Core ideas:
The company reported a decline in its performance in the third quarter of 2023. In the first three quarters of 2023, the company achieved revenue of 8.856 billion yuan, + 22.64% compared with the same period last year, and net profit of 1.581 billion yuan,-11.20% of the same period last year. Q3 lost 215 million yuan in net profit in a single quarter. The leverage ratio excluding customer funds increased to 3.85. The decline in the company's performance is mainly due to proprietary business. From the perspective of business structure, the proportion of asset-heavy business has risen to 45.82%. Among them, brokerage, interest, investment, investment banking and asset management business accounted for 36.10%, 29.14%, 16.68%, 15.86% and 2.22%, respectively.
Shrinking trading and falling markets are a drag on performance. In terms of asset-heavy business, (1) in the first three quarters, the net investment income (including fair) was 819 million yuan, an increase of 181.79% over the same period last year. The net investment income of Q3 fell 419 million yuan compared with Q2. (2) the net interest income of Q3 was 432 million yuan,-27.27% year-on-year, and 1.43 billion yuan in the first three quarters, + 3.72% year-on-year. At the end of September, the balance of the two funds in the market was 1.5909 trillion yuan, + 3% compared with the same period last year. In terms of light assets business, (1) the average daily trading volume of Q3 in the whole market is-13% compared with the same period last year. The net income of Q3 brokerage business in a single quarter is 540 million yuan, which is-27.22% compared with the same period last year. We believe that it is mainly affected by the decline in consignment business. (2) the net income of Q3 asset management in a single quarter is 40 million yuan, + 5.26% compared with the same period last year; according to wind data, the non-goods scale of Q3 joint venture Xingquan Fund / Southern Fund is 1495.29 billion yuan, respectively, which is-7.85% and 1.66% compared with the same period last year. (3) the net income of investment banking business in a single quarter was 192 million yuan,-26.44% compared with the same period last year; the net income of investment banking business in the first three quarters was 778 million yuan, + 4.72% compared with the same period last year. According to wind release date data, 23Q3 market equity financing of 276.1 billion yuan, year-on-year-45%, the company's equity underwriting 7.635 billion yuan, year-on-year-47.59%, ranking 17th in the industry.
Profit forecast and investment advice. Under the guidance of the policy of "activating the capital market and boosting investor confidence", the capital market is expected to usher in a new opportunity for development. With the stabilization of US debt interest rates, the gradual entry of Huijin funds into the market, and the issuance of trillion yuan of treasury bonds to promote economic stabilization, the equity market is expected to recover. The company is expected to continue to benefit by virtue of comprehensive services and coordination capabilities and asset management capabilities. It is expected that the company will achieve a net profit of 3.459 billion yuan and 4.06 billion yuan per share in 2023-2024, with a net asset per share of 6.86,7.46 yuan. Considering the valuation center of the company since 2019, it will give the company a 2023 1.25XPB valuation of 8.58 yuan per share, maintaining a "buy" rating.
Risk tips: declining commission rate, increased competition among investment banks, increased market volatility, and so on.