Incident: The company disclosed its 2022 annual report, achieving revenue of 25.1 billion yuan (YoY -27%) in 2022, net profit of 7.9 billion yuan (YoY -27%), ROE of 7.23% (YoY -3.44 pct), and EPS of 1.02 yuan (YoY -28%). By business, the company's brokering/investment banking/asset management/credit/proprietary business achieved net revenue of 6.4 billion yuan/600 million yuan/8.9 billion yuan/4.1 billion yuan/1.3 billion yuan respectively in 2022, -20%/+41%/-10%/-17%/-78%, accounting for 30%/3%/42%/19%/6%. Among them, brokerage business owners were affected by the degree of trading activity, and proprietary business owners were affected by capital market fluctuations.
Wealth management advantages are stable, leading the industry in terms of non-commodity ownership. 1) In terms of traditional brokerage securities trading business, the company achieved a stock base turnover of 20 trillion yuan in 2022, -7% year on year, market share 4.0%, and +0.2pct year on year. 2) In terms of consignment financial assets, the company achieved revenue of 800 million yuan, -29% year on year, and sold financial products on behalf of 515.8 billion yuan, +4% year on year, of which the size of consignment funds increased 23% to 102.4 billion yuan compared to the end of the previous year; the size of consignment financial products held +1% compared to the end of the previous year, with brokerage firms ranking third in terms of non-commodity ownership. 3) In terms of securities financing and securities lending business, as of the end of 2022, the company's two finance businesses were 83 billion yuan, compared to -12% at the end of the previous year, with a market share of 5.39%, +0.26pct over the previous year.
The scale of asset management has declined, and its public offering has contributed an important source of performance. 1) In the brokerage asset management sector, by the end of 2022, the company's total asset management scale reached 271.2 billion yuan, up -45% from the end of the previous year, of which the pooled asset management scale was -40% compared to the end of the previous year to 210.7 billion yuan. The scale of single and special asset management was -58% and -40% respectively.
2) In the public fund sector, in 2022, the Guangfa Fund controlled by the company achieved a net profit of 2.1 billion yuan, -18% compared to the same period last year, and its public offering scale increased +11% to 1.25 trillion yuan compared to the end of the previous year; E-Fonda Fund, in which the company participated, achieved a net profit of 3.8 billion yuan, -15% compared to the end of the previous year, and its public offering size reached 1.57 trillion yuan from -8% to 1.57 trillion yuan at the end of the previous year. The contribution of Guangfa and eFangda funds to the company's net profit reached 25.6%, +3.1pct over the same period last year. 3) In terms of private equity, GF Sindh's management scale exceeded 15 billion yuan by the end of '22, achieving net profit of 100 million yuan, -86% year on year.
The investment banking business has been recovering steadily, and the scale of debt obligations has increased dramatically. Overall, the company achieved net income from investment banking business +41% year on year to 600 million yuan in 2022, which is close to the net revenue level of 2020. 1) In terms of equity underwriting, the company completed 6 IPO lead underwriters of 2.9 billion yuan in 2022; refinancing underwriters of 11 companies, 15.5 billion yuan. 2) In terms of debt underwriting, the company's lead underwriter issued 188 bond issues in 2022, +370% year on year; the principal underwriting amount was 142.1 billion yuan, +358% year on year.
Self-employment has dragged down performance, and the development of the derivatives market is improving. Constrained by capital market fluctuations, the company achieved net income of -78% year-on-year to 1.3 billion yuan in 2022. Along with the development of the OTC derivatives market, the company's market making and quantitative proprietary investments in 2022 were better able to grasp the trading opportunities brought about by market fluctuations, and the level of earnings was better.
Investment advice: Maintain a Buy-A investment rating. The company's wealth management advantages are stable, its public placement industry is leading, and the investment banking business is recovering steadily. We expect the company's EPS from 2023 to 2025 to be 1.33 yuan, 1.56 yuan, and 1.81 yuan respectively, and the target price for 6 months is 18.4 yuan, corresponding to 1.1x2023 P/B.
Risk warning: Liquidity has been drastically tightened, investment banking business recovery falls short of expectations, and industry competition has intensified.