On the evening of the 27th, Western securities released the annual asset impairment provision, which attracted the attention of the market. Once again, Western securities made a total asset impairment provision of 654 million yuan for LETV, Xinwei group and other Pledged Shares and default bonds, exceeding 50% of the net profit attributable to the parent in the latest year. This is the third consecutive year for Western securities to make a large-scale provision for impairment, with a total provision for reduction The value is more than 1.5 billion.
After this withdrawal, the amount of about 1 billion yuan raised by Western securities for LETV was almost withdrawn, and most of the other historical negative factors were also withdrawn. Maybe the market responded positively to the factor of all the advantages are good for the bad.
At the same time, Western securities also disclosed the 2019 performance express. In 2019, the net profit attributable to the parent company was 622 million yuan, a year-on-year increase of 210%. The net profit increase ranked the top four among the 16 listed securities companies that disclosed the 2019 performance express. However, since 2017, the ranking of Western securities net profit industry has been declining. Whether 2019 can return to the level three years ago remains to be further supported by data.
Due to the drag of stock quality business, asset impairment has been accrued on a large scale for three consecutive years
On the evening of the 27th, Western securities issued the proposal on the companys provision for asset impairment in 2019. After the company and its subsidiaries conducted a comprehensive inventory and impairment test on the assets with signs of impairment, the accumulated provision for asset impairment in 2019 totaled 654 million yuan, exceeding the amount of the companys latest accounting year audited assets belonging to the owner of the parent company Net profit 50%.
Among them, the provision for asset impairment of accounts receivable and other receivables is 657 million yuan, the investment for creditors rights and other creditors rights is 4397 million yuan, and the purchase of financial assets for resale and the financing funds are offset with the provision for impairment of 34.46 million yuan and 12.71 million yuan respectively.
More than 600 million yuan of asset impairment provision is for several well-known market pledged garbage stocks. In 2019, the provision for impairment of LETV was 251 million yuan, the provision for impairment of Zhongnan culture was 14.0547 million yuan, the provision for impairment of Xinwei group was 283 million yuan, the provision for default bonds against thunder was nearly 50 million yuan, and the provision for commercial factoring receivables of Shanghai Huaxin group was 2761 million yuan Ten thousand yuan.
Since 2017, LETV has shown signs of breaking its capital chain. In the same year, Western securities made a provision for impairment of 439 million yuan due to LETV, accounting for 30% of the net profit attributable to the parent in that year; in 2018, another provision of 273 million yuan was made, exceeding 50% of the net profit attributable to the parent in that year; according to a recent announcement, another provision of 251 million yuan was made in 2019. In total, 963 million yuan was withdrawn for LETV in three years.
Looking at Xinwei group, it is also the trouble caused by the violation of stock pledge business. In 2015 and early 2018, Wang Jing, a major shareholder of Xinwei group, carried out stock repurchase transactions with Western securities for many times, and the latter co financed capital contribution of 500 million yuan. On December 26, 2016, some media questioned that Xinwei group concealed huge debts, mysterious people cashed out, the stock was suspended, and then the performance plummeted, triggering two delisting risk warning conditions. The stock was changed to * ST Xinwei. After the resumption of trading in September last year, there were 43 one word drop stops, refreshing the record of A-share drop stops. At present, the companys share price has fallen into the ranks of 1 yuan shares. As early as the end of 2018, Western securities made provision for impairment of the financial assets of 11.4 million yuan, and made provision for impairment of 283 million yuan again in 2019.
In addition, in 2017, Western securities purchased and held financial assets 17 Indy entertainment cp001, 17 Huaye capital cp001, 14 Jingui bonds and 17 Jingui 01 from the secondary market, with investment costs of 40 million yuan, 30 million yuan, 3.5506 million yuan and 30 million yuan, respectively. Due to the issuers failure to pay the principal and interest at maturity, there was a material breach of contract. In 2018, Western securities has accrued 4.7 million yuan for the above-mentioned default bonds, and in 2019, it has accrued nearly 50 million yuan in total, of which 30 million yuan is accrued for the impairment provision of 17 Jin Gui 01 single.
According to Western securities, the accumulated provision for asset impairment in 2019 will reduce the companys net profit attributable to the parent company by 486 million yuan in 2019.
It should be noted that the above-mentioned wrong decisions of Western securities occurred before 2018, mostly within the range of 2015-2017. In 2018, the chairman of Western securities changed. Xu Chaohui, the former chairman of Western trust, took over the new chairman of Western securities, and there was another female leader in the securities industry. The previous year, the general manager of the company also changed, and who was the former deputy general manager of Western securities was proposed as the general manager. So far, the Western securities helmsman has been replaced.
In June 2018, Western securities received the regulatory letter from Shaanxi Securities Regulatory Bureau due to the violation of stock pledged repo business and the imprudent setting of some risk control indicators. The business of stock pledged repo was suspended for half a year from June 25, 2018 to December 25, 2018.
From 2019, the stock pledge repurchase business of Western securities began to return to normal. Some people close to Western securities told reporters that the company is now operating steadily, but it can also be said to be conservative, which may be related to regional culture.
Turning back to the stock pledge business, this business has always been a double-edged sword in the securities industry. At the time of A-share downturn in 2018, the performance of many securities businesses was deeply affected by the equity pledge business, at least 12 securities companies accrued more than 5 billion yuan in that year; the A-share market improved in 2019, but many securities companies still accrued asset impairment due to the equity pledge business, such as Everbright securities parent company accrued more than 600 million yuan of impairment, Guoyuan securities accrued more than 100 million yuan of credit impairment reserves, which are accrued in the industry at present The amount of impairment has exceeded 2 billion yuan.
But at the same time, with the commission rate of brokerage business declining continuously, heavy capital business such as stock pledge business is also an important driving point for securities companies. For example, one of the purposes for many securities companies to implement refinancing is to develop capital intermediary business, such as CSCI securities and Haitong Securities. Securities companies will also explicitly express that they will launch credit business, such as CITIC Securities.
In the past two years, risk prevention has been an important work of the CSRC, among which equity pledge, margin trading and bond default are the focus areas. At the beginning of February this year, the relevant person in charge of the CSRC said that at present, the scale of stock pledge business has declined steadily, and the balance of on-site stock pledge financing is 0.88 trillion yuan, down by more than 45% compared with the peak, the vast majority of financing period is 1-3 years, and the overall performance guarantee ratio is about 213%.
Annual net profit increased by 210% year on year, whether ranking can be improved
From the perspective of profit growth, even under the influence of accrual factors, the performance growth of Western securities is still not small. Up to now, a total of 16 listed securities companies have disclosed the 2019 performance express, and the growth of revenue and net profit attributable to the parent of Western securities ranked fourth.
However, from 2016 to 2018, in terms of the index of net profit ranking, the industry ranking of Western securities has been declining, from 27 to 38, and the actual net profit has declined year-on-year. The actual income is closely related to the annual market fluctuation, but the significant impairment also has a drag on the net profit.
Western Securities said that in 2019, the stock market recovered, trading was active, the bond market grew steadily, and IPO Financing increased significantly. The company actively grasps the market opportunities and develops its businesses well.
As early as the mid-2019, Western securities disclosed that it would accrue nearly 300 million yuan of asset impairment. At that time, relevant people of Western securities told reporters, this withdrawal is sufficient, and will not be under the pressure of this event again.
Source: responsible editor of securities company in China: Yang qian_nf4425