The annual report shows that the company's operating income in 2019 was 3.681 billion yuan, a year-on-year increase of 64.51%; net profit was 610 million yuan, a year-on-year increase of 204.42%; earnings per share was 0.17 yuan.

Every reporter: Wang Yandan Every editor: He Jianling

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Western Securities disclosed the 2019 annual report on the evening of April 1. The annual report shows that the company's operating income in 2019 was 3.681 billion yuan, a year-on-year increase of 64.51%; net profit was 610 million yuan, a year-on-year increase of 204.42%; earnings per share was 0.17 yuan. The company plans to distribute a cash dividend of 0.63 yuan (tax included) for every 10 shares. In addition, the company plans to raise no more than 7.5 billion yuan in additional capital to supplement the company's capital, working capital and repay debts. The issuance targets no more than 35 specific investors including the controlling shareholder Shaanxi Investment Group.

"Daily Economic News" reporter noticed that even though the net profit growth of Western Securities seems to be good, and it has announced the provision of huge credit impairment losses in the early stage, from the annual report, there are some historical issues, especially the relationship with Jia Yueting. The lawsuit remains pending.

Three major business lines suffered losses

Data from the Securities Association of China show that in 2019, the securities industry achieved operating income of 360.483 billion yuan, a year-on-year increase of 35.37%; the industry as a whole achieved a net profit of 123.095 billion yuan, a significant year-on-year increase of 84.77%. Therefore, the performance growth rate of Western Securities is higher than the industry average, but there is also a low base effect - the net profit of Western Securities in 2018 was only 200.4 million yuan, and the basic earnings per share was 0.0572 yuan.

From the perspective of income structure, the self-operated investment segment has become the most important source of income and profit for Western Securities in 2019: self-operated investment achieved operating income of 1.485 billion yuan throughout the year, accounting for 40.35%, with a year-on-year increase of 82.38%; gross profit margin It also increased to 81.93%.

Western Securities detailed the reasons for the surge in self-operated income: In terms of equity investments, it attaches great importance to the tracking and analysis of the macroeconomic situation, strengthens in-depth research on the industry, adjusts positions in a timely manner according to market conditions, and increases the core focus on higher safety margins. The allocation of assets focuses on investments in medicine, agriculture and animal husbandry, machinery and other industries; in terms of fixed income investment, market funds have remained loose throughout the year, currency repurchase rates have been relatively stable, and fixed income investment businesses continue to focus on the credit of the bond market. risks, maintaining relatively high liquidity overall, adhering to a high-grade short-duration investment strategy, and increasing investment in convertible bonds when there are good investment opportunities in the A-share market, achieving stable returns.

In addition, the wealth management segment of Western Securities achieved operating income of 790 million yuan, a year-on-year increase of 26.45%, of which net fee and commission income was 626 million yuan, a year-on-year increase of 30.77%, but the gross profit margin fell slightly to 28.82%.

Currently, the investment bank has achieved operating income of 296 million yuan, a year-on-year increase of 95.10%. In terms of equity business, the two IPOs of Guolian Holdings and Heyuan Gas sponsored by the company have passed the review by the China Securities Regulatory Commission, and seven other IPO projects are under review, including the company's first Science and Technology Innovation Board Hunan Nanxin Pharmaceutical IPO. project. The underwriting business of 2 IPOs and 1 major asset restructuring and supporting fund raising project was completed throughout the year, with a total underwriting amount of 2.923 billion yuan. In terms of debt business, 28 bonds were issued with a total scale of 33.86 billion yuan, of which the company underwrote 16.67 billion yuan and provided financial advisory services for 11 short-term financing, medium-term note and other businesses, with a total issuance scale of 12.5 billion yuan. In terms of stock transfer recommended listing business, 3 new recommended listing companies were added, and 7 targeted capital increases were completed. In terms of international business, we completed one cross-border financing financial consulting business.

However, Western Securities’ credit business, asset management business and research consulting all suffered losses.

’s credit transaction business achieved operating income of 388 million yuan, of which interest income from financing business was 366 million yuan. However, the operating cost of the credit business reached 535 million yuan, so the operating profit was -147 million yuan. In addition, the company's financing business added 1.779 billion yuan of credit, and the balance of financing and financing at the end of the period was 4.384 billion yuan, an increase of 25.25% from the end of last year; the initial transaction amount of stock pledge business to be repurchased at the end of the period was 3.512 billion yuan, a decrease of 20.84% ​​from the end of the previous year, of which The capital investment was 1.886 billion yuan, a decrease of 29.64% from the end of the previous year, and the investment in asset management products was 1.627 billion yuan, a decrease of 7.4% from the end of the previous year.

