3 IPO projects in the first month of the year, haitong Securities how to revive investment banking business?


Xinhua Finance Beijing, February 7 (China Securities Regulatory Commission disclosed in 2021 securities company classification results show that Haitong Securities was divided into BBB, the company’s rating of AA in 2020, the company’s rating fell.In 2021, the company received several regulatory penalties related to its investment banking business.Haitong Securities’ investment banking business finally saw a “bumper harvest” in the first month of 2022, after receiving several fines for investment banking violations in 2021 and having its brokerage regulatory classification rating downgraded by two levels.In January this year, Haitong Securities as the main underwriter and sponsor of the IPO project, there have been 7 official listing, becoming one of the most official listing projects this year.However, under the influence of various factors, three of the seven new shares fell below the offer price on the first day of listing, and are still in the break status.Haitong securities strategy with the relevant new shares, also in a state of loss.As an established leading securities broker, how to carry out business in compliance and revive its prosperity has become a huge test for Haitong Securities in 2022.By the end of January 28, 2022, haitong Securities sponsored and served as the lead underwrite of 7 new shares listed in January this year.Among them, Optate-U (688220.SH) and Marvelbio-U (688062.SH) broke their ipo prices on their first day of trading, both falling nearly 30% on the first day.Tianyue Advanced -U broke on its first day of trading and ended just above its offering price, but has since struggled.As of Jan. 28, the company’s shares were down nearly 18% from their offering price.Figure 1: Since January, 2002, Haitong Securities has been the lead underwriter of the ipos of Optsci-U and Maiwei Bio-U, and has been strategically allocated 836,600 shares and 2.873,600 shares, respectively, with a limited sale period of 24 months.According to the above two new shares listed on the first day of closing, Haitong Securities has been allocated new shares have a total loss of more than 75 million yuan.The IPO underwriting sponsor project may be only a temporary phenomenon, haitong Securities investment banking business real challenge comes from compliance.As a large brokerage with a long history, Haitong Securities is facing severe pressure of compliance and risk control in recent years.According to the official website, Haitong Securities was founded in 1988, always adhere to the “pragmatic, pioneering, steady, excellent” business philosophy and “steady and even conservative” risk control brand;It is the only large securities company founded in 1980s in China that is still in operation and has not changed its name or been acquired or restructured.However, according to the classification results of securities companies in 2021 disclosed by the China Securities Regulatory Commission, Haitong securities’ rating was downgraded to BBB from AA the previous year, a rare downgrade of two notches.The existence of loopholes in compliance risk control is an important reason for the downgrade of Haitong Securities.Information made public by regulatory authorities shows that Haitong Securities received regulatory penalties several times in 2021 for compliance and risk control issues, mainly in investment banking sponsor and asset management.Due to serious compliance problems in the related sponsor business, Haitong Securities has been issued warning letters, regulatory talks or administrative penalties by the CSRC and several local securities regulatory bureums since 2021.Figure 21 years I completely part haitong securities investment banking regulatory penalties in terms of information technology business, in March 2021, Shanghai haitong securities received securities regulatory commission regulatory authority control of the administrative decision, because the compliance and risk control loopholes, regulators to make “12 months, suspended for institutional investors securities investment consulting business,” the penalty decision.In March, 2010, Haitong Securities received an administrative regulation decision from Shanghai Regulatory Bureau. The investment banking and asset management business of Haitong Securities grew rapidly, and its compliance shortcomings may erode its competitiveness. In the past few years, the investment banking and asset management business of Haitong Securities grew rapidly, which became an important driving force supporting the company’s performance growth.However, the compliance risk control loophole of the relevant business and the downgrade of the rating suffered last year are likely to have a certain degree of adverse impact on the future development of the relevant business of Haitong Securities.In the first half of 2021, Haitong Securities’ investment banking business was one of the company’s fastest growing business segments in terms of revenue year-on-year.During the period, the company’s investment banking business generated revenue of 3.08 billion yuan, a year-on-year growth rate of 45.6%.During the reporting period, in terms of equity financing, the amount and number of domestic IPO projects issued by Haitong were 16.53 billion yuan and 22 companies respectively, an increase of 11.66 billion yuan and 18 companies respectively compared with the same period last year, indicating that the company’s IPO underwriting business is growing significantly.Haitong Securities 2021 annual report has not been disclosed, but from the observation of public statistical data, haitong 2021 annual A-share IPO lead underwriter project number and lead underwriting income significantly increased compared with the previous year has no doubt.In the first half of 2021, the income of The asset management business of Haitong Securities was 2.416 billion yuan, with A year-on-year increase of 36.98%, also showing A momentum of rapid growth.Thanks to the rapid growth of investment banking, asset management and other businesses, as well as the traditional advantages in brokerage business and active trading in the securities market, Haitong Securities achieved a significant year-on-year growth in the first half of 2021.During the period, the revenue reached 23.471 billion yuan, up 31.95% year on year, and the net profit returned to the mother was 8.170 billion yuan, up 49% year on year.However, in the third quarter of 2021, haitong Securities’ quarterly revenue and net profit growth rate declined significantly.In the third quarter of 2021, the growth rate of haitong Securities’ operating revenue and net profit was only 8.62% and 21.1% respectively, significantly lower than that of the first half of the year, according to the financial statement.In fact, the first three quarters of this year haitong Securities revenue and net profit growth showed a quarterly trend of decline.Figure 5: The quarterly revenue and net profit of Haitong Securities in the third quarter from 2010 to the first three quarters of 2021 through historical data, the decline in revenue and profit growth of Haitong Securities in the third quarter is partly related to the high base of last year, but the impact of compliance problems on investment banking and asset management business is also an important reason.Despite the challenges of compliance and risk control, Haitong Securities still has the advantages of scale and customer base.By the end of the first half of 2021, Haitong Securities’ net capital scale is still in the first camp among listed brokerages.Figure 6: Haitong Securities, the top 10 listed securities firms in terms of net capital by the end of the first half of 2021, has business outlets covering six international financial centers in “New York, London, Shanghai, Hong Kong, New Zealand and East China” and branches or subsidiaries in 14 countries and regions in 5 continents.It has 340 securities and futures business departments in China and has nearly 20 million domestic and foreign customers.Financial industry, compliance first, how to revive the veterans of the bond industry?Xinhua Finance is a column jointly created by Xinhua Finance and Bread Finance to interpret the financial statements of listed companies as the main content, covering the global stock market, currency market and bond market and other financial markets, providing authoritative, professional and comprehensive financial information services.Xinhua Finance is a national financial information platform contracted by Xinhua News Agency.Statement: Xinhua Finance is a national financial information platform contracted by Xinhua News Agency.Under no circumstances does the information published on this platform constitute investment advice.

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