Matters:

Dongfang Wealth issued an announcement. Since August 24, 2023, it has repurchased 0.45% of the shares, used the capital of 1.01 billion yuan, and adjusted the use of the repurchased shares from employee stock ownership plans or equity incentive plans to cancellation and reduction of registered capital.

Commentary:

Respond to calls for investor-centered regulation. The use of this share repurchase to reduce registered capital reflects the company's response to regulatory calls and attaches importance to investor-based regulatory orientation. The company's customer base is mainly individual investors, and the company actively responds to regulatory calls to help enhance the company's brand image.

Increase shareholder returns and increase earnings per share. The cancellation of registered capital helps to increase earnings per share, effectively improve the return on investment of the company's shareholders, and enhance investors' confidence in the company's investment.

Investment advice: The company's long-term value is still on the wealth management circuit. The recovery in market and investor confidence throughout the year is an important driver for the restoration of the company's fundamentals. We maintain the company's net profit forecast, and maintain the company's 2023/2024/2025 EPS forecast of 0.64/0.79/1.00 yuan and BPS of 5.75/6.76/8.04 yuan respectively. The PE corresponding to the current stock price is 21.3/17.3/13.6 times, respectively, and the ROE is 14.38%/15.15%/16.27%, respectively.

We maintain our 2024 performance 28 times PE valuation, corresponding to a target price of 22.1 yuan. Maintain a “Recommended” rating.

Risk warning: Market trading volume declined; risk appetite declined; capital market innovation fell short of expectations; real economy recovery fell short of expectations.