Investment highlights: The company's own income improved dramatically in the fourth quarter of 2022, investment banking business recovered at an accelerated pace, and brokerage and asset management business performed poorly due to the downturn in the capital market. Looking at the medium to long term, corporate wealth management continues to deepen, and participation in leading public funds has benefited from the development opportunities of the large asset management industry. The qualifications for investment banking business have been fully restored, and the investment banking business has picked up sharply. The reasonable value range is 20.20-23.31 yuan, maintaining the “superior market” rating.
[Event] GF Securities achieved operating income of 25.13 billion yuan in 2022, -26.6% year on year; net profit of the mother was 7.93 billion yuan, -26.9% year on year; corresponding to EPS 1.04 yuan, ROE 7.2%, -3.4 pct year on year. The fourth quarter achieved revenue of 7.62 billion yuan, +3.2% year on year and +58.3% month on month. Guimu's net profit was 2.69 billion yuan, +21.8% year on year and +160.1% month on month. The company's revenue and net profit increased significantly in the fourth quarter, mainly due to a sharp improvement in the company's own income. Furthermore, the company's investment banking business recovered at an accelerated pace, but the brokerage and asset management business did not perform well.
The market is sluggish, and the brokerage business continues to be under pressure. The company's brokerage revenue in 2022 was 6.39 billion yuan, -19.9% year-on-year, accounting for 25.4% of operating income. Brokerage revenue in the fourth quarter was 1.43 billion yuan, -26.9% year on year and -16.3% month on month. The company's revenue from selling financial products on behalf of the company in 2022 was 778 million yuan, -28.9% year on year, accounting for 12.2% of brokerage business revenue, a slight decrease of -1.6pct over the previous year. The balance of the company's two loans was 83 billion yuan, -11.7% year on year. In 2022, the average daily stock trading volume of the entire market was 103 billion yuan, -9.3% year on year; the balance of the two finance loans was 15404 billion yuan, -15.9% year on year.
The investment banking business is picking up at an accelerated pace. The company's investment banking revenue in 2022 was 660 million yuan, +41.1% year on year. The company's investment banking revenue in the fourth quarter was 170 million yuan, +89.3% year on year and +0.7% month on month. In 2022, the underwriting scale of the company's equity business was +1379.1% compared to the same period last year, and the underwriting scale of the bond business was +225.4% compared to the same period last year. Shareholders' underwriting scale was 16.19 billion yuan, ranking 18th; of these, 6 IPOs raised 3 billion yuan; 10 were refinanced, with an underwriting scale of 13.2 billion yuan. The underwriting scale of principal bonds was 151.5 billion yuan, ranking 17th; among them, the underwriting scale of financial bonds, corporate bonds, and corporate bonds was 91.1 billion yuan, 28 billion yuan, and 13 billion yuan respectively. There are 18 IPO reserve projects, ranking 12th, including 8 on the main board of the two markets, 1 on the Beijing Stock Exchange, 1 on the Science and Technology Innovation Board, and 8 on the GEM board.
Affected by market fluctuations, asset management revenue declined year-on-year, and the profit contribution of participating public funds was high. The company's asset management revenue in 2022 was 8.94 billion yuan, -10.1% year on year. Asset management revenue for the fourth quarter was 2.3 billion yuan, -12.8% year on year and +0.1% month on month. By the end of 2022, GF's asset management scale was 271.2 billion yuan, -45.0% over the same period last year; in the fourth quarter of 2022, GF Asset Management ranked 7th in the average monthly size of private equity asset management. In addition, the company holds 22.65% and 54.53% of the shares in eFunda Fund and Guangfa Fund respectively. In 2022, the size of public funds managed by eFunda Fund was 1.57 trillion yuan, -7.8% year on year; net profit was 3.8 billion yuan, -15% year on year; the total size of public funds managed by Guangfa Fund was 1.25 trillion yuan, +10.6% year on year; net profit was 2.1 billion yuan, -18% year on year.
The two major funds mentioned above together contributed 25% to the company's net profit.
Own income in the fourth quarter turned a month-on-month loss into a profit. The company's investment income (including fair value) in 2022 was 1.26 billion yuan, -78.0% year on year; we think the main reason was the poor performance of the equity market, and the Wande A Index fell 18.7% cumulatively throughout 2022. Investment income (including fair value) for the fourth quarter was 1.31 billion yuan, +91.6% year on year, turning a loss into a profit over the previous quarter.
[Investment advice] The company's wealth management and investment management business rank at the forefront of the industry, and the recovery of investment banking business will cause the company's performance to continue to pick up. We expect the company's 2023-2025E EPS to be 1.32, 1.53, and 1.73 yuan respectively, and the BVPS to be 15.54, 16.88, and 18.37 yuan respectively, giving the company 1.3-1.5x 2023E PB. The corresponding reasonable value range is 20.20-23.31 yuan, maintaining the “superior market” rating.
Risk warning: Continued market downturn has led to a decline in business scale, and market supervision has been further strengthened.