China Zhongji Investment completed a targeted investment in Guoxin Securities through a private placement.
Recently, China Zhongji Investment completed a targeted investment in the private placement of Guosen Securities Co., Ltd. (hereinafter referred to as "Guosen Securities", code: 002736.SZ). Established in 1994 and headquartered in Shenzhen, Guosen Securities is a large, comprehensive national securities company that was initially listed on the Shenzhen Stock Exchange in December 2014.
Guosen Securities' business mainly covers five major sectors: brokerage and wealth management, investment banking, investment and trading, capital intermediation, and asset management. In addition, businesses in asset custody, internet finance, research, institutional business, and fund management have also seen significant growth in recent years. Its subsidiaries, Guosen Futures, Guosen Hongsheng, and Guosen Hong Kong, have expanded into futures brokerage, private equity investment, and overseas business, laying a solid foundation for Guosen Securities' diversified product and service offerings. In June 2019, Guosen Capital, an alternative investment subsidiary, was established, mainly engaged in investment businesses such as follow-on investments in the STAR Market.
Yang Zhigang, Partner and Executive President of the Wealth Management Center at China Zhongji Investment, stated that there are three main reasons for participating in Guosen Securities' private placement:
1. Opportunities from Financial Supply-Side Reform and the "Dual-Zone Drive"
With in-depth financial supply-side reform, the capital market and the role of investment banks continue to rise, and the stock market will become an important component of the country's core competitiveness. Securities companies, as a bridge connecting the capital market and the real economy, will expand their share in the financial system, thus better serving the real economy with high quality and efficiency.
As the only large, state-owned comprehensive securities company controlled by the Shenzhen State-owned Assets Supervision and Administration Commission, Guosen Securities has a strong customer base in Shenzhen's ChiNext market and will play an important role in Shenzhen's new reform policies. Shenzhen is the core engine of the Guangdong-Hong Kong-Macao Greater Bay Area, and the historical opportunity of the "dual-zone drive" will bring greater development advantages to Guosen Securities.
2. Well-Established Business Layout and Outstanding Profitability
Guosen Securities has been established for 25 years and holds full securities licenses, including securities brokerage and wealth management, investment banking, investment and trading, asset management, and capital intermediation. As of March 2020, it has completed a cumulative 261 IPO projects, ranking first in the industry.
According to statistics from the Securities Association of China, Guosen Securities' five core indicators—total assets, net assets, net capital, operating income, and net profit—have been among the top in the industry for the past five years. Its proprietary trading, investment banking, and brokerage businesses continue to lead the industry, with outstanding performance. Capital intermediation business followed the market recovery, and asset management restructuring also led to a slight increase in asset management scale. In 2019, the company achieved net assets of 5.487 billion yuan, a year-on-year increase of 6.50%. In terms of profitability, the company's revenue increased by 40.46% year-on-year, 1.81 percentage points higher than the average level of leading securities firms, and its diluted return on net assets reached 8.74%, leading the industry.
3. Financial Technology Empowers Institutional Business, with Large Growth Potential
Guosen Securities attaches importance to investment in financial technology and has been at the forefront of the industry in information technology innovation. Its trading technology product series includes: Jinsun Intelligent Mobile Securities and Yisheng Strategic Trading APP, which use various artificial intelligence technologies integrated with scientific investment advisory and wealth management; GUTS high-speed trading and other new-generation intelligent, high-performance, large-capacity, high-reliability, distributed high-speed trading systems that enhance high-speed trading and quantitative capabilities; and a "product + risk control" overall solution for private equity institutions. Among them, algorithmic trading ranks among the top 2 in the market along with CICC.
In addition, in January 2020, Guosen Securities signed a comprehensive strategic cooperation agreement with Huawei to cooperate on the application and innovation of digital technologies in financial technology and the secure and controllable key infrastructure in the industry.
Yang Zhigang also mentioned that Guosen Securities has a very good customer base, and now that the registration system for the STAR Market and ChiNext is undergoing reform, its "market-oriented investment banking" competitive advantage will become more prominent, and the investment banking profit model will become more diversified. This will further open up the company's business development space, enhance profitability, and make the future promising.
It is understood that the funds raised by Guosen Securities this time are mainly used to enhance its capital strength and overall competitiveness. The funds will be invested in credit businesses represented by equity pledges and margin financing, as well as capital businesses represented by fixed income and proprietary trading, which are expected to generate benefits in the short term and achieve steady improvement in operating performance.
