On October 15th, Finda Securities participated in the "2024 Hebei Jurisdiction Listed Companies' Investors' Collective Reception Day and 2024 Semi-Annual Report Performance Explanation Meeting" jointly organized by the Hebei Securities Regulatory Bureau, Hebei Province Listed Companies Association, and Shenzhen Panorama Network Co., Ltd.

One investor's question was particularly sharp: "Since the company went public in 2021, its market value has been shrinking year by year. Does this mean that the management does not care about investors' interests after obtaining social financing? Why can't the development plans made at the decision-making level gain more investors' recognition?"

In response, the company replied: "Stock price fluctuations are influenced by various factors such as the macro environment, overall market trends, and capital preferences..." Such a response may not satisfy investors. As a securities company listed for more than three years, what is the development trajectory of Finda Securities?

The image is part of the investor relations activity record form released by Finda Securities. Data source: Wind.

Continuously underperforming performance leads to a continuous decline in stock prices.

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Finda Securities entered the A-share market on May 7, 2021, with an issue price of 3.76 yuan. At the beginning of the listing, investors had high hopes for this securities firm from Hebei. The company's stock price soared, reaching a high of 18.05 yuan (pre-adjusted) in the month following the listing. However, the good times did not last long, and since then, the company's stock price has embarked on a long downward path. As of the close on October 15, 2024, Finda Securities' stock price has fallen to 7.07 yuan, a drop of 60.83% from its historical high.

The image is the monthly K-line chart of Finda Securities. Data source: Wind.

The reason for this is that the performance has been continuously below expectations, which is the crux of the weak stock price. Wind data shows that the actual EPS values of Finda Securities in 2022 and 2023 after going public did not meet market expectations. The consensus forecast values for 2022 and 2023 were 0.13 yuan and 0.21 yuan, respectively, while the actual announced values were only 0.09 yuan and 0.19 yuan, respectively, which were 25.86% and 12.06% lower than expected. This continuous performance "default" undoubtedly hit investors' confidence.

Finda Securities' historical performance forecast Surprise details. Data source: Wind.

Both revenue and profit fluctuate violently.Upon a close examination of the financial statements of Caida Securities, it is not difficult to detect the instability in the company's performance. Since Caida Limited was transformed into a joint-stock limited company in July 2016, the operating income of Caida Securities has decreased from 1.827 billion yuan in 2016 to 1.469 billion yuan in 2017 and 1.461 billion yuan in 2018. Although the company experienced a period of relatively stable growth from 2019 to 2021, with the revenue reaching a peak of 2.524 billion yuan in 2021, this upward trend did not last.

In the first full year after going public, 2022, Caida Securities' revenue plummeted by 34.89% to 1.644 billion yuan. Although there was a recovery in 2023, reaching 2.317 billion yuan, it still failed to return to its peak. In the first half of 2024, the company's revenue fell by 11.04% year-on-year to 1.093 billion yuan. The fluctuation in the company's revenue not only reflects the instability of its business but also exposes its vulnerability to market changes.

The net profit attributable to the parent company is even more highly volatile. According to Wind data, in 2017 and 2018, the company's net profit fell sharply by 55.29% and 76.18% year-on-year, respectively, to 297 million yuan and 74 million yuan. Although there was a recovery from 2019 to 2021, in 2022, it suffered a sharp decline of 55.55%, amounting to only 302 million yuan. In 2023, it rebounded to 606 million yuan. However, in the first half of 2024, there was another significant decline, with a year-on-year drop of 41.07% to 241 million yuan.

Looking at the income from the main business lines, the brokerage business has been under significant pressure in recent years. In 2022 and 2023, the net brokerage fees fell by 20.72% and 6.60%, respectively. This trend is quite common throughout the securities industry, reflecting the challenges faced by traditional brokerage businesses.

Investment banking business used to be a highlight of the company. From 2018 to 2022, this business went through a process from rapid growth to a slowdown in growth rate. However, in 2023, the business income experienced its first decline, with a year-on-year decrease of 3.77% to 303 million yuan. In the first half of 2024, against the backdrop of a tightening overall financing environment, the investment banking business income further declined by 6.39% to 137 million yuan.

Proprietorship business has become the main source of the company's performance fluctuations. In 2021, 2022, and 2023, the income from the proprietorship business was 933 million yuan, 368 million yuan, and 1,142 million yuan, respectively. This business model, which highly depends on market conditions, although it may bring substantial returns in a bull market, is also very likely to become an important factor that drags down the company's performance in a bear market. Whether the company has sufficient risk control capabilities to balance the risks and returns of the proprietorship business is crucial.

Although the net income from asset management fees has grown relatively steadily, the scale is still relatively small, with income of only 130 million yuan at the end of 2023, which is not enough to significantly drive the company's overall performance.

Cost control is ineffective, and efficiency needs to be improved.While income growth is sluggish, the cost control of Finda Securities is also less than satisfactory. In 2016, the company's management expenses were 896 million yuan, which climbed to 1,499 million yuan by 2023, an increase of 67.30%. In contrast, during the same period, revenue only grew from 1,827 million yuan to 2,317 million yuan, an increase of 26.82%, with the growth rate of management expenses far exceeding that of revenue.

Looking at the proportion of management expenses to revenue, it was 49.03% in 2016, and it rose to 67.86% and 64.7% in 2022 and 2023, respectively. The climb in this data reflects, to some extent, a decline in the company's operational efficiency. Against the backdrop of increasingly fierce competition in the securities industry, how to improve management efficiency and control costs will be a major challenge for the management of Finda Securities.

It is worth noting that in recent years, Finda Securities' main risk control indicators have shown a downward trend. In 2021, the company's risk coverage ratio, capital leverage ratio, liquidity coverage ratio, and net stable funding ratio were 385.20%, 30.15%, 1,377.81%, and 174.52%, respectively. By the end of 2023, these indicators had dropped to 253.42%, 29.20%, 629.60%, and 219.76%, respectively. By the mid-report of 2024, they had further declined to 245.88%, 28.53%, 353.92%, and 183.43%.

Although these indicators are still above regulatory requirements, the continuous downward trend reflects a weakening of the company's risk-bearing capacity during business expansion. In the current environment of tightening financial regulation, how to find a balance between business development and risk control is a question that the management of Finda Securities needs to think deeply about.