Shenwan Hongyuan Group Announces 2020 Interim Results

Robust Growth in Total Revenue and Net Profit

HONG KONG, Aug. 31, 2020 /PRNewswire/ -- Shenwan Hongyuan Group Co., Ltd ("Shenwan Hongyuan Group", "Shenwan Hongyuan" or the "Group") (stock code: 6806.HK; 000166.SZ) announced its interim results for the six months ended June 30, 2020 (the "Reporting Period").

During the Reporting Period, the Group achieved total revenue and other income of RMB17.79 billion, representing a year-on-year increase of 18.30%, mainly attributed to the robust growth of institutional services and trading business. Net profit for the period attributable to shareholders of the Group reached RMB4.04 billion, representing a year-on-year increase of 26.03%. Basic earnings per share was RMB0.16, representing a year-on-year increase of 14.29%. The Group's total assets amounted to RMB441.63 billion, representing an increase of 13.67% as compared to the beginning of 2020.

Business Highlights in the First Half of 2020

  • Strong performance during the Reporting Period, with total revenue and other income and net profit increasing 18.30% and 26.03%, respectively. Weighted average return on equity reached 4.75%, representing an increase of 0.41 percentage point as compared to the corresponding period of last year;
  • Total revenue and other income for the institutional services and trading business surged 43.17% to RMB9.48 billion as compared to the corresponding period of last year, mainly due to the robust performance of Fixed Income Currencies and Commodities (FICC)'s sales and trading;
  • The transformation to wealth management was accelerated through intensifying technology application, optimising user experience, strengthening investment consulting construction, improving professional services, promoting customer layering, and deploying the draught businesses. During the Reporting Period, the personal finance business gained approximately 304,200 new clients, and the market share of new accounts was 3.81%; the Group's Big Winner APP had monthly active users of 1.34 million, representing a year-on-year increase of 28.14%;
  • Newly acquired two important qualifications for the pilot programs of mutual fund investment advisory business and cross-border business to further improve the business layout;
  • Accomplished the investment platform integration and improved the "investment + investment banking" mechanism. The Group will continue to focus on the capital market and invest in the securities business;
  • Implemented the political responsibility as a state-owned financial enterprise in epidemic prevention and control. To this end, employees from various branches have actively fought coronavirus in the front line, strengthened health protection and guaranteed the quality of customer service. The Group donated more than RMB13 million in cash and other anti-epidemic supplies including food, masks, protective clothing and ambulances to Hubei, Xinjiang, Huining of Gansu;
  • Served the real economy, issued corporate bonds for epidemic prevention and "anti-epidemic" themed funds, established bailout funds to help entity enterprises, especially small and medium-sized enterprises to cope with price fluctuation risks and capital pressure, and promoted the resumption of work and production by leveraging financial instruments such as commodity OTC options.

Information on each business segment is as follows:

Business segment

Total revenue and other income (RMB billion)

Y-o-Y change

Enterprise finance

1.29

-6.26%

Personal finance

6.01

-1.14%

Institutional services and trading

9.48

+43.17%

Investment management

1.01

+4.97%

Total

17.79

+18.30%

In the first half of 2020, the Group overcame difficulties such as the Covid-19 pandemic and intensified trade conflicts, adjusted various business strategies in a timely manner to make progress against the adverse conditions, achieved good business performance and continued to maintain a stable and positive business condition.

With the transformation of China's economy to high-quality development and the gradual implementation of various reforms and opening-up policies, the capital market will further strengthen its pivotal role and become more dynamic, providing more room for development  for the securities industry.

The year 2020 is a new starting point marking the fifth year of Shenwan Hongyuan's restructuring. Adhering to the role of at state-owned financial enterprise that 'holds belief and dares to take responsibility', the Group will focus on serving the real economy and solidly proceed with "ensuring stability on six fronts" and "security in six areas", by consolidating the low-level management, speeding up the business transformation, and improving competitiveness. It will complete the annual goals with a brand new start, and provide better returns to shareholders through excellent results.

Enterprise Finance Business

The enterprise finance business of the Group consists of investment banking business and principal investment business. During the Reporting Period, total revenue and other income of RMB1.29 billion, representing a year-on-year decrease of 6.26%.

In terms of investment banking business, during the outbreak of Covid-19 epidemic, the Group proactively responded to the state's call for giving play to the role of the capital market by serving as the lead underwriter for the first domestic epidemic prevention bonds of the securities company, at the critical moment of prevention and control of the epidemic and support the fight against the "epidemic". During the Reporting Period, the Group completed six equity financing projects with a financing amount of RMB5.62 billion; market share in respect of financial bonds increased significantly from 2.45% for the first half of 2019 to 3.85%. Under the deepening reform of the National Equities Exchange and Quotations (NEEQ), the Group ranked first in the industry in terms of the accumulated number of enterprises for which the company recommended for listing on the NEEQ, bringing huge opportunities for business on NEEQ, Star Board and ChiNext listing.

As of July 2020, the Group had intensive meetings for 14-equity related deals including three on Star Board listing, two on ChiNext listing, one SME IPO, four IPOs on the NEEQ Select, three private offerings and one issuance of convertible bonds. With quality and efficiency of project execution further optimized, the Group's overall investment banking business showed growth momentum.

In terms of principal investment, by leveraging the capital and structural advantages as a listed company, as the Group focused on "research + investment + investment banking" and comprehensively met clients' needs for integrated financial services. The Group focused on key areas, industries and clients, fully deepened the coordination with securities business and greatly improved professional investment capabilities. The Group has accomplished integration of investment platform with key focus on fixed income and equity platforms, deepened mechanism reform and strengthened development momentum. Hongyuan Huizhi continued to consolidate its advantages in fixed-income business. Relaying on the strengths of a securities company in terms of bond investment, it increased investment in standardized products and achieved diversified asset allocation. Shenyin & Wanguo Alternative Investment deepened the adjustment to asset layout and focused on promoting private equity, private securities fund investment and the follow-up investment in the STAR Market, resulting in steady increase in business scale.

