This is the 192nd original article of "Subjective View".
Yanghe is also taking positive measures to correct this phenomenon, from Q1 to Q3, the amount of trading financial assets continues to decrease, and the amount of monetary funds continues to increase, indicating that the company is also reducing the scale of trust wealth management products.
Subjective view (Public Account ID: trainingview)
Text | Old Guo
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On October 26, Yanghe released its 3 quarterly reports.
Overall, the results are in line with expectations.
Operating data
In the first three quarters, it achieved revenue of 21.9 billion yuan, an increase of 16.01% year-on-year, and in the third quarter, it achieved revenue of 16.66% year-on-year.
In the first three quarters, it achieved a net profit attributable to the mother of 7.2 billion yuan, an increase of 0.37% year-on-year, and -13.1% in the third quarter.
In the first three quarters, the net profit of non-attributable to the mother was 6.85 billion, an increase of 21.57% year-on-year, and the third quarter was 22.95% year-on-year.
In the first three quarters of 2021, Yanghe's operating income growth rate was basically stable at about 15%, 13.51%, 15.75% and 16.01% respectively; the corresponding growth rate of non-attributable net profit was basically stable at about 20%, 19.01%, 21.13% and 21.57% respectively.
In addition, the amount of contract liabilities increased from 5.5 billion in Q2 to 6.5 billion after the peak sales season of the Mid-Autumn Festival, and this figure was 3.87 billion at the end of the third quarter of last year, which also shows that the company's products are selling well in the channel in 2021.
In general, the channel destocking of Yanghe shares has achieved remarkable results, and after two consecutive years of channel reform and adjustment for 19-20 years, Yanghe's growth has returned to the normal track.
The impact of non-recurring gains and losses on net profit
The large difference in the growth rate between Yanghe's attributable net profit and non-attributable net profit is mainly caused by investment income and changes in the fair value of financial assets held.
Among them, the investment income is mainly the interest and sale income of bank wealth management products and trust wealth management products; the fair value change is mainly the trust product and the fair value change of the company's holding of listed company BOC Securities.
The security and yield of bank wealth management are relatively stable, and the main changes depend on the change of the purchase amount, and the main fluctuations in non-recurring profit and loss are mainly the stock price changes of trust products, trust wealth management products and BOC Securities.
First, let's look at the impact of changes in the fair value of the investment targets held by the company on net profit.
The company holds a total of 78.9474 million shares in BOC Securities, which are included in the "trading financial assets" account in 2020 and the "other non-current financial assets" account in 2021, both of which belong to the financial asset classification of "measured at fair value and the change of which is included in the profit or loss of the current period", so the change in its stock price will affect the current profit of the company.
The difference between the two subjects is that the former is expected to hold for no more than 1 year, while the latter indicates that the expected holding time is more than 1 year.
In this way, the stock price fluctuations of BOC Securities will affect the net profit of Yanghe shares in the long run in the future.
After the listing of BOC Securities last year, the stock price rose all the way, and this year's stock price continued to fall, which caused a huge difference in the amount of non-deductible and non-attributable net profit of Yanghe shares.
The chart below shows the weekly candlestick of Yanghe's stock price since its listing, and the yellow arrow is the closing candlestick on December 31, 2020. As can be seen from the figure, the stock price of BOC Securities has basically fallen all the way this year.
According to yanghe shares' semi-annual report, the fair value of the shares held by BOC Securities in the first half of the year was 123 million yuan, and the fair value at the end of the period was 1.626 billion yuan; by the end of the third quarter, due to the continuous decline in the stock price, the fair value of these shares decreased to 1.186 billion yuan (78.9474 million shares * 15.02 yuan / share), so the fair value loss in the third quarter was 440 million yuan (1.626 billion yuan - 1.186 billion yuan).
As of the end of the third quarter of 2021, the total fair value loss of the shares of BOC Securities held by Yanghe Shares was 560 million yuan (123 million yuan + 440 million yuan).
In the income statement of the third quarterly report, the "Fair Value Change Profit and Loss" account shows that the fair value of the investment targets held by the company in the first three quarters of 2021 actually decreased by only 278 million yuan, which indicates that the fair value of other investment targets (stocks and trust products) held by the company increased by 280 million yuan (560 million yuan - 278 million yuan).
In the first three quarters of 2020, the fair value increased by 1.247 billion yuan, and the fair value in the first three quarters of 2021 actually decreased by 278 million yuan, reflected in the company's pre-tax profit, only the change in fair value, the first three quarters of this year decreased by about 1.5 billion yuan compared with the same period last year, so there was only a slight increase or even decline in net profit year-on-year, while the deduction of non-net profit increased by about 20% year-on-year.
However, even so, the net profit attributable to the mother in the first three quarters of 2021 has increased slightly, and these gaps are mainly made up by the main business, so it confirms the strength of the company's main business recovery from the side.
