What happened: Citic Construction Investment revealed that its revenue exceeded expectations and its profit was slightly lower than expected in the third quarter of 2022. 3Q22 achieved a revenue of 8.28 billion yuan, unchanged from the same period last year, with a net profit of 2.06 billion yuan, and a revenue of 22.7 billion yuan, + 10%, compared with the same period of last year. The net profit of the parent was 6.44 billion yuan, and 8.71% of the weighted ROE (underage) of 9M22 was-11%.
The main revenue of 9M22 Securities increased by 4% year-on-year, significantly outperforming the sector (down 22% year-on-year). 9M22 CITIC Construction Investment realized the income of 16.77 billion / 4% of the main securities (excluding bulk trade and other income), which grew the fastest among the comprehensive listed securities firms. (the main income of Guolian Securities and Huaan Securities 9M22 Securities was + 0.2% and + 0.1% respectively compared with the same period last year, while the main income of other listed securities companies declined in varying degrees. The growth rate of brokers and investment banks is much better than that of their peers, which is the main reason for the income growth. Itemized, 9M22's business income (year-on-year growth rate) is as follows: brokerage 4.57 billion (flat), investment bank 4.57 billion (+ 32%), asset management 730 million (+ 2%), net interest 1.78 billion (+ 24%), net investment 4.42 billion (- 20%).
The 9M22 income structure is as follows: brokers 27 per cent, investment banks 27 per cent, asset management 4 per cent, net interest 11 per cent and investment 26 per cent.
The profit growth rate is lower than the income growth rate, mainly due to the increase of cost investment. The rate of 9M22 management expenses (management expenses / securities main income) is 49.5%, an increase of 6.5pct compared with the same period last year. The management fee during the reporting period is 8.3 billion / 20% compared with the same period last year, which is expected to be related to the transformation of wealth management and investment in institutional derivatives business, with rapid growth in both manpower and IT. In addition, the 9M22 credit impairment is 180 million (9M21 rushes back 90 million). Increasing management expenses and raising more impairment drag profit growth by about 9pct and 3pct respectively.
The market share of brokerage business has increased, the number of consignment sales has increased by 30% compared with the same period last year, and the transformation of wealth management business has been effective. 9M22 brokerage net income was flat year-on-year / outperformed the market, 3Q22 single-quarter brokerage net income achieved 1.52 billion / year-16% (the decline is better than the A-share turnover decline of-30%); At the end of the period, the company provides wealth management services to more than 12 million clients. 2Q22 consignment equity fund holdings of 70.6 billion yuan / year-on-year + 30%, consignment non-base holdings of 76.4 billion yuan / year-on-year + 31%, ranking fourth among securities firms; under the goal of expanding the ownership scale, the company's revenue growth rate of consignment sales of financial products significantly outperformed the industry.
Investment banking market share increased, IPO and bond underwriting ranked second, IPO project actively contributed to "specialization and innovation".
9M22 company IPO main underwriting scale of 46.9 billion, year-on-year + 39%, ranking second in the industry (up 1 place over the same period last year), with a market share of 10.7%, increasing 1.8pct over the same period last year. The main underwriting market share of 9M22 bonds is 12.2%, ranking second in the industry, while the refinancing main underwriting market share is 9.4%, ranking fourth in the industry. 9M22, the number of sponsors and the amount of capital raised by the company remained the first in the industry among all the companies listed on the North Stock Exchange, and 12 companies were recommended in the first batch of 81 listed companies in the North Exchange.
Investment analysis opinion: maintain the overweight rating, downgrade 22e profit forecast, maintain 23-24e profit forecast. The 22-year management expense rate assumption is raised, thus the 22-year profit forecast is lowered, and the 23-and 24-year profit forecasts are maintained. The estimated net profit of 2022-2024E is 86.6 yuan, 117.7 yuan and 13.58 billion yuan respectively (the original forecast is 9.35 billion yuan for 22 years), which is-15%, + 36% and + 15% respectively. Citic Construction Investment Co., Ltd. is the target of comprehensive registration reform: 9M22 investment banking revenue accounts for 27%, ranking first with brokerage income, while brokerage and investment banking income growth is much faster than that of their peers. Since the reform of the registration system, the performance of the company's investment bank has been released continuously, and the market share of IPO and debt business is on an upward trend. Maintain the company's overweight rating. The current closing price corresponds to 24 times, 17 times and 15 times the dynamic PE of 22-24 years.
Risk hints: the downward pressure on the economy has increased; the activity of stock-based trading in the market has decreased significantly.