Key investment points: The company continues to improve its professional capabilities in the investment banking business, and the major investment banking business is growing steadily, maintaining an overwhelming position in the Fujian region. The reasonable value range is 7.50-8.13 yuan/share, maintaining the “superior to the market” rating.
[Event] Results for the first three quarters of 2023: In the first three quarters of 2023, the company achieved operating income of 8.86 billion yuan, +22.6% year-on-year; net profit of 1.58 billion yuan, -11.2% year-on-year; corresponding to EPS of 0.18 yuan and ROE of 3.0%.
The third quarter achieved operating income of 1.92 billion yuan, -15.7% year-on-year; net loss was 210 million yuan, which changed from profit to loss over the previous year.
The increase in expenses in the third quarter affected the company's overall performance. Losses in the third quarter were mainly due to losses in investment business and an increase in management expenses. In the third quarter, the company's management expenses were 1.70 billion yuan, up 28.6% year on year, up 73.1% year on month, and expenses were 88.82%, up 30.60 pct year on year and 53.28 pct month on month.
The company's brokerage business continues to be under pressure, and the pace of strengthening the coordination mechanism of the entire wealth chain is firm. In the first three quarters of 2023, the company achieved brokerage revenue of 1.77 billion yuan, -18.3% year-on-year, accounting for 20.0% of operating income. Brokerage revenue for the third quarter was 540 million yuan, -27.1% year-on-year. In the first three quarters, the average daily stock base trading volume of the entire market was 973.9 billion yuan, -5.2% over the same period last year. The balance of the two loans in the entire market was 1590.9 billion yuan, +3.3% over the beginning of the year. The company deepens the “5+27” business promotion service system and actively promotes business innovation to promote the steady growth of the company's integrated business.
In the first half of 2023, the company had a balance of 28.1 billion yuan, +4.2% over the same period last year.
The scale of bond underwriting has risen sharply, and the scale of business has bucked the trend. In the first three quarters of 2023, the company's investment banking business revenue was 780 million yuan, +4.7% year on year, and investment banking business revenue in the third quarter was 190 million yuan, -26.2% year on year.
The underwriting scale of equity business is -68.2% year on year, and the underwriting scale of bond business is +42.5% year on year. The shareholder underwriting scale was 8.27 billion yuan, ranking 14th; including 6 IPOs, with a capital raising scale of 5.3 billion yuan; and 7 additional financings, with an underwriting scale of 3 billion yuan. The principal underwriting scale of bonds was 137.8 billion yuan, ranking 18th; of these, the underwriting scales of corporate bonds, financial bonds, and ABS were 47.6 billion yuan, 44 billion yuan, and 26 billion yuan respectively. There are 5 IPO reserve projects, ranking 20th, including 1 on the main board of the two markets, 1 on the Beijing Stock Exchange, and 3 on the GEM.
The company continues to explore the transformation and development path of asset management and public offering. The company's asset management business revenue for the first three quarters of 2023 was 110 million yuan, +0.5% year-on-year. Asset management revenue for the third quarter was 0.4 billion yuan, +4.7% year-on-year. Societe Generale Asset Management is continuously strengthening the peer-to-peer financial ecosystem and the construction of internal and external sales channels, focusing on market opportunities and customer needs, building on the “two-wheel linkage” strategy, continuously enriching and improving the company's product line, while at the same time leveraging its own investment and research capabilities and channel advantages to form a series distribution of advantageous products.
In the first half of the year, the self-operated business turned a year-on-year loss into a profit. Investment income (including fair value) was $82 million; loss for the same period last year was $700 million; investment loss for the third quarter (including fair value) was $4.2 billion; loss for the same period last year was $500 million.
[Investment Suggestion] The company's 2023-2025E net profit per share is expected to be 0.29, 0.45, and 0.49 yuan, respectively, and net assets per share of 6.25, 6.62, and 6.98 yuan, respectively. Referring to the valuation levels of comparable companies, we gave them 2023E1.2-1.3x P/B, corresponding to a reasonable value range of 7.50-8.13 yuan/share, maintaining the “superior to the market” rating.
Risk warning: Continued market downturn has led to a decline in business scale, and market supervision has been further strengthened.