01
Oriental Fortune, stock price flash crash
Last Friday was a rather bizarre day for the stock market.
In the morning, the three major indexes continued to rise, all rising more than 1% in early trading, and everyone was eating hot pot and singing, preparing to end the last trading day of the first half of the year with a big rise.
However, there was a sudden change in the afternoon, and with the flash crash of Oriental Fortune as a signal, the market suddenly appeared a wave of diving!
The cause was caused by a small essay circulating on the Internet:
First, the brokerage self-check whether the IP of the relative's account is consistent with the employee, the second is that the market is worried about the impact of the subsequent third-stage rate reform, and the third is rumors such as salary cuts and bonuses.
The most important thing is that on July 1, the "Regulations on the Administration of Securities Transaction Costs of Publicly Offered Securities Investment Funds" came into effect. According to the latest regulations, the commission rate for passive equity fund products shall not exceed 2.62/10,000, and other types shall not exceed 5.24/10,000.
The conditions are all to strip the flesh of the brokers.
Therefore, the collective stock price of the financial software sector and brokerage stocks led by Dongcai crashed.
Financial software stocks including Oriental Wealth, Fortune Trends, and Flush took the lead in diving, and then brokerage stocks "jumped".
As of the close, Oriental Fortune fell 6.88%, Compass fell 5.28%, Fortune Trend fell 5.16%, Straight Flush fell 3.71%, and Great Wisdom fell 2.8%.
Among the 50 brokerage stocks, 48 closed in the green.
Brokerage stocks dived, almost bringing the market to collapse
The Shanghai Composite Index narrowed its gains, the Shenzhen Component Index turned green, and the ChiNext Index fell more than 1%. The Shanghai Composite Index rose 0.73%, the Shenzhen Component Index fell 0.01%, and the ChiNext Index fell 1.16%.
The bull market flag bearer raised the bear market flag.
02
The stock price fell back to four years ago
This time, the stock price of Oriental Fortune fell sharply, especially noteworthy, on Friday they fell the most, leading the decline.
Oriental Wealth, known as the "Bond Mao", should be the most resistant to the decline in brokerage stocks, but this time it fell the most.
Moreover, the downward trend continues.
The decline was extended at the start of trading on July 1, falling 0.85% on the day.
On July 2, it continued to fall. At the close, it fell 1.91%.
Roughly calculated, in just three trading days, the market value of Oriental Fortune has evaporated by almost 17 billion!
In fact, even without last Friday's small composition, its stock price would be difficult to stabilize.
In the last 60 trading days, the net inflow of funds from Oriental Wealth was -5.493 billion yuan.
The amount of funds flowing in 20 trading days was -2.782 billion yuan.
The inflow of funds in the past 5 trading days was -1.452 billion yuan.
On the last trading day, the inflow of funds from Oriental Wealth was 1.968 billion yuan. However, the outflow of main funds was as high as 2.615 billion yuan, and the net inflow of main funds was -647 million yuan.
With such a rapid outflow of funds, the stock price must be unbearable.
Judging purely from the stock price of the secondary market, the stock price of Oriental Fortune has fallen continuously, sharply, and the continuous decline has reached 31 months.
The stock price fell from a relative high of 27.17 yuan to a relative low of about 10.27 yuan.
The overall drop is more than 60%!
The stock price fell directly back to four years ago, and all the gains brought by the small bull market in 2020 were spit back!
Of course, a sharp drop in stock prices doesn't happen for no reason; In the past year or so, Dongcai's performance growth has not been satisfactory.
In 2023, Dongcai's total operating income will be 11.081 billion yuan, a year-on-year decrease of 11.25%.
net profit was 8.193 billion yuan, a slight decrease of 3.71% year-on-year.
The non-net profit was 7.862 billion yuan, a slight decrease of 4.18% year-on-year.
In the first quarter of this year, Dongcai's business continued to decline.
the total operating income was 2.456 billion yuan, down 12.60% year-on-year;
The net profit attributable to the parent company was 1.954 billion yuan, down 3.70% year-on-year.
On paper, Dongcai's continuous decline in operating data for more than a year must have had an impact on the stock price.
