Overall performance was steady, with a marked recovery in the fourth quarter. According to the company's performance report, China Merchants Securities achieved total operating income of 19.79 billion yuan in 2023, +3.00% year-on-year; net profit to mother was 8.74 billion yuan, +8.35% year-on-year after adjustment. 23Q4 revenue and net profit to mother were RMB 4.9 billion and RMB 2.3 billion respectively, +25.6%/+30.7% YoY, while 2023Q1-Q4's net profit to mother for the single quarter was 23/25/17/2.3 billion yuan, respectively, +51.7%/-11.8%/-15.9%/+30.7% YoY.
Leverage increased slightly from month to month to month to help expand the table. As of the end of '23, total assets were $696.4 billion, +13.85% YoY, and net assets attributable to mother were $121.94 billion, +5.87% YoY.
Pan-wealth management has developed steadily, and investment banks have rebounded slightly. 1. Q4's IPO underwriting scale was 3.6 billion yuan, ranking second in the industry: according to Wind's release date data, the total market equity financing amount in '23 was 1064.1 billion yuan, -35% year-on-year, of which IPO was -31% YoY, refinancing -36%; and bond underwriting was 13.4 trillion yuan, +28% YoY. The underwriting scale of China Merchants Securities's IPO in '23 was -30% year-on-year, and bond underwriting was +18% year-on-year. 2. Pan-wealth management is relatively stable: According to Wind, the average daily transaction volume of the entire market in '23 was -5%, and the average daily transaction volume in Q4 was -0.4% YoY. In '23, NEDAF was 984.9 billion shares, -17% YoY, and Q4 was +4% YoY. The investment brokerage business was -14% year-on-year in the first three quarters. The net value of public funds in the 23Q4 market was 27.3 trillion yuan, +6% year-on-year, +0.3% quarter-on-quarter, and -13% year-on-year in the first three quarters of the China Merchants Asset Management business. 3. The bond market picked up year-on-year in the fourth quarter.
According to Wind, the 23Q4 total market balance was 1650.9 billion yuan, +7% year-on-year and +3.8% quarter-on-quarter. Net income from China Merchants Interest was +45% year-on-year in the first three quarters.
Profit prediction and investment advice: A large comprehensive brokerage firm with deep shareholder resources. The asset-light business is resilient, and short-term fluctuations do not change resource accumulation and leading endowments. The company is accelerating the transformation of non-directional investment, and the advantages of institutionalization are expected to become more prominent. The company's net assets are expected to be 13.35 yuan and 14.64 yuan per share in 2024-2025. The valuation center of 1.1X-2.0XPB in the past five years gave the company a 24-year valuation of 1.40xPb. The reasonable value of A shares was 18.70 yuan/share. Considering the A/H share premium, H shares were given HK$8.05 per share, maintaining the “buy” ratings for A and H shares. (Press HKDCNY=0.94)
Risk warning: Decreased trading activity, falling short of expectations in proprietary business development, industry regulation and policy changes, increased industry competition, etc.