Event description
Overview:
The company released its three-quarter report in 2022, with operating income of 22.7 billion yuan in the first three quarters, + 10% year-on-year; adjusted operating income (minus other business costs) of 16.85 billion yuan, + 5% year-on-year; net profit of 6.44 billion yuan,-11%; weighted average ROE of 8.71%, year-on-year-2.67pct. In the third quarter alone, the operating income was 8.281 billion yuan, which was basically the same as the same period last year; the net profit of returning home was 2.06 billion yuan,-25% of the same period last year.
Main points:
Investment banking business contributed the largest income increment, and proprietary business became the biggest drag on income structure. Brokerage, investment banking and proprietary business accounted for 27%, 27% and 26% of income respectively, net interest accounted for 11%, and asset management business and other businesses accounted for 4% and 5% respectively.
In terms of incremental income contribution, investment banks achieved a maximum positive contribution of 147%, while other businesses and net interest income contributed 72% and 46% respectively, and self-support contributed-167% of the income increment. Administrative expenses increased by 20% and credit impairment turned from negative to positive drag on performance.
The income and market share of investment banking increased year on year.
The net income of investment banking was 4.57 billion yuan, + 32% compared with the same period last year. During the reporting period, the company's IPO financing scale was 46.59 billion yuan, with a market share of 10.7%; the total size of equity financing was 46.41 billion yuan, with a market share of 10.6%; and the main underwriting scale of debt financing was 406.07 billion yuan, accounting for 9.26% of the industry share.
The scale of proprietary business increases and the rate of return decreases.
The income of proprietary business was 4.31 billion yuan,-22% compared with the same period last year, mainly caused by the decline in the rate of return on investment. At the end of the period, the company's securities investment was 224.2 billion yuan, + 18% compared with the same period last year, and the rate of return on investment was 2.04%, down 0.94pct from the same period last year.
The brokerage business performed better than the market, and the asset management interest income increased the net income of the brokerage business by 4.57 billion yuan, unchanged from the same period last year.
Asset management income is 730 million yuan, + 2% compared with the same period last year; interest income is 1.78 billion yuan, + 24% compared with the same period last year.
Investment suggestion
The advantages of corporate investment banking have been further consolidated, significantly benefiting from the comprehensive registration reform. The industry leader in investment banking, wealth management and trading system ensures the soundness of the company's performance. Due to the change of market environment, we adjust the company's revenue from 333.3 RMB 386.48 / 41.321 billion to 320.54 / 361.02 / 41.46 billion in 2022-2024, and adjust the forecast of EPS1.39/1.64 / 1.73 in 2022-2024 to 1.21 / 1.39 / 1.63. The share price of 6066.HK on October 28, 2022 is RMB5.41 (HK $5.92, corresponding to HK $1 = RMB0.91), corresponding to the estimated profit of 2022 / 2023 / 2024, which is estimated to be 4.47 / 3.90 / 3.31 times PE respectively, maintaining "overweight".
Rating.
Risk hint
1) equity market fell sharply, securities firms' stock pledge business risk and securities investment business risk; 2) investment bank responsibility increased under the registration system, investment banking business due diligence and compliance risk; 3) trading volume shrank sharply, capital market reform is lower than expected risk.