Zheshang Securities(601878) 华创证券·2024-05-30 06:31Investment Rating - The report gives a "Recommended" rating for the company with a target price of 14.1 RMB, compared to the current price of 11.13 RMB [1]. Core Insights - The company has a strong regional advantage in Zhejiang, which supports its brokerage and investment banking business for long-term growth. It has the highest market share in corporate bond and company bond underwriting in Zhejiang for five consecutive years [1][12]. - The company is focusing on wealth management and investment banking, with a notable increase in its distribution and institutional services, while the decline in commission rates is slowing down [1][28]. - The company is pursuing external mergers and acquisitions, specifically targeting Guodu Securities to enhance its business capabilities and regional presence [1][7]. Summary by Sections Company Overview - The company, Zhejiang Securities, is a state-controlled listed brokerage firm based in Zhejiang, with 74 branches in the province, representing 57% of its total branches [1][19]. - It aims to transition into a medium-sized brokerage by 2030, emphasizing high-quality development and service to the real economy [12][17]. Business Analysis - Wealth Management: The company has seen significant growth in its brokerage business, with a CAGR of 43.84% from 2018 to 2021, and it continues to invest in financial technology to maintain its market share [1][28]. - Investment Banking: The company has a strong local presence in bond underwriting, with a market share that has consistently ranked first in Zhejiang [1][24]. - Asset Management: The company is focusing on its asset management subsidiary, which has recently gained a public fund license, indicating a shift in strategy [1][17]. - Futures Business: The company maintains a commission rate that has been higher than the industry average for ten consecutive years [1][17]. External Growth Strategy - The company is actively pursuing the acquisition of Guodu Securities, which is expected to complement its existing business and enhance its overall strength [1][7]. - The report highlights the supportive regulatory environment for mergers and acquisitions in the securities industry, which could facilitate this strategic move [1][7]. Financial Projections - The company is projected to achieve EPS of 0.52, 0.59, and 0.69 RMB for 2024, 2025, and 2026 respectively, with corresponding BPS of 7.45, 7.87, and 8.36 RMB [1][2]. - The current price corresponds to a PB of 1.49, 1.41, and 1.33 for the next three years, indicating a favorable valuation compared to peers [1][2].