Event: The company recently released its 23Q3 quarterly report. 23Q1-3 achieved operating income of 1,298 million yuan, an increase of 8.66% over the previous year; net profit of 460 million yuan, an increase of 2.25% over the previous year. Among them, 23Q3 achieved operating income of 448 million yuan, an increase of 2.71% over the previous year, and net profit of 185 million yuan, a year-on-year decrease of 11.09%.

The flexibility of self-operated business has been unleashed, and competitiveness has been highlighted. The 23Q1-3 self-operated business increased 119.92% year over year to 714 million yuan, and the share of revenue increased by 29.99pct to 55.00%, which is the main driver of performance growth. Among them, net investment income, investment income of joint ventures, and net income from changes in fair value were 5.99 million, 0.30 million yuan, and 145 million yuan respectively. Business elasticity mainly comes from turning losses into profits from changes in fair value. The company focuses on fixed income investment transactions. The investment and research team is rich in experience and the product range is becoming more and more perfect. The fixed income business will continue to support performance growth in the future.

Investment banking and brokerage businesses were under pressure in the short term, and market share increased year over year. 1) Investment banks: The company's 23Q1-3 investment banking business revenue was 66 million yuan, a year-on-year decrease of 11.73%, accounting for 5.09% of revenue, a decrease of 0.68 pct. It is expected that the return on projects will mainly decrease. The growth rate of corporate underwriting is impressive. According to Wind data, as of 23-11-3, the total underwriting amount of corporate bonds increased by 79.72% year on year to 48.124 billion yuan, the market share increased by 0.13pct to 0.42%, and the ranking rose 5 places to 33rd place. 2) Brokerage: 23Q1-3 brokerage business revenue was 167 million yuan, down 1.53% year on year, accounting for 12.88 revenue, down 0.20 pct. In comparison, the market fluctuated at a low level in '23. The average daily stock base turnover for 23Q1-3 was 106 billion yuan, down 4% from the previous year. The company's market share is expected to increase.

Asset management is limited, and resilience remains. The company's 23Q1-3 asset management business achieved revenue of 368 million yuan, a year-on-year decrease of 28.11%, accounting for 28.34% of revenue, a decrease of 11.09pct. Mainly due to market fluctuations, investors' risk appetite has declined, and the scale of asset management has been reduced. According to data from the China Foundation Association, the average monthly scale of 23Q3TOP20 brokerage asset management was 4185.785 billion yuan, a year-on-year decrease of 26.92%. The decline in company revenue is in sync with the contraction of the TOP20 brokerage asset management scale, and is still at the middle level of the industry.

Profit forecast and investment suggestions: The company's self-operated business advantages are showing, but the overall popularity of the market still needs to be increased. We adjusted the company's net profit from 2023-2025 to 20.85, 23.61, and 2,679 billion yuan respectively, with year-on-year growth rates of 31.30%, 13.27%, and 13.46%, respectively. The EPS is 0.28, 0.34, and 0.40 yuan/share, respectively, and the corresponding PE is 77.48x, maintaining the “increase in holdings” rating.

Risk warning: Self-operated business performance falls short of expectations, asset management business scale expansion falls short of expectations, and regulatory policies are tightened