[Event] Yongan Futures announced 2023 interim results: 1) Revenue for the first half of the year was 11.97 billion yuan, or -38.8%; net profit for the first half of the year was 4.1 billion yuan, +30.4%; corresponding to EPS 0.28 yuan, ROE 3.39%, +0.7 pct. 2) Q2 revenue was 6.6 billion yuan, -44.3% year on year; net profit was 2.0 billion yuan, -28.1% year on year. 3) Net assets returned to the parent group in the middle of the year were 12.2 billion yuan, +2.1% from the beginning of the year and +0.5% from the end of Q1.

The decline in the scale of base difference trade has led to a decrease in the scale of revenue. Revenue for the first half of the year was -38.8% year-on-year, mainly due to a decline in the scale of unbalanced trade business. Excluding the revenue portion from trade in goods, it was only -5.5% year-on-year. In the first half of the year, the company's net handling fee/net interest income/investment income was 350 million yuan, 320 million yuan, and 320 million yuan respectively, compared to -17%, +19%, and +22%, respectively.

The operating profit of the brokerage business doubled year on year, and the overseas business grew more than fivefold. The operating profits of futures brokering/asset management/fund sales/risk management/overseas business in the first half of the year were 272 million yuan, 01 million yuan, 103 million yuan, 160 million yuan, and 64 million yuan, respectively, compared with +109%, -82%, -63%, -23%, and +521%, respectively.

Futures brokerage business: Client rights are growing steadily, and agent turnover has declined slightly. 1) Futures brokerage revenue for the first half of the year was 620 million yuan, +68% year-on-year, of which net processing fee revenue was 3.1 billion yuan, or -9% year-on-year. 2) In the first half of the year, the company's domestic futures agency traded 104 million lots, +10.3% year on year, transaction amount 7.67 trillion yuan, -2.3% year on year, and average daily customer equity was 48.72 billion yuan, up 7.6% year on year.

Asset management & fund sales business: The scale of asset management has increased dramatically, and fund sales are under pressure in the short term. 1) Asset management business: Business revenue for the first half of the year was 06 billion yuan, -65% year-on-year, of which net processing fee revenue was -30%. As of mid-2023, the company had 25 asset management products, an increase of 3 over the same period in 2022. The operating scale was 3.18 billion yuan, an increase of about 80% over the previous year, of which the bond business scale was about 2.05 billion yuan. 2) Fund sales business: Affected by capital market fluctuations since 2022, the net value of some asset management products has withdrawn. Business revenue for the first half of 2023 was 32 million yuan, -58% year-on-year.

Risk Management & Overseas Business: The scale of risk management business is declining, and overseas business is growing rapidly. 1) Risk management business: The overall profitability of the industry declined in the first half of the year, and the company's business revenue was 11.14 billion yuan, -41% year-on-year. 2) Overseas business: The company actively responded to changes in the overseas capital market and strengthened the development of key customers. The number of institutional accounts opened increased 1.5 times over the previous year, and the operating profit of overseas business reached 60 million yuan in the first half of the year, an increase of more than five times over the previous year.

Maintain a “better than market” rating. We believe that as a leader in the domestic futures industry, Yongan Futures is expected to gain continuous growth momentum from the rapid development of the industry, and with the increase in industry concentration, the company's leading edge will also be further consolidated and should enjoy leading premiums. We gave the company 31-32x 2023E PE, and the corresponding reasonable value range was 19.46-20.09 yuan. The current stock price corresponds to 27x 2023E PE, maintaining the “better than the market” rating.

Risk warning: Commodity price fluctuations have exceeded expectations, and domestic futures market regulatory policies have changed.