Next, let's look at the impact of changes in investment income on net profit.
As we mentioned earlier, the investment income mainly comes from the interest of bank wealth management products and trust wealth management products.
Investment income for the first three quarters of 2021 was $763 million, compared to $919 million in the same period last year and a decrease of $156 million in 2021. The impact of investment income on net profit is relatively small compared to fair value changes.
The reason for the decrease in investment income in 2021 is also very simple, that is, the amount of the company's investment in high-yield trust wealth management products has decreased, which we will analyze in detail later.
The main investment direction of Yanghe's trust wealth management products is real estate projects, including projects of Jushenghua, Evergrande, R&F, Wanda and other real estate companies under Baoneng.
Since the second half of the year, with the intensive implementation of the national real estate market regulation and control policies, including Evergrande, Baoneng, R&F and other real estate development companies have broken out of the situation of tight capital chain, Evergrande Real Estate has experienced an operating crisis, debt default and construction site suspension, which will have a great impact on the repayment of principal and interest of these trust wealth management products invested in real estate projects in Yanghe.
However, in the first quarter of 2021 and all previous financial reports, the details of each trust wealth management product will be announced, but from the third quarter of 2021, this detailed table will no longer be published.
Someone called to inquire about the listed company, saying that it was a change in the csrc's credit system, so the information disclosure was more concise, and the original investors' access to the information of the listed company was limited, and they did not know what the original intention of the regulatory level was to change this change?
According to the information disclosed in the 2021 semi-annual report of Yanghe Shares, as of June 30, 2021, the total number of unexpired trust wealth management products was 5.8 billion yuan, compared with the scale of 12.6 billion yuan at the end of the first quarter, which has been significantly reduced.
From the income statement, the asset impairment loss in the first three quarters of 2021 was less than 180,000, indicating that the company did not make an impairment provision for these items.
I counted the trust wealth management products related to several real estate companies that have recently reported tight capital chains. As shown in the table below, as of the end of the second quarter, the total scale of trust wealth management products involving Evergrande was 980 million.
Compared with the end of 2020, the form of the 2021 semi-annual report, there are already a number of trust wealth management products involving Evergrande, R&F and Baoneng that have expired in the first half of the year and have not continued to appear in the detailed table.
In this regard, Lao Tang once mentioned Yanghe's reply to this in the weekly report on September 25, and the main meaning is twofold:
The trust wealth management products disclosed in the 2020 annual report, but the high-risk real estate trusts that are no longer in the 2021 semi-annual report, regardless of whether they are due or not, have been paid;
All unmatured trusts are fully mortgaged and secured, and the underlying assets are clear and clear.
And Evergrande's crisis mainly occurred in the second half of the year, the above table highlighted in the two trust wealth management products that matured in November, whether they can really pay and recover the principal and interest at maturity, for us to judge whether the trust wealth management products related to Evergrande with a total of 980 million yuan will be product asset impairment, has an important reference role.
However, we need to understand that even if there is a sufficient amount of collateral and guarantee, it does not mean that the full amount can be recovered in full.
I remember that in May last year, I asked Old Tang about this question, and probably everyone did not expect that this problem would appear so quickly.
Of course, Don's explanation now seems very reasonable, and this result is only the risk that must be faced in the pursuit of high returns.
As mentioned above, Yanghe shares are also taking positive measures to correct this phenomenon, from Q1 to Q3, the amount of trading financial assets continues to decrease, and the amount of monetary funds continues to increase, indicating that the company is also reducing the scale of trust wealth management products.
The specific changes are shown in the following table:
The decrease in the amount of trading financial assets shown in this table also explains the year-on-year decline in investment income in 2021.
Although the state's control over loans to real estate enterprises has been relaxed, Yanghe is actively recovering investment in trust wealth management products.
However, this may still become a financial thunderstorm in the future, which requires our close attention in the future.
In addition, it is also hoped that Yanghe can disclose relevant information in more detail to dispel investors' uneasiness and doubts.
Future and valuation
The unlocking condition for Yanghe's equity incentive plan implemented in August was that "operating income in 2021 and 2022 will increase by 15% respectively over the previous year".
Yanghe's 14th Five-Year Plan is also a doubling of operating income, and the annualized compound growth rate corresponding to the five-year doubling is also 15%.
Therefore, the performance of the first three quarters of 2021 is basically a template for future performance growth: operating income growth is about 15%, and the corresponding growth of attributable net profit is about 20%.
Under normal circumstances, the attributable net profit of Yanghe shares in 2021 is about 8.8 billion, and the attributable net profit in 2024 is expected to reach about 15 billion, and the reasonable market value corresponding to the 25-30 price-earnings ratio should be 380-450 billion yuan.
Therefore, the current ideal buy market value is 190-225 billion yuan, and the corresponding ideal buy price range is 126-149 yuan if the 1.507 billion shares are calculated.