Introduction to this report:
The rebound in investment business revenue is driving high performance; the company will benefit from a package of “invigorating the capital market and boosting investor confidence” policies, such as capital market investment-side reforms, and achieve growth exceeding expectations through deep customer and comprehensive value monetization.
Key points of investment:
Maintain the “increase in holdings” rating and maintain the target price of 12.21 yuan, corresponding to 24.92xPE and 1.39xPb in 2023. The company's 2023H1 revenue/net profit was 3327/874 million yuan, +29.39%/61.08%; the weighted average ROE was +0.73 pct to 2.77% year over year, and the performance was in line with expectations. Taking into account the impact of investment and financing balance in the capital market, we maintained the company's profit forecast of 2023-2025 EPS of 0.49/0.57/0.67 yuan, and maintained a target price of 12.21 yuan, corresponding to 24.92xPE and 1.39xPb in 2023, maintaining the “increase in holdings” rating.
Benefiting from market recovery, a sharp rebound in investment business revenue has driven a high increase in performance, and the decline in investment bank revenue has dragged down performance. 1) 2023H1, the company's net income from investment business was +674.71% year-on-year to 984 million yuan, contributing 113.38% of the adjusted revenue (operating income - other business expenses) increase, which was the main reason for the high performance increase; the high increase in investment business stemmed from market recovery, which led to a year-on-year return on investment of +2.11pct to 2.55%; the scale of financial assets was +3.376% from the end of 2022 to 39.308 billion yuan, which further increased revenue, mainly due to the company's transactional financial assets of +6.22% to 33.305 billion yuan at the end of 2022 As a result; 2) Affected by the poor equity financing environment, the investment banking business was -17.98% year-on-year to 549 million yuan, accounting for -15.91% of the adjusted revenue increase, which dragged down performance.
It is expected that the company will benefit from a package of “invigorating the capital market and boosting investor confidence” policies such as capital market investment-side reforms, and achieve growth exceeding expectations through deep and comprehensive value monetization from customers. The company's “investment banking traction” strategy continues to deepen, giving full play to the competitive advantages of investment banks, bringing customer capital and high-quality assets to business systems such as wealth, asset management, and institutions, and constructing a company-level comprehensive financial service system through an integrated operation mechanism, thus achieving a full life cycle service for customers. It is expected that the company will benefit from the substantial introduction of a package of “invigorate the capital market and boost investor confidence” policies, such as capital market investment-side reforms, and achieve growth in overall performance exceeding expectations through deep and comprehensive value monetization from customers.
Catalyst: Investment-side reform policies are being implemented at an accelerated pace, and the “investment bank leading” strategy continues to be deepened.
Risk warning: The equity market has declined sharply.