The company disclosed its 2023 three-quarter report: In the first three quarters of 2023, the company achieved total operating revenue of 10.575 billion yuan, a year-on-year decrease of 1.24%. Achieved net profit of 2,060 billion yuan, an increase of 5.59% over the previous year. As of 2023Q3, the company's total assets were 185.309 billion yuan, up 6.93% from the beginning of the year. The asset growth was mainly due to the increase in fixed assets from 1,2007 billion yuan at the end of 2022 to 7.587 billion yuan at the end of 2023Q3, mainly an increase in the scale of investment in the new energy business. The company continued to accelerate green business transformation around the relevant deployment of the Guangdong Provincial Government. The balance ratio at the end of the period remained stable at 78%.

Let's take a look at the main business structure. (1) Interest income for the first three quarters of 2023 (RMB 3,644 billion, accounting for 34% of total operating income) decreased 9% year-on-year, mainly including interest income from financial leases and interest income from non-performing asset management. Domestic liquidity optimization since 2022 may reduce the return on financial leasing and non-performing asset management. However, economic fluctuations in 2023 constrained downstream financial leasing demand. As the economy stabilizes, it may release downstream demand while boosting the level of return on assets. Furthermore, the company seizes opportunities and lays out new energy business, which is conducive to asset expansion. (2) Benefiting from investment in the new energy business, fixed assets increased sharply year on year. Relevant revenue for the first three quarters of 2023 (749 million yuan, accounting for 7% of total operating income) was driven by electricity revenue from new energy businesses and a low base of bad asset management business, which increased 258.36% year over year. (3) The remaining revenue (5.616 billion yuan accounts for 53% of total operating income), in addition to handling fee income related to financial leasing, was contributed by futures-related businesses. Other businesses in the first three quarters of 2023 were 5.616 billion yuan, a year-on-year decrease of 6%, offset by other business costs (yoy -6%).

Investment returns continue to grow. Q1-3 in '23 achieved investment income of 2,154 billion yuan, yoy +15%.

As of 2023H1 held 1,287 billion shares of CITIC, accounting for 8.68%, up 0.54 pcts from the beginning of the year. Benefiting from capital market reforms and good development, CITIC is expected to continue to contribute to performance flexibility.

Profit forecasting and investment advice. Affected by lower interest rates and lower interest income, the 2023 revenue forecast was lowered appropriately. It is estimated that net profit to mother will be 2.74 billion yuan in 2023, an increase of 9% over the previous year; corresponding to an ROE of 9.5%, an estimated EPS of 0.55 yuan in 2023. Maintain the company's 2023E PE valuation at 15x, with a reasonable value of 8.2 yuan per share. Maintain an “Overweight” rating.

Risk warning: Regional reform and construction progress is falling short of expectations, subsidiary operations falling short of expectations, etc.