Intrinsic Value Nanjing Securities Co., Ltd. (601990.SS)

• Previous Close: $7.95
• Intrinsic Value: $5.61
• Upside potential: -29%

Stock Valuation Context

Business Model And Market Position

Nanjing Securities operates as a comprehensive securities firm providing a full spectrum of capital markets services in China's competitive financial sector. The company generates revenue through securities brokerage, underwriting and sponsorship services, proprietary trading operations, asset management, and credit trading activities. Its business model leverages traditional brokerage channels alongside modern internet finance platforms to serve retail and institutional clients across Jiangsu province and broader China. Nanjing Securities maintains a regional stronghold in Eastern China while competing with larger national brokers through specialized service offerings and local market expertise. The firm's diversified revenue streams across trading, investment banking, and asset management provide stability against market cyclicality while positioning it as a mid-tier player in China's rapidly evolving capital markets landscape. Established in 1990, the company has built longstanding client relationships and regulatory expertise that support its sustained market presence despite intense competition from state-owned and international financial institutions.

Revenue Profitability And Efficiency

Nanjing Securities reported revenue of CNY 3.78 billion with net income of CNY 1.00 billion, reflecting a robust net margin of approximately 26.5%. The company demonstrates efficient capital allocation with operating cash flow of CNY 2.99 billion significantly exceeding net income, indicating strong cash conversion from its securities operations and minimal working capital requirements.

Earnings Power And Capital Efficiency

The company generated diluted EPS of CNY 0.27, supported by its diversified revenue streams across brokerage, investment banking, and proprietary trading. Capital expenditures were minimal at negative CNY 128.6 million, consistent with the asset-light nature of securities operations, allowing for high returns on invested capital through operational leverage rather than significant fixed asset investments.

Balance Sheet And Financial Health

Nanjing Securities maintains a substantial debt position of CNY 33.26 billion, typical for securities firms utilizing leverage for proprietary trading and market-making activities. Cash and equivalents of CNY 1.04 billion provide liquidity coverage, while the company's beta of 0.509 indicates lower volatility than the broader market, reflecting its balanced risk management approach.

Growth Trends And Dividend Policy

The company demonstrates shareholder returns through a dividend per share of CNY 0.128, representing a payout ratio of approximately 47% based on current EPS. This balanced approach supports investor income while retaining capital for business expansion in China's evolving capital markets, particularly in internet finance and derivatives trading segments.

Valuation And Market Expectations

With a market capitalization of CNY 31.66 billion, the company trades at a P/E ratio of approximately 31.6 based on current earnings. This valuation reflects market expectations for growth in China's financial services sector and the company's position as a regional securities provider with expansion potential in wealth management and digital finance services.

Strategic Advantages And Outlook

Nanjing Securities benefits from its established presence in Eastern China's economically vibrant region and diversified service offerings. The company's focus on internet finance innovation and regional client relationships positions it to capture growth in China's retail investing expansion, though it faces intense competition from larger national brokers and evolving regulatory requirements.

Sources

Company financial reportsStock exchange disclosuresMarket data providers