Event: Everbright Securities released its third-quarter report in 2023, which was higher than expected, mainly due to the return of the impairment of 3Q by 2.15 billion (previously expected to be carried out by 4Q). 9M23 realized a net profit of 4.36 billion / yoy+28%,3Q and a quarterly profit of 1.97 billion / yoy+51%/qoq+37%. 9M23 revenue 7.76 billion / yoy-13%,3Q single quarter revenue 1.58 billion / yoy-56%/qoq-54%. The weighted average ROE of 9M23 is 7.2%/yoy+1.39pct.
The MPS event was basically settled, and 3Q returned to 2.15 billion of the previous overmention. The company has previously provided for a total of 5.28 billion of the estimated liabilities and asset impairment provisions for the MPS event. On September 21, the company announced that Everbright Capital, a subsidiary, intended to reach a settlement with the relevant parties, so it returned to the previous provision and increased non-recurrent income by 2.15 billion. At this point, the financial impact of the MPS event has been basically eliminated.
The main business in a single quarter is under pressure, mainly due to the loss of investment. The main income of 9M23 Securities is 7.08 billion yuan / yoy-9%, of which 3Q is 1.36 billion yuan / yoy-48% in a single quarter. 1) split of main revenue: the income of brokerage, investment bank, asset management, net interest and net investment in a single quarter is 7.1,1.4,2.2,4.7 and-220 million, respectively, compared with the same period last year. 2) in terms of the composition of main income, brokers account for 53%, investment banks account for 11%, capital management accounts for 16%, net interest accounts for 34%, and net investment accounts for-16%.
Investment leverage shrank slightly in a single quarter, and the return on investment turned negative. The total assets of the company at the end of 3Q23 are 2478 billion yuan / yoy-1%/qoq-5%; final operating leverage 2.81x/yoy+0.05x/qoq-0.21x. In terms of investment business, the financial investment scale of the company at the end of 3Q23 is 1209 billion yuan / yoy+8%/qoq-5%, investment leverage 1.80x Universe 0.07% Universe Qoqmi 0.15x; the single-quarter investment return turns negative, and the company's 3Q single-quarter annualized investment return-0.72%/yoy-2.4pct/qoq-4.6pct, the cumulative annualized return 2.13%/yoy+0.7pct in the first three quarters.
Investment banking business is under pressure, which is expected to be mainly due to the impact of a phased slowdown in regulatory IPO. According to the statistics of the date of issue, the amount of equity underwriting of 3Q23 Company is 450 million / yoy-85%, of which 1 is underwritten by IPO, the underwriting scale is 230 million / yoy-51%, refinancing, the underwriting scale is 220 million / yoy-91%;9 at the end of the month, the number of IPO reexaminers is 4 / industry ranking 35, refinancing reexaminers is 15 / industry ranking 15. In terms of bond underwriting, 3Q23's underwriting amount 127.2 billion / yoy+85%/qoq+23%, industry ranks 7th / 4th compared with the same period last year.
Investment analysis advice: reassemble the package and start again, maintaining the "recommended" rating. The reversal of impairment provision means that the financial impact of the MPS incident has basically dissipated, Everbright Securities restructuring industry to start again, the fundamentals are expected to continue to improve. It is estimated that the net profit of 2023-2025E Everbright Securities will be 5.49 billion yuan, 4.87 billion yuan and 5.4 billion yuan respectively, which is + 72%,-11% and + 11% compared with the same period last year. The closing price of 10X 26 corresponds to the company 23-25e dynamic PB 1.27x, 1.21x, 1.15x, dynamic PE 15x, 17x, 15x respectively, maintaining the "recommended" rating.
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.