1H22's performance is slightly better than we expected.
Everbright Securities 1H22 revenue year-on-year-33% to 5.37 billion yuan, of which the main business income (excluding other income mainly from commodities)-15% year-on-year, home net profit-6.8%-2.11 billion yuan, ROAE (company caliber) year-on-year-0.68ppt to 3.6%. The performance was slightly better than we expected, mainly because the year-on-year decline in investment income was lower than that of the industry, and the impairment returned to 100 million yuan (vs.1H21 provision of 170 million yuan). Q2 homing net profit is-8% / month-on-month + 116% to 1.44 billion yuan. The leverage ratio of self-owned assets at the end of 1H22 adjusted management fee year-on-year + 1ppt to 50% focus 2Q22-0.4x/ is unchanged at 2.8x.
Trend of development
Retail business declined year-on-year and underperformed the industry. The income of the wealth management division of 1H22 was-41% to 2.6 billion yuan compared with the same period last year, of which the performance of the retail business was lower than that of its peers, and other income, mainly commodities, was-93%. 1) Brokerage income-15% to 1.7 billion yuan (vs. Industry year-on-year + 0.5%), Q2-11% / month-on-month-6%. 1H22A shares ADT year-on-year + 9.5%, Hong Kong stocks ADT year-on-year-27%, the company's consignment sales of financial products year-on-year-45%, accounting for the proportion of brokerage business-8ppt to 14%; overseas brokerage business decline led to agents buying and selling securities net income-11% year-on-year. 2) 1H22 net interest income is-3% to 1.24 billion yuan compared with the same period last year, and Q2 is-1% / month-on-month + 5%. 1H22 interest income year-on-year-13% last year-27% to 40.1 billion yuan, share-0.6ppt to 2.5%; stock pledge interest income + 54% year-on-year.
The total business of enterprises and institutions is-14% compared with the same period last year, and the head effect of industry investment banking business is strengthened. 1) 1H22 investment banking revenue-24% to 800 million yuan (vs. The industry is flat), Q2 + 3% / Q2 + 55% compared with the same period last year.
The company's equity underwriting is + 55% year-on-year, share + 0.8ppt to 2%, of which IPO underwriting is + 14% year-on-year (vs. Industry + 46%); bond underwriting share year-on-year + 0.4ppt to 2.6%. 2) the business income of 1H22 institutions is-8% compared with the same period last year, of which the share of net income of seat commission is-0.5ppt to 2.5%.
The decline of investment business is better than that of the same industry, and the income of asset management has declined slightly. 1) 1H22 investment business year-on-year-25 to 650 million yuan (vs. Industry-38%), Q2 year-on-year-28% / month-on-month turnaround, income decline due to fluctuations in equity-oriented investment. The size of transactional financial assets at the end of the period is from + 38% to 81.7 billion yuan compared with the same period last year, of which stocks: bonds: funds: others = 5% 1ppt 22%, 53% 19%, corresponding to annualized investment return-1.5% year-on-year. 2) 1H22 asset management business revenue from-2% to 660 million yuan (vs. Industry-8%), Q2 year-on-year-31% / month-on-month + 2%. At the end of Q2, the asset management scale of securities firms was + 15% to 432 billion yuan higher than at the beginning of the year, of which active management accounted for + 10ppt to 93.5% compared with the same period last year. In the fund business, Everbright Prudential (55% shareholding) has a non-stock scale of-12% to 64.9 billion yuan, corresponding to a net profit of-14% to 74 million yuan, while Dacheng Fund (25%) has a non-cargo management scale of + 15% to 155.7 billion yuan, and net profit of + 53% to 270 million yuan.
Profit forecast and valuation
Based on the fact that the investment income of 1H22 is better than that of its peers, we have raised our profit forecasts for 2022 and 2023 by 14% to 4.2 billion yuan. The current A-share price corresponds to 2022 1.3x/1.2x 23-year PZX B (excluding perpetual debt). To maintain the outperform industry rating, based on earnings upward revision, we raised our target price by 21% to 17.5 yuan, corresponding to 1.44x 2022e P Universe B and 1.36x 2023e Pmax B, which has 10% upside space compared to the current share price.
Risk
The risk of market volatility, the uncertainty of regulatory policy and the development of business transformation are not as expected.