The first half of 2024 will end with a sharp contraction in equity underwriting income, a surge in the number of IPO withdrawals, frequent fines for business violations, and widespread salary cuts and layoffs, and the "cold winter" of brokerage and investment banks will intensify.
Wind data shows that in the first half of 2024, the equity underwriting and sponsorship income of 44 brokerages will be less than 3 billion yuan, a year-on-year decrease of 80%. 20 brokerages, including CITIC Securities, CICC, China Securities and Haitong Securities, saw their business income shrink by more than 80%, and the revenue of 8 brokerages fell by more than 90% year-on-year.
At the same time, the number of project withdrawals surged, with a total of 367 projects withdrawn by 60 investment banks in the first half of the year, and the average withdrawal rate climbed to 51.36%. Among them, the number of withdrawals of many leading brokerages exceeded 20, and the withdrawal rate of 11 brokerages was 100%.
In addition, in the first half of the year, more than 20 investment banks received fines for business violations. Among them, CITIC Securities, CITIC Securities, Guosen Securities, Guotai Junan and many other brokerages have been fined more than once, and the more serious is that Huaxi Securities was fined to suspend business qualifications, in addition, Shenwan Hongyuan, Haitong Securities and many other brokerages were required to be ordered to correct, and most of the remaining brokerages were issued warning letters, and some insurance agents were supervised or identified as inappropriate persons.
In the face of the pressure of declining revenue and high business compliance risks in the first half of the year, many brokerage investment banks have begun to cut salaries and lay off employees, and some brokerages have taken measures such as job transfers and adjusting the focus of investment banking business.
Equity underwriting income plummeted by 80%.
In the first half of 2024, the scale of the equity financing market will further shrink, and the amount of IPOs and refinancing will both decline. Affected by this, the underwriting and sponsorship income of securities and investment banks fell sharply, totaling less than 3 billion yuan.
Wind data shows that as of June 30, the number of A-share equity financiers in the first half of the year was 159, a year-on-year decrease of 248; Among them, there were 44 IPOs, a year-on-year decrease of 141; 234 refinanced companies, a year-on-year decrease of 119 companies. In terms of the amount of funds raised, the total amount of equity financing in the first half of the year was 173 billion yuan, a decrease of 74% over the same period last year; Among them, the amount raised by IPOs was 32.5 billion yuan, a year-on-year decrease of 85%; The amount raised from refinancing was 140.5 billion yuan, down 69% year-on-year.
From the perspective of the underwriting amount of brokers, only 5 brokerages underwrote more than 10 billion yuan in the first half of the year. Among them, CITIC Securities topped the list with a total underwriting amount of 29.496 billion yuan, followed by Huatai United with 21.344 billion yuan, followed by CICC, Guojin Securities and China Merchants Securities, with 11.361 billion yuan, 10.501 billion yuan and 10.006 billion yuan respectively.
According to the underwriting and sponsorship fees of securities firms disclosed by Wind, as of June 30, the lead underwriting income of 44 brokerages in the first half of the year totaled 2.652 billion yuan, down 80% year-on-year and 70% month-on-month. Among them, the IPO fee was 2.087 billion yuan, a year-on-year decrease of 83%; The refinancing cost was 566 million yuan, a year-on-year decrease of 59%.
Judging from the performance of various brokerages, only the lead underwriting income of Huatai United Securities and CITIC Securities exceeded 300 million yuan, and the lead underwriting income of China Merchants Securities, Minsheng Securities and Haitong Securities exceeded 200 million yuan. 20 brokerages, including CITIC Securities, CICC, China Securities and Haitong Securities, saw their business income shrink by more than 80%, and the revenue of 8 brokerages fell by more than 90% year-on-year.
In addition, in the underwriting and sponsorship fees, the proportion of underwriting fees is higher, and in the first half of the year, when the scale of equity financing decreased sharply, large IPO projects have a greater impact on the growth of brokerage investment bank income. In the first half of the year, only China Merchants Securities' underwriting and sponsorship fees increased year-on-year, and its main income came from SolaX Energy, which had the highest IPO underwriting and sponsorship fees, and the underwriting and sponsorship fees obtained by the project alone amounted to 206 million yuan.
The average rejection rate of projects exceeds 50%
Under the policy adjustments such as strict control of IPO "entry gate" and "declaration is responsibility", the number of project withdrawals surged in the first half of the year. Wind data shows that as of June 30, a total of 366 equity financing withdrawals were made in the first half of the year, of which 291 were IPOs and 75 were refinancing.
In terms of sub-sectors, the maximum number of withdrawals on the ChiNext Board is 100, 93 on the main board of the Shanghai Stock Exchange, 62 on the main board of the Shenzhen Stock Exchange, 60 on the Science and Technology Innovation Board, and 50 on the Beijing Stock Exchange.
From the perspective of sponsors, the number of brokerages with a large number of sponsors is also large, and the number of withdrawals of "three Chinas and one sea" exceeds 20, and the withdrawal rate exceeds 30%. Among them, the largest number of withdrawals from CITIC Securities was 44; China Securities followed with 33 withdrawals; CICC and Haitong Securities withdrew 26 and 23 respectively.
