Handling fee business under pressure, self-support drag Q3 performance into loss
In the first three quarters of 2023, the revenue/net profit of the Company was RMB 88.6/15.8 billion yuan respectively,+22.6%/-11.2% year-on-year respectively, the annualized ROE was 4.0% and-1.5pct year-on-year, the leverage ratio at the end of the period (deducting customer margin) was 3.85 times,+16% compared with the beginning of the year, and the performance was lower than our expectation. Q3 single-quarter revenue/net profit of 1.92/-220 billion yuan respectively, year-on-year-15.7%/loss, month-on-month-30.7%/loss. Considering the overall weakness of the stock market in the third quarter, we lowered the net profit forecast for 2023-2025 to 23.0/41.6/48.4 billion yuan (adjusted to 37.0/45.8/56.4 billion yuan),-13%/+81%/+16% respectively, corresponding EPS of 0.27/0.48/0.56 yuan and ROE of 4.4%/7.6%/8.4% respectively. The company's "wealth management + institutional business" two-wheel linkage and digital intelligence construction strategy promotion, the current share price corresponding to PB is 1.0/1.0/0.9 times respectively, maintain the "buy" rating.
The revenue of brokerage and investment banking business in the third quarter decreased year-on-year due to the influence of the market, and the market share of IPO scale kept increasing (1) The net income of brokerage business of the company in the first three quarters was 1.77 billion yuan,-18.3% year-on-year, 5.4 billion yuan in Q3 single quarter,-27.1% year-on-year and-13.1% month-on-month. The average daily turnover of stock base in the first three quarters was 10060 trillion yuan,-3.5% year-on-year. (2) The net income of investment banking business of the Company in the first three quarters was RMB 780 million yuan,+4.7% year-on-year, and RMB 190 million yuan in Q3 single quarter,-26.2% year-on-year and-11.3% month-on-month. IPO revenue in the first three quarters was RMB 400 million yuan,+58.4% year-on-year, and underwriting scale/odd number was RMB 5.27 billion yuan/6 units respectively,+41.2%/+20.0% year-on-year respectively. IPO underwriting market share in the first three quarters was 1.63%,+0.86pct compared with the same period in 2022. (3) In the first three quarters of 2023, the net income of entrusted asset management business realized by the Company was RMB 110 million yuan respectively,+0.6% year-on-year. Q3 achieved 40 million yuan in a single quarter,+4.7% year-on-year and +8.9% month-on-month.
The net interest income in the third quarter decreased significantly year-on-year, and the self-operated business was dragged down by the fluctuation of the stock market (1) The net interest income in the first three quarters of 2023 was RMB 1.43 billion yuan,+3.7% year-on-year, and RMB 430 million yuan in Q3 single quarter,-27.2% year-on-year and-13.4% month-on-month. At the end of the third quarter, the balance of funds financed by the Company was RMB 29.5 billion yuan, accounting for 1.95% of the market share of the two financing, which was-0.02pct compared with the beginning of the year. (2) The self-operated investment income in the first three quarters of 2023 is RMB 820 million yuan (the loss in the first three quarters of 2022 is RMB 700 million yuan), and the annual return rate of self-operated investment is 2.89%(-1.34% in the first three quarters of 2022). Shanghai and Shenzhen 300 fell 3.98% in the third quarter, Q3 single-quarter self-investment income loss of 420 million yuan, expected to be affected by the weakening of the stock market.
At the end of the first three quarters of 2023, the scale of self-operated financial assets was 86.2 billion yuan,+31% compared with the beginning of the year. (3) The management expenses of the Company in the first three quarters of 2023 were RMB 4.83 billion yuan,+32.7% year-on-year, and the management expenses in Q3 were RMB 1.70 billion yuan,+28.6% year-on-year and +73.1% month-on-month, which is expected to be mainly due to the increase in information technology and labor cost investment of the Company.
Risk hint: stock market volatility brings uncertainty to earnings; wealth management business growth is not as expected.