Investment in TA_S:m:m to a] The company expects debt to return, and net profit for the first three quarters of 2023 is +28% year-on-year. The company's capital-light business has consolidated its foundation, optimized the layout of its capital-heavy business, and continuously enhanced its ability to serve the real economy. The reasonable value range is 17.68-19.15 yuan/share, maintaining the “superior to the market” rating.
[Event] Everbright Securities released its 2023 three-quarter report: the first three quarters of 2023 achieved operating income of 7.76 billion yuan, -13.1% year-on-year; net profit of 4.36 billion yuan, +28.0%; corresponding to EPS of 0.88 yuan, ROE 7.2%, +1.4 pct year-on-year.
Company brokerage/investment banking/asset management/interest/self-employment income accounted for 28%/10%/9%/17%/25% of operating income, respectively. The third quarter achieved revenue of 1.58 billion yuan, or -55.6% year-on-year. Net profit of the mother was 1.97 billion yuan, +51.4% over the same period last year. The sharp increase in net profit in the first three quarters and the third quarter was mainly due to the fact that the company's subsidiary Everbright Capital signed execution settlement agreements with China Merchants Bank and Shanghai Huarui Bank in the third quarter, and the company reverted to an estimated debt of 2.15 billion yuan.
Strengthen the construction of a wealth management customer service ecosystem, and accelerate the transformation of wealth management. Brokerage revenue for the first three quarters of 2023 was 2.20 billion yuan, -16.2% year-on-year, accounting for 28.3% of operating income. The brokerage business in the third quarter was 770 million yuan, -22.1% year-on-year, accounting for 45.3% of operating income. The average daily stock base trading volume of the entire market in the first three quarters of 2023 was 973.9 billion yuan, -5.2% over the same period last year. The total market balance of the two loans was 15909 billion yuan, up 3.4% from the beginning of the year. The company's retail business adheres to the development strategy of “wealth+institution+collaboration”. As of the end of June 2023, the total number of customers of the company was 5.66 million, an increase of 5% over the end of the previous year; total customer assets were 1.3 trillion yuan, an increase of 2% over the end of the previous year.
The investment banking business serves the real economy and focuses on emerging strategic industries. Investment banking revenue for the third quarter of 2023 was 760 million yuan, -26.1% year-on-year. Investment banking revenue for the third quarter was 140 million yuan, or -33.8% over the same period last year. The underwriting scale of equity business is -71.7% year on year, and the underwriting scale of bond business is +4.7% year on year. In the first three quarters, the equity principal underwriting scale was 5.5 billion yuan, ranking 15th; of these, 7 were IPOs, with a capital raising scale of 4.5 billion yuan; and 3 additional financing companies, with an underwriting scale of 1 billion yuan. The main underwriting scale of bonds in the first three quarters was 298.4 billion yuan, ranking 7th; of these, the underwriting scale of local government bonds, financial bonds, and medium-term notes was 127.7 billion yuan, 58.2 billion yuan, and 32.4 billion yuan respectively. There are 4 IPO reserve projects, ranking 23rd, including 3 main boards and 1 GEM in the two markets. The company's equity financing business implements the responsibilities of central enterprises, serves the real economy, and actively expands “specialized, special and new” enterprises; debt financing has promoted the underwriting and issuance of a number of characteristic bonds represented by green bonds, rural revitalization bonds, and science and technology innovation bonds.
The asset management business adheres to the customer as the center and enhances active management capabilities. Asset management revenue for the first three quarters of 2023 was 690 million yuan, -43.3% year-on-year. Asset management revenue for the third quarter was 220 million yuan, -61.3% year-on-year. Guangzheng Asset Management is steadily advancing the application process for a public offering license. The application materials for the qualification of public fund managers have been officially accepted by the Securities Regulatory Commission.
Under a low base, the year-on-year growth rate of self-employment in the first three quarters was high. Investment income for the first three quarters of 2023 (including fair value) was 1.93 billion yuan, +87.6% year-on-year; net investment loss (including fair value) for the third quarter was 220 million yuan, which turned profit into loss over the previous year. Both equity and fixed income performance improved sharply year-on-year in the first half of 2023. In terms of equity, it mainly benefited from effective control of directional exposure and the good performance of low-wave dividend assets laid out in the previous period; in terms of fixed income, the position structure was optimized under the premise of strict risk control. As of the end of June, the company's holdings included general communication bonds, interest rate bonds, etc., and credit bonds were mainly bonds issued by high quality entities, and credit risk was manageable.
Investment suggestions: We expect the company's net profit per share for 2023-2025E to be 1.03, 0.68, and 0.85 yuan, respectively, and net assets per share of 14.73, 15.39, and 16.23 yuan, respectively. We gave it 1.2-1.3 xP/B for 2023, corresponding to the reasonable value range of 17.68-19.15 yuan, maintaining the “superior to the market” rating.
Risk warning: Trading volume continues to decline, and investment returns continue to decline due to increased volatility in the equity market.