Event: Citic Construction Fund released its third quarterly report for 2023, with profits lower than expected. 9M23 realized a net profit of 5.69 billion / yoy-12%,3Q and a quarterly profit of 1.38 billion / yoy-33%/qoq-26%. 9M23 revenue 18.38 billion / yoy-19%,3Q single quarter revenue 4.92 billion / yoy-41%. 9M23 weighted ROE is 7.05%/yoy-1.66pct.
The income of the main securities industry is stable, and the rate of 3Q management expenses has increased significantly. 9M23's main securities revenue of 161.3 billion yuan / yoy-4%, is better than the revenue decline (yoy-19%), mainly due to a decline in commodity sales revenue. 1) split of main revenue: the income of brokers, investment banks, asset management, net interest and net investment is 43.2,38.9,9.5,15.1 and 5.14 billion yuan respectively, which is-5%,-15%, + 15% and + 16% respectively compared with the same period last year. 2) in terms of the composition of main income, brokers account for 26.8%, investment banks 24.1% and capital management 5.9% in light capital business. In the capital business, net investment (including foreign exchange) accounts for 31.9%, and net interest accounts for 9.3%. 3) the management expense rate of 3Q company has increased greatly: 3Q company management expense 2.88 billion / yoy-7%/qoq+3%, management expense rate is 64.4%/yoy+12.6pct.
3Q23 operating leverage, investment leverage are month-on-month decline, a single quarter of the investment business under obvious pressure. At the end of 3Q23, the company's total assets were 5225 billion yuan / qoq-6%/ compared with + 2% at the end of 22 years, and the net assets were 96.4 billion yuan / qoq+1%/ compared with + 3% at the end of 22 years. The final operating leverage was 4.28 times / qoq-0.27 times. In terms of investment business, the size of the company's tradable and derivative assets at the end of 3Q23 is 206.5 billion yuan / 9% compared with + 9% at the end of 22 years, and the investment leverage at the end of the period is 2.92% / qoq-0.06 times. The annualized investment return of 3Q23 company is 1.09% / yoy-1.4pct estimated by the net investment income of 770 million / yoy-43%, per quarter.
The brokerage business is growing against the market, and the financial and financial services are basically stable. In terms of brokerage business: 3Q23's brokerage business income of 1.54 billion yuan / yoy+1%, is better than market performance (3Q Shanghai and Shenzhen stock ADT yoy-13%), which is expected to increase the market share of brokerage business and drive income growth. In terms of credit business: at the end of 3Q23, the company raised 54.6 billion yuan / qoq-2%/ compared with + 3% at the end of 22 years (market 3Q23 balance qoq-2%); at the end of the reporting period, the company bought 19.4 billion yuan / qoq-40%/ of resale assets compared with-24% at the end of 22 years. Company 3Q is expected to shrink the scale of stock pledge business.
IPO business market share increased, equity project reserves are sufficient, but the slowdown in the pace of issuance affects income. According to the statistics on the date of issue, the underwriting scale of IPO of 9M23 company is 37.9 billion yuan / yoy-19%, market share is 11.6% yoymilk 0.82 pct, and the refinancing business scale is 45.6 billion yuan / yoy-33%, market share is 10.8%/yoy-1.42pct. In terms of debt business, the underwriting scale of 9M23 corporate bonds is 1.0999 trillion / yoy+11%, with a market share of 11.1% / yoy-0.82pct. In terms of project reserve, the company currently has 91 equity queuing projects / ranking second in the industry (excluding non-registration, termination of registration, termination of audit, suspension of audit), of which 27 IPO projects rank third in the industry.
Maintain the recommended rating of CITIC Construction Investment. It is estimated that the return net profit of CITIC Construction Investment from 2023 to 2025E is 7.58 billion yuan, 8.24 billion yuan and 9.12 billion yuan respectively, which is + 1%, + 9% and + 11% compared with the same period last year. The closing price of 10ax 26 corresponding to 23-25e dynamic PB is 2.56x, 2.37x, 2.18x, dynamic PE is 28.1x, 25.5x, 22.8x.
Risk hints: the downward pressure on the economy has increased; the activity of stock-based trading in the market has declined significantly; and the process of residents' funds entering the market has slowed down.