Event: Zheshang Securities released 1H23 results, slightly exceeding the performance of KuaiBao. 1H23 realized revenue of 8.46 billion yuan / yoy+13%; return net profit of 910 million yuan / yoy+25%,2Q23 single-quarter profit of 420 million yuan / yoy+5%/ qoq-13%. 1H23 weighted average ROE 3.44% (underage) / yoy+0.43pct; end-of-period operating leverage 4.75 times, up 0.3 times from the beginning of the year.
Investment bank income and investment income increased sharply compared with the same period last year, and the total contribution of brokerage income and investment income was nearly 70%. The main securities income of 1H23 Company (excluding other business income and government subsidies) is 3.18 billion yuan / yoy+29%. 1) split main revenue:
The income of brokerage, investment bank, asset management, net interest, net investment (including net exchange profit and loss) and long stock investment was 12.5,4.8,1.8,3.5,8.9 and 20 million yuan respectively, which was + 29%, + 81%,-20%,-10%, + 139% and + 157% respectively compared with the same period last year. 2) in terms of performance composition, brokerage income is the first pillar, accounting for 39%, investment bank 15%, asset management 6%, net interest 11%, net investment 28% (excluding other fees and long stock investments account for 1% of the main income).
The commission rate of stock-based trading declined compared with the same period last year, and the consignment was under short-term pressure affected by the decline in the market. In terms of brokerage business, 1H23's stock-based trading volume 2.41 trillion / yoy+2%, according to the company's semi-annual report, the company ranks 21st in the industry in terms of net income from acting securities trading business, and the estimated net commission rate of 1H23 is about 3.27bp (vs 1H22 3.40bp). The commission income of 1H23 institutions is 270 million yuan / yoy+10%, accounting for 29% of the net income of brokerage business (excluding futures brokers) / yoy+4.3pct.
In terms of wealth management business, 1H23 increased sales of financial products by 19.9 billion yuan / yoy+23%, consignment income of 120 million yuan / yoy-28%, accounted for 13% / yoy-4.0pct of the net income of brokerage business (excluding futures brokers). In terms of credit business, at the end of 1H23, the company raised 192.5 yuan / yoy+9.6%, with a market share of 1.21%, and margin interest income of 580 million yuan / yoy+2%.
The scale of investment assets has expanded slightly and the rate of return on investment has improved significantly. At the end of 1H23, the company's total assets were 145.9 billion yuan, an increase of 6.5% over the beginning of the year, of which investment assets were 47.5 billion yuan, + 5% compared with the beginning of the year. Among investment assets, transactional financial assets were 40.1 billion, down 9 per cent from the beginning of the year (bonds accounted for 67 per cent of tradable financial assets, 13 per cent of equities, 9 per cent of public funds, 4 per cent of brokerage management and 7 per cent of others). The investment income of 1H23 is 890 million yuan, and the annualized net investment return is estimated to be 3.81% (net investment income / average investment asset size), an increase of 2.19pct over 2022.
The number one project of Zhejiang businessmen's asset management has achieved remarkable results, and the scale of asset management has rebounded since the beginning of the year. In 2022, the company positioned the asset management business as the "number one project" (annual report information). At the end of 1H23, the asset management stock of Zhejiang businessmen was 96.92 billion yuan, an increase of 6% over the beginning of the year. It is expected that the impact on the scale brought about by the disposal of the new regulations of asset management and the substantial adjustment of the bond market at the end of 22 will gradually clear, and the AUM of Zhejiang businessmen will show an upward trend; the active management scale of Zhejiang businessmen will be 92.58 billion yuan, accounting for 95.5% / yoy+9.8pct.
IPO business picked up, the scale of coupon underwriting increased year-on-year, and investment banking revenue improved. According to Wind data, according to the date of release, in terms of IPO business, 1H23 IPO mainly underwrote 2 (1H22 0), with an underwriting scale of 2.975 billion yuan, with a market share of 1.36%, ranking 15th in the industry; in terms of project reserve, the company had 25 queued projects at the end of the period, ranking 21st in the industry, of which 64% came from Zhejiang Province. In terms of refinancing business, 1H23 achieved a refinancing (excluding convertible bonds and convertible bonds) of 1.186 billion yuan / yoy+58%; bond underwriting business, 1H23 achieved a bond main underwriting scale of 81.548 billion yuan / yoy+134%, underwriting scale of the industry 19, of which corporate bond underwriting scale of 72.3 billion yuan, market share of 3.79%, corporate bond underwriting scale ranked seventh in the industry, ranking first in Zhejiang province.
Investment analysis advice: maintain profit forecasts, maintain buy ratings. It is estimated that the net profit of 23-25e Zhejiang Merchants Securities is 20.8,26.2 and 3.18 billion yuan respectively, which is + 25.8%, + 26.0% and + 21.4% respectively compared with the same period last year. The current closing price corresponds to 1.47 times the dynamic PB of 23 years. Taking into account that the company continues to promote the "second venture" (semi-annual report information), the growth of agency brokerage and wealth management business is strong, the core competitiveness is expected to further highlight and maintain the buy rating.
Risk hint: the Fed raised interest rates more than expected; macro liquidity tightened and the process of residents' funds entering the market slowed down.