Profit improvement was driven by self-operation, and the valuation had a safe margin. Maintaining the “buy” rating 2023Q1, the company's total operating revenue/net profit returned to the mother was 648/2.16 billion yuan, +36%/+66% year on year, the annualized weighted average ROE was 7.48%, +2.60 pct year-on-year, and the year-end leverage ratio (excluding customer security deposits) 4.13 times, +7% from the beginning of the year. The performance was slightly lower than expected, mainly due to asset management business revenue falling slightly below expectations and management expenses slightly higher than expected.

Proprietary investment returns improved markedly in the first quarter, driving a year-on-year increase in profits. Considering that asset management revenue was slightly lower than expected, we lowered our net profit forecast for 2023-2025 to 93/120/14.2 billion (before adjustment of 98/129/137 billion). +17%/+29%/+18% year-on-year, EPS was 1.2/1.6/1.9 yuan. The profit contribution of the company's big wealth management line (GF Fund+eFunda Fund+GF Asset Management+Consignment) in 2022 is expected to be 2.6 billion dollars, with a profit contribution of 32% compared to +3pct compared to +3pct. The assets of the company's leading fund companies are scarce, and the profit contribution is relatively steady. The improvement in the equity market in 2023 drove an improvement in the return on proprietary investment, which favors the improvement in corporate profits. The current stock price corresponds to the 2023-2025 PB 0.9/0.9/0.8 times. The valuation has a safe margin and maintains a “buy” rating.

Its funds maintained a leading position in the industry, and E-Fonda Fund's AUM market share further increased (1) The company's asset management business revenue was 2.09 billion yuan, -11% compared to the previous year. It is expected to mainly contribute to Guangfa Fund and GF asset management. At the end of the period, Guangfa Fund's non-good/biased AUM (Wind Caliber) was 6667/376.9 billion, -1%/-2% month-on-month, +6%/-6% year-on-year, with a market share of 4.32%/5.27%, and -0.09/-0.18pct month-on-month, ranking 3/3rd in the industry. (2) The company's investment income in joint ventures and joint ventures was 250 million yuan, +235% over the same period last year. At the end of the period, E-Fangda's non-good/biased AUM (Wind Caliber) was 10050/584 billion, +3%/+4% month-on-month, -7%/+4%, with a market share of 6.51%/8.17%, +0.13/+0.17pct month-on-month, ranking 1/1 in the industry.

The scale of proprietary investment has increased, and management fees have increased year over year

(1) The net brokerage revenue of 2023Q1 company was 1.45 billion yuan, -12% year on year and +1% month on month. The average daily stock turnover in the 2023Q1 market was 87.89 billion yuan, -12.8% year on year, +4.8% month on month, and newly issued equity funds of 93.5 billion yuan, -40% year on year and +30% month on month. The investment bank's business revenue was 1.0 billion, or -33% year on year. (2) The company's own investment income was 1.47 billion yuan, turning a loss into profit over the previous year, with an annualized return of 3.2% on its own investment. Financial assets at the end of the period were $213.1 billion, +34% year on year and +32% month on month. This was due to an increase in investment scale such as bonds and funds at the end of the period. In 2023Q1, the company's net interest income was 940 million yuan, -5% year on year, with a 5.68% share of the two loans market, and -0.05 pct month-on-month. (3) Management expenses were 3.62 billion yuan, +41% year on year, accounting for 56.3% of adjusted revenue, and -3.1 pct year on year.

Risk warning: risk of market fluctuations; growth in wealth management and asset management falls short of expectations, investment banking business risk.