Personal Finance Business

The personal finance business of the Group mainly covers securities brokerage, futures brokerage, margin financing and securities lending, stock-backed lending and sales of financial products. During the Reporting Period, the personal finance business of the Company recorded total revenue and other income of RMB6.01 billion, representing a year-on-year decrease of 1.14%.

In terms of securities brokerage busines, the Group strived to overcome the unfavorable conditions such as further intensified competitions in the industry. The transformation to wealth management was accelerated through intensifying technology application, optimising user experience, strengthening investment consulting construction, improving professional services, promoting customer layering, and deploying the draught businesses. Net income of fee (excluding trading units leasing) increased by 10.89% year-on-year with a market share of 4.22%. Number of clients increased by 155.4% year-on-year, with sales up by 142.8%. Agency sale of financial products increased by 96%. Client's securities under the custody of the Company amounted to RMB3.62 trillion, representing an increase of 13.25% from the end of last year.

In terms of futures brokerage business, the Group proactively responded to the impact of the pandemic and market changes, adjusted business strategies in a timely manner to achieve a year-on-year increase of 18% in daily average customer equity, hitting a record high; the types of market-making businesses increased to six, resulting in continuous increase in the business scale.

As for margin financing and securities lending business, the balance of margin financing and securities lending business was RMB1,163.77 billion, representing an increase of 14.17% over the end of last year. Balance of the Group's margin financing and securities lending business was RMB60.25 billion, representing an increase of 16.51% over the end of the previous year.

The stock-backed lending business continued to adopt stringent risk controls and reduce its scale. The stock-backed lending business had a balance of RMB16.24 billion, decreasing by 33.69% over the end of the previous year. The Group's sales of financial product business line dedicated great efforts to both the mutual funds and private funds. While conducting market-making services with fund companies for equity-based mutual funds, the Group focused on leading private equity funds to build a quantitative private equity business ecosystem.

Institutional Services and Trading Business

The institutional services and trading business include prime brokerage services, research and consultation, FICC sales and trading as well as equity sales and trading business. During the Reporting Period, the Group's institutional services and trading business recorded total revenue and other income of RMB9.48 billion, representing a year-on-year increase of 43.17%.

For the prime brokerage business, the Group continued to deepen its "platformization" strategy, focusing on core clients including mutual funds, private equity funds, insurance, banks, and large enterprise groups to provide customers with a comprehensive package of financial services.

The Group's subsidiary SWS Research continued to improve the quality of research and market influence and provided decision-making references for national agencies, regulatory authorities, and industry associations.

During the Reporting Period, while continuously improving the FICC business layout, the Group supported the common development of commodities, gold, market-making, and product creation businesses, to cultivate new profit growth drivers. In the market environment fierce competition, the Company's sales of debt financing instruments of non-financial enterprises continued to maintain a leading position in the industry, and was ranked first.  

In respect of equity sales and trading business, the Group continued to promote the transformation of traditional proprietary trading. It continued to leverage the advantages of OTC derivatives business to expand client coverage, vigorously develop market-making trading business, and proactively promote the innovation and business development of capital market.

The Group also vigorously continued to improve its cross-trade services for derivatives. Oriented for customer needs, it significantly promoted supply-side reform of products to continuously enrich its product lines and strengthen its customer stickiness, establishing a "product + trading + capital intermediary" profit model. According to the latest statistics from Securities Association of China, the Group's OTC option trading business made up 18.66% in terms of market share, ranking second by scale among its peers.

Investment Management Business

The investment management business consists of asset management, mutual fund management and private equity fund management. During the Reporting Period, the Group's investment management business segment recorded total revenue and other income of RMB1.01 billion, representing a year-on-year increase of 4.97%.

During the Reporting Period, as the Group consolidated the original fixed-income business and comprehensive financial business, the asset securitization business management and issuance scale showed a growth trend, with greatly improved ranking.

The performance of SWS MU CSI 500 Index Selected Enhanced product and SWS MU Quantitative Drive product adopting 800 Index Selected Enhanced strategy of the Company ranked the first among the same kind of 500 Index Selected Enhanced products and the same kind of 800 Index Selected Enhanced products, respectively, which fully demonstrated the strong competitiveness of the Company's quantitative investment ability in the industry.

The private equity fund business centers on the positioning of national supply side reform and development of real economy, cooperated with local government guidance funds and key areas in Beijing, Tianjin, Hebei and Greater Bay area, and carried out "fund of fund + direct investment" mode investment projects with key clients such as Sichuan Development in the southwest region, explored the expansion of real estate fund management business and supported the region in an all-round development, industrial upgrading, mixed reform of state-owned enterprises and other key areas.

About Shenwan Hongyuan Group

Shenwan Hongyuan Group Co., Ltd. (Stock code: 6806.HK; 000166.SZ) is a leading investment holding group focused on securities businesses in China and committed to providing diverse financial products and services to clients, and have established a longstanding leading position across multiple business lines in the PRC securities industry with quality growth, including enterprise finance, personal finance, institutional services and trading, and investment management. In January 2015, Shenwan Hongyuan emerged from the merger between Shenyin & Wanguo Securities and Hong Yuan Securities which was the largest merger in PRC securities industry at that time and listed on Shenzhen Stock Exchange. In April 2019, Shewan Hongyuan issued H shares and was successfully listed on the Hong Kong Stock Exchange.

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