alternative investment subsidiaries, and those who have arranged ahead of time also tend to increase investment.

Some securities companies actively apply for the establishment or capital increase of alternative investment subsidiaries. In terms of system arrangement, in order to avoid the interference of the sponsor institutions on the stock pricing by using the "co investment" system, the scientific and technological innovation board separates the "co investment" subject from the sponsor, and is limited to the subsidiary of the sponsor, and the source of funds is also limited to its own funds. Therefore, the establishment of alternative investment subsidiary is a prerequisite for securities companies to join the "cake" of science and technology innovation board.

At present, small and medium-sized securities companies are the main force to set up alternative investment subsidiaries. In July, Wanhe securities and CAIDA securities announced the establishment of alternative investment subsidiaries and completed industrial and commercial registration. According to the announcement of Wanhe securities, the investment scope of Wanhe, an alternative investment subsidiary, is to participate in the co investment of the science and technology innovation board and the gem, with a registered capital of 1.5 billion yuan.

The follow-up mechanism of the science and Technology Innovation Board will consume a lot of capital of the following investors. Therefore, higher requirements are put forward for the net capital of securities companies undertaking the projects of science and technology innovation board. The larger the capital scale and the stronger the fund-raising ability, the securities companies are expected to occupy more advantages in the long-term running of the science and technology innovation board.

Recently, securities companies such as BOC securities, Dongfang securities and Zhongtai securities have increased capital to their alternative investment subsidiaries. Among them, Dongzheng venture capital (the main body of Dongfang securities's science and technology innovation board co investment business entity) has obtained two capital increases of Dongfang securities, with a scale of 1.4 billion yuan. According to the data, the net profit of venture capital in the first half of the year was 280 million yuan, which was far more than 206 million yuan in the whole year last year. This may be the main motivation of Dongfang securities to continuously "invigorate" the asset management of the eastern stock exchange.

In addition, this year, a number of securities companies have implemented or issued stock allotment plans. According to the reporter's statistics, the development of investment and trading business has become the most important investment direction of the funds raised by the refinancing of securities companies, and some of them are expected to be used for the follow-up investment business of its subsidiary, the science and technology innovation board.

However, as for the "hot issue of allotment" of listed securities companies, the research paper of China Securities construction investment also reminds that the business structure of listed securities companies is more and more capitalization, and the "arms race" of net capital is becoming more and more intense. However, since 2021, the stock market of securities companies has been depressed, and investors are not willing to subscribe for additional shares or convertible bonds issued by securities companies. For this reason, many securities companies choose to issue shares as a means of refinancing, allowing existing shareholders to make a dilemma of "subscribing or bearing share price dilution", which may lead to dissatisfaction and sell-off of existing shareholders.