On the whole, the average withdrawal rate of 60 brokerages exceeded 50%. Among them, 11 securities companies such as Century Securities and Southwest Securities have withdrawn 100%, and 6 of the exclusive sponsors of Zhongyuan Securities have all withdrawn; Ping An Securities and Capital Securities withdrew 3 of the 4 sponsored projects, with a withdrawal rate of 75%; 12 brokerages, including Kaiyuan Securities and Zhongde Securities, have a withdrawal rate of more than 50%.
An investment banker told Yicai that IPOs are being withdrawn every day recently, some of the withdrawn projects are projects that were queued up before, and some of the company's financial indicators do not meet the new listing requirements.
Since June alone, hundreds of IPOs have withdrawn. On June 29, there were 4 companies planning to IPO withdrawd, according to the previous inquiry, GF Securities sponsored Huamao Weiye, China Securities sponsored by the three technology technology have a change in performance, gross profit margin declined, etc., CITIC Securities sponsored Changfeng Pharmaceutical was questioned due to the positioning of the science and technology innovation board, business compliance, continuous losses and other issues.
More than 20 securities firms received fines from investment banks
In addition to the sharp decline in income, under the strict supervision of intermediaries, the first half of the year brokerage investment banking business fines were frequent. According to the rough statistics of the first financial reporter, in the first half of the year, more than 20 brokerages received fines from investment banks.
Among them, the China Securities Regulatory Commission issued 36 fines to investment banks and sponsors, including CITIC Securities, CITIC Construction Securities, Guosen Securities, Guotai Junan and many other securities companies have been fined more than once, and the more serious one is Huaxi Securities, which was fined and suspended from business qualifications. In addition, Huaan Securities, Shenwan Hongyuan, Haitong Securities, Zhongtai Securities and Donghai Securities were all required to be ordered to make corrections, and most of the remaining securities firms were issued warning letters, and some insurance agents were interviewed by regulators or identified as inappropriate persons.
From the perspective of non-compliance business, the number of IPO sponsorship fines has decreased, and the number of bond underwriting business fines has increased. Among them, most of the IPO violations were fined for failing to be diligent and conscientious during the continuous supervision period, and five securities firms, including CITIC Securities, China Securities Construction Securities, Huatai United Securities, Guosen Securities, and Dongguan Securities, were issued warning letters. In addition, Huaying Securities, Huaxi Securities, Guohai Securities, and Everbright Securities were fined for failing to supervise the private placement, mergers and acquisitions or convertible bond business.
The securities firms that were fined for violating the rules in the bond underwriting business include Ping An Securities, Shenwan Hongyuan, Haitong Securities, Zhongtai Securities, China Securities Construction Investment and Soochow Securities. Among them, Ping An Securities violated fair competition in the process of bond issuance and pricing, and the interest rate of individual project bond issuance was linked to the underwriting fee.
At the same time, the decline or loss of issuers' profits has also become the reason why many brokerage investment banks were fined in the first half of the year. CITIC Securities, Wanhe Securities, and Zhongde Securities were all issued warning letters because the operating profit of the convertible bond issuer in the year of listing fell by more than 50% compared with the previous year; Guosen Securities was fined for the loss of the IPO issuer in the year of listing.
In addition, some sponsors were also held accountable after the project was withdrawn. According to the disclosure of the Shanghai Stock Exchange on June 20, the issuer Dashenlin Pharmaceutical Co., Ltd. has withdrawn the IPO project and terminated the review in January, but China Securities Securities, as the sponsor of the project, was given a regulatory warning by the Shanghai Stock Exchange due to the failure to perform its sponsor duties, and was required to rectify and internally pursue responsibility for related issues.
A number of investment banks cut salaries and laid off employees
In the face of the pressure of declining revenue and high business compliance risks in the first half of the year, many brokerage investment banks have begun to cut salaries and lay off employees, and some brokerages have taken measures such as job transfers and adjusting the focus of investment banking business.
According to the first financial reporter, in the first half of the year, the investment banking departments of many leading securities companies such as CICC, CITIC Securities and China Securities Construction Investment have been adjusted.
Among them, CICC has made clear layoffs. According to relevant sources, CICC's salary cut and layoff plan for a period of time in the future is expected to reach 25%, and about 1/3 of the investment banking business line will be laid off. However, there has been no official response from CICC for the time being.
CITIC Securities has made internal adjustments to its investment banking department, and some personnel have been transferred from equity business to other business lines such as bonds. Recently, the first financial reporter learned from relevant people that China Securities Construction Investment has also carried out internal adjustments to the employees of the investment banking department and diverted them to other departments.
In addition, some brokerage investment banks have not laid off or adjusted their employees for the time being, but salary cuts are inevitable. An investment banker from a listed brokerage firm told Yicai that his brokerage has not laid off employees for the time being, but has reduced salaries to a certain extent. At present, the business focus of the company's investment banking department has been adjusted, focusing on mergers and acquisitions, financial advisory and other listed company businesses.
Recently, with the resumption of IPO acceptance and listing committee review, there is also a glimmer of hope for investment bankers. "Although it is the current 'cold winter' of investment banks, everyone is still actively exploring and stockpiling high-quality IPO projects, waiting for opportunities." said the above-mentioned investment banker.
(This article is from Yicai)