The company's 1Q2020 realized operating income of 7.697 billion yuan, an increase of 41.05% over the same period last year, and a net profit of 1.987 billion yuan, an increase of 6.72% over the same period last year. 19EPS 0.23 yuan, 19BVPS3.22 yuan.

1Q2020 revenue increased by 40%, and the business structure changed: (1) the company's revenue in 2019 was 7.697 billion yuan, an increase of 41.05% over the same period last year; the net profit was 1.987 billion yuan, an increase of 6.72% over the same period last year; and the company's net interest rate and annualized ROE were 39.53% and 10.17%, respectively, higher than the industry average (7.72%). (2) the income from self-management, brokerage, credit, asset management and investment banking accounts for 21%, 17%, 11%, 4% and 3%, respectively. Proprietary share decreased by 18 percentage points compared with 1Q2019, while the share of other businesses increased to 45%, an increase of 24 percentage points compared with 1Q2019.

Interest income has greatly increased, and the market share of investment banking business has increased significantly: (1) benefiting from the high market activity during the reporting period, the company achieved a brokerage income of 1.29 billion yuan, an increase of 25% over the same period last year. (2) the net interest income was 845 million yuan, an increase of 59% over the same period last year, mainly due to the increase in investment income from other claims. 1Q2020 credit impairment loss is estimated to be 35 million yuan. (3) realized investment banking business income of 193 million yuan, down 31% from the same period last year, but the total amount of stock and debt underwriting of 1Q2020 was 63.355 billion yuan, with a market share of 2.66%, significantly higher than that of the same period last year (1.95%), of which the market share of equity underwriting was 5.61%, ranking fourth in the industry. The company's new third board continues to supervise 631 enterprises, ranking first in the industry.

The self-supporting downturn has lowered the overall performance, and the asset management business still needs to be repaired: (1) under the background of the 1Q2020 market shock and the high base number of 1Q2019, the industry-wide self-operating income fell by 43% compared with the same period last year (Wande data), the company achieved 1.595 billion yuan in proprietary business income, down 25% from the same period last year, which is less than that of the industry. As the market picks up, proprietary business is expected to improve marginally. The company expanded the investment scale of its options business, with 1Q2020 derivative financial assets of 929 million yuan, an increase of 92.7% over the beginning of the year (482 million yuan). (2) 1Q2020 achieved 288 million yuan in asset management business income, down 11% from the same period last year, less than the industry's 16% revenue growth. (3) other business income was 3.486 billion yuan, an increase of 196% over the same period last year, mainly due to a significant increase in commodity income of subsidiaries, but also a drag on the company's profit margin.

Valuation

Maintaining the original profit forecast, the company's net profit for 20-21-22 is expected to be 100 million yuan in 67-77-82, corresponding to an EPS of 0.27 billion, 0.31 and 0.33, maintaining an overweight rating.

Risk hint

The impact of the policy on the industry is greater than expected; the dual impact of market fluctuations on industry performance and valuation.