Main points of investment

Yongan forward goods released the mid-2023 report, with total operating income and net profit of 119.66 and 412 million yuan respectively during the reporting period, respectively, which were-38.8% and + 30.4% respectively compared with the same period last year. The weighted average ROE achieved total operating income and net profit of 66.03 yuan and 204 million yuan respectively in the single quarter from + 0.70pct to 3.39% dint 2023Q2, and + 23.1% and-2.2% respectively in the quarter-on-quarter.

Net interest income and investment income were the main drivers of profit growth in the first half of the year. On the revenue side, in the first half of 2023, the company realized net income from handling fees, net income from interest, investment income and other business income (net method) of 3.50,3.23,3.18 and 127 million yuan respectively, which were-17.3%, + 18.9%, + 22.2% and-55.6% respectively compared with the same period last year, accounting for 31.3%, 28.9%, 28.4% and 11.4% respectively. Growth in interest income and investment income boosts performance On the cost side, management expenses ranged from + 2.3% to 463 million yuan compared with the same period last year, and the net profit margin (net profit margin) under cost rigid constraints increased 14.13pct to 38.8% compared with the same period last year.

Yong'an Guo Fu returns to promote the growth of investment income, and overseas business enters the profit-cashing period. 1) in terms of futures brokerage business, the turnover of the national futures market in the first half of 2023 was + 1.5% compared with the same period last year. Under the background of the recovery of customer trading activity, the turnover of Yong'an futures was + 1.2% year on year, and the average daily customer rights and interests were + 7.6% to 48.718 billion yuan compared with the same period last year. However, under the downward pressure of rates, the commission income of brokerage business in the first half of the year was-8.8% to 311 million yuan. 2) the income of asset management business is expected to decline due to the retraction of product net value. in the first half of the year, the revenue of asset management is-30.3% to 4 million yuan compared with the same period last year, but the company continues to build a system with Yongan X series products as the core and other series products as the support. to achieve the asset management scale of + 80% to 3.184 billion yuan compared with the same period last year, as the market resumes the upward trend, it is expected to contribute to profit elasticity. 3) risk management income has declined significantly under the overall pressure on industry profits. the operating profit of risk management business in the first half of the year is-23.1% to 160 million yuan compared with the same period last year. The company actively explores business growth points and adds a number of market-making qualifications such as industrial silicon and Huaxia Kechuang 50ETF options, which is expected to promote the steady growth of the business scale. 4) the investment business is carried out through the participation of Yongan Guofu and the allocation of related financial products. In the first half of the year, the investment income of long shares and the investment income of financial products were + 76.7%,-6.4% to 0.56 and 247 million yuan, respectively. Yongan Guofu's profits resumed to support the growth of investment income. 5) overseas business entered the profit-cashing period, and the number of institutional accounts opened in the first half of the year increased by 1.5 times compared with the same period last year, and the operating profit increased by 5 times to 64 million yuan.

Yong'an Futures "one body, two wings, three-wheel drive" business system is balanced and comprehensive, the leading position of the industry is stable, and it is expected to enjoy industry and policy dividends from the quality and expansion of the futures market for a long time. We have adjusted our profit forecast and expect the company's net profit from 2023 to 2024 to be 10.03 yuan and 1.202 billion yuan respectively, which is + 49.2% and + 19.8% respectively compared with the same period last year. The PE valuation corresponding to the closing price on August 23 is 24.96 and 20.83 times, respectively, maintaining the "overweight" rating.

Risk hints: capital market volatility risk, macroeconomic downside risk, market share increase less than expected risk, new business promotion less than expected risk.