In the first three quarters of 2023, First Venture achieved operating income of 1.91 billion yuan, the same as the previous year; net profit of the mother was 330 million yuan, down 3.7% from the previous year; and the diluted ROE was 2.22%, down 0.12 percentage points from the previous year. Looking at a single quarter, the revenue of all types of 2023Q3 businesses recorded a month-on-month decline, while the brokerage business and asset management business performed relatively stable in a single quarter. The public subsidiaries Chuangjin Hexin Fund and Yinhua Fund are still supported by the company's important performance. The total profit contribution ratio for the first half of 2023 is about 50%, the same as the same period last year. The first venture has a full fixed income business chain and continues to build a “fixed income +” asset management system, which is expected to form a differentiated competitive advantage.

2023Q3's performance declined sharply month-on-month, with net profit of $12 million per quarter. In the first three quarters of 2023, First Venture achieved operating income of 1,913 million yuan, the same year on year; net profit of 328 million yuan, down 3.67% year on year; current EPS was 0.08 yuan/share, the same as the same period last year; and diluted ROE was 2.22%, down 0.12 percentage points year on year. BVPS vested in common shareholders at the end of the period was $3.52, up 1.44% from the beginning of the year. Looking at a single quarter, 2023Q3's performance declined significantly month-on-month. The revenue for the 2023Q1/Q2/Q3 quarter was 692 million/753 million yuan/467 million yuan, respectively, and net profit for the single quarter was 141 million/175 million/012 million yuan, respectively. All revenue recorded negative month-on-month growth.

Asset management business: The scale of brokerage asset management has reached an inflection point, and the profit contribution ratio of fund subsidiaries is about 50%.

In the first three quarters of 2023, the company achieved net revenue from asset management business fees of 698 million yuan, a year-on-year decrease of 6.10%.

Q3 The net revenue of asset management business in Q3 was 227 million yuan in a single quarter, down 5.97% from the previous month. In 2023, the company's asset management scale reached an inflection point: as of the end of 2023H1, the company's brokerage asset management scale was 65.6 billion yuan, an increase of 19% over the beginning of the year, and ushered in a recovery after five consecutive years of year-on-year decline in 2018-2022.

In terms of fund management business, as of the end of 2023H1, the asset management scale of the holding subsidiary Chuangjin Hexin Fund was 896 billion yuan, an increase of 7% from the beginning of the year, of which the public fund management scale was 107.2 billion yuan, an increase of 24% from the beginning of the year; the management scale of the shareholding subsidiary Yinhua Fund was 553.3 billion yuan, up 8% from the beginning of the year. 2023H1, Chuangjin Hexin Fund and Yinhua Fund achieved net profit of 126 million yuan and 351 million yuan respectively, up 51% and 13% year-on-year respectively. The total profit contribution ratio reached 49%, and the profit contribution ratio was basically the same as the same period last year.

Investment & investment business: The decline in investment income accelerated month-on-month, and the decline in the size of investment banks' equity lines lowered revenue.

In the first three quarters of 2023, the company's net investment income+fair value change income excluding joint ventures was 430 million yuan, an increase of 127% over the previous year. On a quarterly basis, the total investment income of 2023Q1/Q2/Q3 was 209 million, 194 million and 27 million yuan respectively. The total investment income of 2023Q2/Q3 companies continued to decline 7% and 86% month-on-month, and the pace of decline in Q3 increased significantly, mainly due to changes in fair value and loss of 77 million yuan. Looking at the scale of investment, as of the end of 2023Q3, the company's investment assets had expanded. The financial investment scale was 26.2 billion yuan, an increase of 18% over the beginning of the year. From a risk perspective, the company's main risk exposure is investment in bonds, and the overall exposure is low:

As of the end of 2023H1, the investment scale of corporate bonds was 20.4 billion yuan, accounting for 82% of the financial investment scale; self-operated equity and fixed income securities accounted for 7.82% and 264.52% of net capital respectively, both below the weighted average of 16.64% and 266.86% of comparable companies.

In terms of investment banking business, in the first three quarters of 2023, the company achieved net income from investment banking business of 153 million yuan, a year-on-year decrease of 18.28%. On a quarterly basis, the net income of investment banks in 2023Q1/Q2/Q3 was 46 million/75 million/032 million yuan, respectively. In terms of business scale, according to Wind's issuance day statistics, the company's equity underwriting scale for the first three quarters was 2.7 billion yuan, compared to 6.7 billion yuan for the same period last year; the bond underwriting scale was 121 billion yuan, compared to 8.3 billion yuan for the same period last year.

Brokerage & Credit Business: The brokerage business performed steadily in a single quarter, and the credit business was small in scale and risk manageable.

In terms of brokerage business, in the first three quarters of 2023, the company achieved net brokerage revenue of 267 million yuan, a year-on-year decrease of 9.53%. On a quarterly basis, net income from brokerage fees in the first three quarters was 88/92 million/88 million yuan, respectively. Q3 fell 4.40% month-on-month, mainly due to a decline in market trading activity in the third quarter. Considering that the average daily turnover of A-shares in the third quarter fell by 20.68% month-on-month, the company's brokerage business performed smoothly when market trading was cold.

In terms of credit business, in the first three quarters of 2023, the company achieved net interest income of 89 million yuan, a year-on-year decrease of 47.06%. On a quarterly basis, 2023Q1/Q2/Q3 net interest income was 28 million/40 million/021 million yuan respectively. Fluctuations were mainly due to interest expenses. Judging from the risk level, the overall scale of the company's credit business is small and the risk is relatively manageable: as of the end of H1 2023, the balance of the company's securities financing business was 6.084 billion yuan, up 3.26% from the beginning of the year; the average maintenance guarantee ratio was 286.36%, higher than the industry average.

Risk factors: The development of the public fund business fell short of expectations; the company lost its investment; the turnover of A shares fell sharply; the risk of the company's credit business was exposed; and the development of the wealth management market fell short of expectations.

Profit forecast: Considering factors such as the gradual implementation of active capital market policies and fund fee reduction reforms, we maintained First Venture 2023, adjusted the 2024 EPS forecast to 0.17/0.18 yuan (the original forecast for 2024 EPS was 0.20 yuan), added the 2025 EPS forecast to 0.19 yuan; adjusted the 2023/2024 BVPS forecast to 3.61/3.77 yuan (the original forecast for 2023/2024 BVPS was 3.66/3.82 yuan), and added The 2025 BVPS forecast is 3.92 yuan. The first venture has a full fixed income business chain and continues to build a “fixed income +” asset management system. It is expected to develop its own brand characteristics and form a differentiated competitive advantage. The current PB of First Venture is 1.8 times, which is significantly higher than the PB average of the four comparable companies Great Wall Securities, Caitong Securities, Nanjing Securities, and Shanxi Securities. It is mainly due to the company's outstanding share of profit in asset management business and distinct FICC business characteristics.