Reporters noticed that there are historical reasons for the losses in the credit business of Western Securities. The company pointed out that it will attach great importance to the whole-process risk control and compliance work, properly handle and resolve legacy business risks, and promote the steady and healthy development of credit business.

At the same time, Western Securities’ asset management business also experienced a decline in revenue and operating losses. The annual report shows that the company's asset management business achieved operating income of 49.0551 million yuan, a year-on-year decrease of 42.15%; but the operating cost was 69.5598 million yuan, so the operating profit was 20.5047 million yuan. This has something to do with the relatively small scale of the company’s active management under the background of de-channelization—the annual report shows that the company’s total asset management business scale is 29.314 billion yuan, a year-on-year decrease of 33.75%. Among them, the active management scale is 5.434 billion yuan, accounting for 18.54% of the total scale; the passive management scale is 23.879 billion yuan, accounting for 81.46% of the total scale. In terms of

research and consulting business, Western Securities has gained some reputation but failed to achieve profitability. In 2019, this segment of the company achieved operating income of 56.2551 million yuan, a year-on-year increase of 45.91%, but the cost was as high as 103 million yuan, resulting in a loss of 47 million yuan. In addition, Western Securities won the second place in the "2019 New Wealth Most Potential Research Institutions". The annual report shows that the company currently has 15 sell-side research teams, which have produced a total of 99 in-depth reports and 757 regular reports, organized 263 industry chain surveys, 119 conference calls, and produced a total of 3,356 roadshows.

has provided a total of 653 million yuan in credit impairment losses. Another aspect that has attracted investors' attention in the

annual report is the company's asset impairment. Due to the increase in impairment losses on defaulted customer payments for stock pledges, Western Securities accrued a total of RMB 653 million in credit impairment losses throughout the year; in the previous year, it accrued RMB 490 million in asset impairment losses (there are differences between the old and new accounting standards. For credit business There are differences in the accounts for the provision of asset impairment losses).

The huge credit impairment loss is related to Western Securities’ previous aggressive stock pledge repurchase, especially since this business has repeatedly stepped on the two big thunders of LeTV and Xinwei. Judging from the annual reports, even if some project companies and relevant parties have reached settlements or have won the lawsuit, there are still huge variables in whether they can recover the full amount of the money.

For example, in July 2017, Western Securities filed a civil lawsuit with the Shaanxi Provincial Higher People's Court against Jia Yueting, a customer of the stock pledged repurchase business, requiring Jia Yueting to pay a total of approximately 483 million yuan in financing principal, interest, and liquidated damages. During the defense period, Jia Yueting raised a jurisdiction objection. On March 20, 2018, the Supreme People's Court made a final ruling, upholding the Shaanxi High Court's decision to reject Jia Yueting's jurisdiction objection. On July 4, 2018, Jia Yueting’s spouse Gan Wei was added as a co-defendant. On November 22, 2018, Western Securities signed a "Settlement Agreement" with Jia Yueting and his spouse. The "Settlement Agreement" was confirmed by the Shaanxi High Court and a "Civil Mediation Agreement" was issued on November 23, 2018.

However, Jia Yueting and Gan Wei failed to fulfill the obligations specified in the "Civil Mediation Letter". Western Securities applied to the Shaanxi High Court for enforcement on November 28, 2018. The Shaanxi High Court designated Xi'an Railway Transport Intermediate Court for specific enforcement. The case is currently under way. During execution. Jia Yueting applied for personal bankruptcy reorganization in the United States in October 2019.

Including the lawsuit with Jia Yueting, Western Securities disclosed a total of seven major lawsuits or arbitrations. Although many arbitrations and lawsuits have been disclosed sporadically in normal announcements, the company still added a sentence to each lawsuit: "In the future, the company will pay close attention to relevant risk matters, continue to maintain the stability of the company's development, and invite investors to Investors should pay attention to investment risks!”

A non-banking analyst pointed out that although this sentence is in the nature of an official document, in the context of economic and market fluctuations, it is not a cliche, but an investment risk factor that investors should potentially pay attention to.

Daily Economic News