Incident Overview
The company released its 2023 three-quarter report. The first three quarters achieved revenue of 14.87 billion yuan, -3% year-on-year; net profit of 6.40 billion yuan, +2% year-on-year. The weighted ROE was 5.82%, -0.05 pct year on year; Q3 revenue was 4.08 billion yuan, -13% year over year, and net profit was 1.67 billion yuan, -16% year over year.
Analytical judgment:
Investment bank revenue declined significantly, and capital business increased by 10%
Judging from the revenue growth rate, the investment banking business revenue fell the most, at 32%. Brokerage, asset management business, and equity investment fell 14%, 13%, and 9% respectively, while capital business (securities investment income+net interest income) bucked the trend and increased by 10%.
Judging from the incremental revenue contribution, brokerage and investment banks contributed 190% and 95% of the revenue decline respectively, while equity investment and asset management contributed 33% and 23% of the revenue decline, respectively. Net interest income and the increase in income from securities investment business hedged a sharp decline in income.
Looking at the revenue structure, brokerage and capital businesses accounted for the highest net income, at 32% and 44% respectively; equity investment and investment banking revenue accounted for 8% and 5% respectively; and asset management and other businesses accounted for 4% and 6% of revenue, respectively.
Net income from brokerage business was -14% year-on-year due to a contraction in market trading
The average daily trading volume of the entire market in the first three quarters was 1,07.6 billion yuan, -4% over the same period last year. The company's brokerage business net revenue for the reporting period was 4.28 billion yuan, -14% over the same period last year. According to the 23rd Interim Report, the market share of the company's stock trading volume rose to 5.24% in the first half of the year, a record high.
Net income from asset management business was -13% year on year, and net income from asset management business was 550 million yuan, -13% year on year, and the size of equity funds of joint venture funds fell by more than 10% year on year. According to Wind data, the size of biased equity funds at the end of the third quarter of the joint venture Bosch Fund/China Merchants Fund was 1222/193.5 billion yuan, respectively, -12%/-17% year-on-year.
Net income from the investment banking business was -32% year-on-year, and the market share of IPOs and bond financing declined year-on-year. Net income from the investment banking business was 750 million yuan, -32% year-on-year. In the first three quarters, the IPO financing balance was 3.43 billion yuan, with a market share of 1.05%, year-on-year -1.17pct; the core bond financing balance was 126.3 billion yuan, a market share of 2.71%, year-on-year -0.62 pct; and the refinancing scale was 7.2 billion yuan, with a market share of 2.23%, +0.35pct year-on-year.
Net interest income increased sharply, and income from securities investment increased slightly
Net interest income was 1.31 billion yuan, +45% year-on-year; the average daily balance of Liangfinance in the reporting period was 1.59 trillion yuan, -3% year-on-year.
Securities investment income increased slightly. Securities investment income was 4.72 billion yuan, +3% year-on-year; the financial asset investment scale at the end of the reporting period was 336.3 billion yuan, +11% year-on-year, and the yield was 1.48%, the same as the previous year.
Investment advice
Since the market recovery situation was lower than expected at the beginning of the year, we lowered our assumptions related to the market environment and lowered the 23-25 operating income from 248.79.79/288.49/328.88 billion yuan to 193.26/ 221.38/ 25.644 billion yuan. Accordingly, the company's EPS was lowered from 1.21/1.40/1.59 yuan to 0.93/1.09/1.35 yuan. Corresponding to the closing price of 14.10 yuan/share on October 27, 2023, PE was 15.09/12.91/10.47 times, respectively.
We are optimistic about the company's wealth management business based on its strong group background and brand advantage, and maintain the company's “increase in holdings” rating.
Risk warning
The stock and bond market fluctuated greatly, earnings from proprietary investments declined; market transactions shrank; management fees increased dramatically due to competition for industry talents.