Investment points: the company has achieved remarkable results in the transformation of wealth management, with a high proportion of income from consignment sales of financial products.

The asset management business has distinct characteristics, and the active management and public offering transformation have advantages. Proprietary business reversed in the first quarter. The reasonable value range is 9.44-10.16 yuan, maintaining the "better than the market" rating.

[event] Caitong Securities released interim results in 2023: in the first half of 2023, the company achieved operating income of 3.48 billion yuan, + 56.1% year-on-year; net profit of 1.04 billion yuan, + 63.9% year-on-year; corresponding to 0.22 yuan of EPS, 3.1% of ROE. In the second quarter, the operating income was 1.69 billion yuan, + 7.3% compared with the same period last year, and-5.4% compared with the previous quarter. The net profit from the home is 540 million yuan, + 14.1% compared with the same period last year, and + 9.7% compared with the previous year.

The decline in market trading volume affects the company's brokerage business income. The brokerage income in the first half of 2023 was 580 million yuan,-4.2% of the same period last year, accounting for 16.6% of the operating income. The average daily stock-based trading volume of the whole market is 1.0271 trillion yuan,-2.0% compared with the same period last year; the company's income from consignment sales of financial products is 80 million yuan,-16.0% from the same period last year, accounting for 13.91% of the brokerage business income; the scale of consignment sales of financial products is 57 billion yuan, + 34.4% from the same period last year; the balance of the company's two financing companies is 18.2 billion yuan, + 5.9% from the beginning of the year, and 1.5885 trillion yuan from the beginning of the year, + 3.1% from the beginning of the year. In the first half of 2023, the average daily retention of the company's financial products increased by 6.5% compared with the same period last year. We will comprehensively carry out asset allocation business for wealth customers and increase the research and development and operation of asset allocation strategies. As of August 28, the new signing scale of the fund has increased by 280 million yuan, with a cumulative signing size of nearly 3 billion yuan. At the same time, actively explore private banking business to provide customized strategy output services for peer, institutional, high net worth and private level customers.

Equity underwriting performed well in the first half of 2023. The company's investment banking revenue in the first half of 2023 was 320 million yuan, a year-on-year increase of 72.7%. The underwriting scale of equity business is + 1049.8% compared with the same period last year, and the underwriting scale of bond business is + 122.6% year on year. Equity main underwriting scale is 3.1 billion yuan, ranking 17th; among them, IPO 2, raising 900 million yuan; refinancing 3, underwriting 2.2 billion yuan. The main underwriting scale of bonds was 70.5 billion yuan, ranking 25th, of which corporate bonds, financial bonds and corporate bonds were 53.2 billion yuan, 12 billion yuan and 4.5 billion yuan respectively. There are 10 IPO reserve projects, ranking 23rd, including 5 main boards of two cities, 2 of Beijing Stock Exchange and 3 of gem.

The scale of asset management has continued to improve, and remarkable achievements have been made in the transformation of public offering. The company's asset management business income in the first half of 2023 was 700 million yuan, a year-on-year increase of 4.8%. The scale of asset management is 294.9 billion yuan, + 8.2% compared with the same period last year. By the end of 2022, the scale of public offering management has exceeded 100 billion yuan, ranking third among securities firms.

Proprietary performance reversed sharply in 2023. In the first half of 2023, the company's investment income (including fair value) was 1.24 billion yuan, a sharp increase of 223 times compared with the same period last year; in the second quarter, the investment income (including fair value) was 530 million yuan, + 16.3% compared with the same period last year.

On the one hand, the company has maintained a low position and operated cautiously since the beginning of the year, effectively defending against the downside risks brought about by the market decline, on the other hand, it actively revolves around the main line of the market, focusing on the layout of representative industries and individual stocks, and achieved better investment returns.

Investment suggestion: we estimate that the EPS and BVPS of the company in 2023-25e are 0.47, 0.56 and 7.26, respectively. We give it 1.3-1.4x Pmax B in 2023, corresponding to a reasonable value range of 9.44-10.16 yuan, maintaining a "better than the market" rating.

Risk hint: the trading volume continues to decline, and the volatility of the equity market leads to a continuous decline in investment income.