In the first three quarters of 2023, Hongta Securities achieved operating income of 876 million yuan, a year-on-year increase of 27.42%; net profit of 215 million yuan, an increase of 747.75%; and a diluted ROE of 0.94%, an increase of 0.83 percentage points over the previous year. Looking at a single quarter, 2023Q3 performance continued the month-on-month downward trend in Q2. Net profit (net loss) for the 2023Q1/Q2/Q3 single quarter was 225 million/70 million/-80 million yuan respectively. Investment business was the main reason for dragging down the company's overall performance. The 2023/2024 BVPS forecast for Hongta Securities was adjusted to 4.85/4.86 yuan (the original forecast for 2023/2024 BVPS was 5.25/5.45 yuan), and the 2025 BVPS forecast was added to 4.88 yuan.

The 2023Q3 performance continued the Q2 month-on-month downward trend, with a net loss of 80 million yuan in a single quarter. In the first three quarters of 2023, Hongta Securities achieved operating income of 876 million yuan, a year-on-year increase of 27.42%; net profit of 215 million yuan, a year-on-year increase of 747.75%; current EPS of 0.05 yuan/share, compared to 0.01 yuan in the same period last year; and a diluted ROE of 0.94%, an increase of 0.83 percentage points over the previous year. BVPS vested in common shareholders at the end of the period was $4.86, up 2.06% from the beginning of the year. Looking at a single quarter, 2023Q3's performance continued the month-on-month downward trend in Q2. The revenue for the 2023Q1/Q2/Q3 quarter was 490 million/290 million/96 million yuan, respectively, and net profit (net loss) for the single quarter was 225 million/70 million/-80 million yuan, respectively.

Self-operated investment business: The increase in the scale of self-operated equity combined with the decline in the market may be the main reason for the month-on-month decline in total investment income. 2023Q1-3, Hongta Securities's net investment income plus fair value variable income was 229 million yuan, an increase of 247% over the previous year. However, total investment income showed a quarterly downward trend. The total investment income for 2023Q1/Q2/Q3 was 316 million, 29 million, and -117 million yuan respectively, dragging down the company's overall performance. The increase in the scale of proprietary equity combined with the decline in the market may be the main reason for the month-on-month decline in total investment income: on the one hand, the rise and fall of the Shanghai and Shenzhen 300 Q1/Q2/Q3 was +4.63%/-5.15%/-5.22%, respectively; on the other hand, the company's proprietary equity securities accounted for 15.61% of net capital, a significant increase of 10.95 percentage points from the beginning of the year.

Brokerage & Credit: In Q3, net income from brokerage business declined slightly month-on-month, and credit business risk was manageable. In terms of brokerage business, the net brokerage business revenue of 2023Q1-3 Hongta Securities was 133 million yuan, a year-on-year decrease of 17.62%. Q3 achieved net brokerage revenue of 43 million yuan in a single quarter, down 6.5% from the previous quarter. According to the company's 2023 semi-annual report, net income from brokerage securities accounts for 84% of net income from brokerage business, which dominates the market. The average daily turnover of 2023Q2/Q3A shares was 1006.6 billion yuan and 798.4 billion yuan respectively. The decline in agency trading revenue due to the decline in market trading activity may be the main reason for the month-on-month decline in net income from brokerage business. In terms of credit business, as of the end of 2023H1, the scale of Liangrong was 1.3 billion yuan, and the stock pledge size was 3.4 billion yuan, all of which were basically the same as at the end of the previous year; the guarantee ratio of Liangfinance was 283%, and the stock pledge performance guarantee ratio was 299%, and credit risk was manageable.

Investment banking & asset management business: The scale of investment banking business has risen sharply, and the profit contribution of publicly funded subsidiaries has declined. In terms of investment banking business, the net income of the investment banking business of 2023Q1-3 Hongta Securities was 27 million yuan, a year-on-year decrease of 48.57%, mainly due to a sharp decline in the scale of equity underwriting business. In Q1-3 of 2023, the company's equity underwriting scale was only 76 million yuan, compared to 1,895 million yuan for the same period last year; the bond underwriting scale was 5.116 billion yuan, compared to 2,900 billion yuan for the same period last year. In terms of asset management business, the net revenue of 2023Q1-3 Hongta Securities's asset management business was $34 million, down 8.47% year on year. The asset management business is mainly carried out through the Shanghai Branch, Hongta Futures, and Hongta Red Earth Fund.

As of the end of 2023H1, the management scale of the Shanghai branch was 54.7 billion yuan, which is basically the same as at the beginning of the year; the total management scale of Hongta Red Earth Fund and its subsidiary Hongta assets was 24.2 billion yuan, up 26.9% from the beginning of the year.

Risk factors: A share turnover has declined sharply, credit business risks are exposed, investment losses have occurred, and compliance risks.

Profit forecast: Hongta Securities has been deeply involved in the land of Yunling for a long time and has continuously strengthened its financial service capabilities in the region; at the same time, the company's network layout covers major economic belts such as Beijing-Tianjin-Hebei and Yangtze River Delta, and can achieve extensive industrial finance and wealth management collaboration with controlling shareholders, and future performance is expected to be repaired. Considering factors such as market trading conditions, IPO and refinancing slowdown, we adjusted Hongta Securities's 2023/2024 EPS forecast to 0.05/0.08 yuan (the original forecast for 2023/2024 EPS was 0.31/0.32 yuan), adding the 2025 EPS forecast to 0.11 yuan; and adjusted Hongta Securities's 2023/2024 BVPS forecast to 4.85/4.86 yuan (the original forecast for 2023/2024 BVPS was 5.25/5.45 yuan), adding 2025 The annual BVPS forecast is 4.88 yuan.