Event: the company announced its performance, KuaiBao, and 1H23 achieved operating income of 6.184 billion yuan, an increase of 15.09% over the same period last year, and a net profit of 2.396 billion yuan, an increase of 13.67% over the same period last year, corresponding to an EPS of 0.48 yuan, an increase of 14.29% and 3.96%, a decrease of 0.35%. 2Q23 achieved an operating income of 3.434 billion yuan, an increase of 7.58% over the same period last year, and a net profit of 1.438 billion yuan, down 0.28% from the same period last year.
The equity market picked up in the first quarter, and proprietary business income boosted performance during the reporting period. The net income of 1Q23's proprietary business was 944 million yuan, an increase of 1.03 billion yuan compared with 1Q22. Benefiting from the pick-up in the equity market in the first quarter, the company's 1Q23 investment income was 663 million yuan, an increase of 32.86% over the same period last year. At the same time, the gradual reduction of market interest rates in the first half of the year led to a rise in financial asset prices and a return from fair value changes to profits, an increase of 873 million yuan compared with 1Q22. In addition, in 2022, the company added five new business qualifications for market makers in on-the-floor derivatives, which will help hedge risks and optimize the proprietary business model in the first half of the equity market.
Light assets business accounts for a relatively high proportion, which is obviously affected by the market. By the end of 2022, the company's light assets business contributed 65.56% of operating income. 1H23 is affected by the market, and investment banking, asset management and wealth management businesses are all under pressure.
Investment banking has long ploughed emerging industries and green finance to serve the real economy. The company's 1Q23 investment banking revenue was 192 million yuan, down 39.43% from the same period last year. This is related to the slowdown in the issuance of A-share IPO under the registration system. In the first half of 2023, there were 184 IPO initial public offerings in the A-share market, an increase of 8 over the same period last year, but the scale of fund-raising decreased by 16% to 218.802 billion yuan.
1H23 has 4 IPO projects, of which 3 are motherboard projects and 1 is the Northern Stock Exchange project. The industries involved include electronic equipment manufacturing, transportation equipment manufacturing, chemical manufacturing and other emerging industries and key areas. The main underwriting scale of 1H23 corporate bond business is 73.61 billion yuan, ranking 15th, involving green bond projects including comprehensive environmental governance, new energy power generation and other industries.
Active layout of asset management business to enhance core competitiveness. The net income of 1Q23's asset management business was 219 million yuan, down 32.82% from the same period last year. This is related to the poor overall performance of the fund issuance market in the first half of the year. 1H23 launched 609 funds, down 17.7% from the same period last year, and the fund-raising scale was 538.1 billion yuan, down 23.8% from the same period last year. By the end of 2022, the total size of entrusted management of optical securities assets management was 365.417 billion yuan, and the monthly average size of 4Q22 private equity asset management ranked fourth. On June 19, Guangzheng Capital Management formally submitted the application for "qualification approval of Public offering Fund Manager" to prepare for the transformation of public offering. The company is expected to rely on the advantages of channel resources and investment and research of brokerage business to enhance the core competitiveness of fund management companies.
The income of wealth management business has declined in the short term under the influence of the equity market, and the transformation has been continuously deepened in the long run. The revenue of 1Q23's brokerage business was 737 million yuan, down 16.15% from the same period last year. The company strengthens the construction of the wealth management customer service ecosystem and continues to expand the customer base. By the end of 2022, the total number of customers has reached 5.385 million. (1) in the consignment business of financial products, the consignment size of 1H23's equity products was 55.4 billion yuan, down 11.22% from the same period last year, while the consignment size of fixed-income products was 4.5 billion yuan, an increase of 18.42% over the same period last year. This is related to the fact that the overall performance of the 1H23 equity market is not as good as that of the fixed-collection market. The 1H23 CSI 300 index fell slightly by 0.75%, while the CSI all-debt index rose 2.98%. (2) in terms of fund investment business, the company launched the "Golden Sunshine Butler" fund investment service in 2022, the signing scale of securities investment business increased exponentially, and the customer retention rate remained at a high level.
Generally speaking, the proprietary business benefited from the market recovery and became the main driving force to boost the company's performance in the first half of the year; the light asset business is affected by the market and is under pressure in the short term, but in the long run it is expected to benefit from the group's E-SBU ecosystem strategy, strengthening coordination and resource integration between businesses, tamping profit growth points, especially optimistic about the integration of its investment banking and brokerage business. Since late July, policies that are good for the capital market have been gradually introduced, which is expected to promote the further development of the company's proprietary, investment banking, wealth management and other businesses. We estimate that the EPS for 2023-2025 will be 0.73, 0.87, 0.98, respectively, with a "buy" rating based on the closing price on August 7, 2023, corresponding to 24.97 times 2023PE.
Risk hints: the volatility of the equity market is intensified, the landing of the policy is not as expected, and the business development is not as expected.