However, the financial report is the effect, not the cause, and there must be deeper influencing factors.
03
What's wrong with Dongcai?
Dongcai's business income is mainly two major heads:
Brokerage + fund distribution.
If further broken down, the fund business accounted for 48%, the securities business - fee and commission income accounted for 36%, and the securities business - net interest income accounted for 15%.
In addition to the fact that the two sectors are very stable, the other two sectors are actually not very good.
The most direct effect of the official implementation of the new commission regulations is the significant reduction in fund transaction costs. According to CICC Non-Bank and Fintech teams, it is expected that the transaction commission rate will drop by 40%.
According to this reduction, Dongcai's commission income will be reduced from 3.989 billion to 2.393 billion, and the income will decrease by 1.596 billion. The annual revenue is reduced to 9.484 billion, but the cost will not be reduced.
Therefore, this piece will have a greater impact on Dongcai's financial reports in the future.
The other is fund distribution.
The income of the fund in the first half of the year has been released, and it cannot be said that it is very bad, it can only be said that it is very bad.
Less than 40% of active equity funds have achieved positive returns.
After the merger of AC classes, only 300 of them have a return of more than 10%, and 31 products have achieved a return of 20%+.
The vast majority of funds are losing money, and fewer and fewer people are buying funds, and the way of fund distribution is not easy.
Of course, this is not only a problem faced by the Dongcai family. Therefore, as long as Dongcai carries this wave, the future road is not necessarily dark.
Because Dongcai is different from other brokerages, they are a new model.
Unlike most brokerages, Oriental Fortune started with an Internet website and has Internet genes. The company has successively owned Oriental Wealth Network, Tiantian Fund, Oriental Wealth Securities, Youyou Private Equity, Zhongxin Insurance, Choice Platform, etc.
Because of this, Oriental Fortune has unique profit characteristics:
Internet platform drainage, monetization through securities licenses: Oriental Wealth uses its Internet platforms, such as Oriental Wealth Network and Tiantian Fund Network, to attract a large number of user traffic. These platforms then monetize the traffic and convert it into customers.
Asset-light model: Oriental Wealth's asset-light model is mainly reflected in its Internet-enabled brokerage business, compared with the asset-heavy model of traditional brokerages, Oriental Wealth's assets are "light" enough.
Diversified revenue sources: Orient Wealth's revenue sources include net income from procedures and commissions, revenue from e-commerce services (mainly agency funds), financial data services, advertising services, etc.
High ROE and capital utilization efficiency: Orient Fortune's ROE level remains at a high position, especially in the years when the market performance is average, such as 2020 and 2022, its relative advantages are more obvious, showing efficient capital utilization efficiency.
Speaking of which, everyone understands very well. The core competitiveness of Oriental Fortune is the popularity and flow of the stock bar.
Compared with other traditional brokerages, the stock bar is the most unique place of Oriental Wealth, and it is also a place for shareholders to speak freely. According to the monthly active data of the company's PC+ mobile terminal, basically half of China's shareholders are active users of Dongcaijia.
Therefore, Oriental Wealth has both Internet attributes and brokerage attributes, and its essence is an Internet brokerage.
The essence of the Internet attribute is the network effect: the winner takes all, and the strong are always strong.
As for Oriental Fortune, it has gone one step further and has become a platform, just like a platform like WeChat, which gathers many people and many entrances, and the entrances connect many businesses.
This model is very scary, for example, Douyin, with traffic to do live broadcasts, do e-commerce, do the same.
Other brokerages have not established a similar ecosystem, and it is difficult for Dongcai to find a competitor even if they want to find it.
As a typical cyclical industry, A-shares will hit the bottom sooner or later, and Oriental Fortune has sufficient book funds and still achieved good profits, which can fully withstand this downward cycle.
Once the market recovers, the performance growth of Oriental Wealth is expected to restart, and the profitability elasticity of online brokerages like Dongcai is much greater than that of traditional brokerages.
| Jintou Research Good Article Recommendation: Another former star unicorn went bankrupt, and it had 9 rounds of financing of 13 billion
Source: Ph.D. in Economics