The market share of brokerage and finance has continued to increase, and the “fantasy” model has been integrated into the product ecosystem in an orderly manner. The company's total revenue/net profit to mother in 2023 was 11.08/8.19 billion yuan, -11%/-4% over the same period last year, which is basically in line with our expectations. Fund consignment revenue and securities side revenue were under year-on-year pressure, and the year-on-year increase in proprietary investment income supported performance.
Considering the downturn in partial equity funds, we revised the company's 2024-2025 net profit forecast to 91/10.8 billion yuan (adjusted to 99/119) and added the 2026 profit forecast of 12.5 billion yuan, corresponding EPS of 0.6/0.7/0.8 yuan. The current stock price corresponds to 2024-2026 PE23.7/20.1/17.4 times. On February 26, the company announced the cancellation of the previous 1 billion repurchased shares (0.45% of the total share capital), which is beneficial to increasing earnings per share and demonstrating the company's confidence in development and recognition of its own value. The company announced the 2024 restricted equity incentive plan, awarding 871 people 40 million shares (0.25% of total share capital) at 13.75 yuan. The average annual net profit growth rate of nearly 10% was in line with the current market environment and the company's steady growth confidence in the three vesting periods. The market share of the company's securities business continues to rise. It focuses on the beta catalysis of the stock market and funds, fully benefiting from the increase in retail customer trading activity and maintaining a “buy” rating.
Affected by fund market beta and fee cuts, fund consignment revenue was under pressure on fund sales revenue of 3.63 billion yuan in 2023, -16.2% year over year. Both redemption fees and end commission income are expected to decline year on year. In 2023, the company's non-cargo sales volume was 908.5 billion yuan, -24% year on year. We estimate that the market share of non-cargo base sales reached 6.7%, compared to -2.1pct in 2022. The company's average daily partial share holdings were -7.6% year over year, compounded by a drop in management fees. End commission revenue is expected to decline year on year. At the end of 2023, Tiantian Fund's partial share/non-commodity share was 4029/549.6 billion yuan, and the share of partial share/non-commodity shares was 5.94%/3.37%, respectively, down 0.29/0.39pct from 6.23%/3.75% in early 2023. After deducting the impact of ETFs and disruptions in direct sales channels, it is estimated that Tiantian Fund's partial share holdings increased in the top 100 consignment sales.
The market share of brokerage and finance has further increased, and the “Wonderful Vision” financial model is being integrated into the product ecosystem in an orderly manner (1) The net revenue of the company's securities brokerage in 2023 was 4.29 billion yuan, -10% year-on-year, 4.01% of share base turnover, +0.12pct compared to 2022; the average daily share base turnover of the entire market was 0.99 trillion yuan, -2.9% YoY, and 21.44 million new accounts were opened, -17% YoY. We estimate that the company's net commission rate (after deducting consignment revenue) was -11% year-on-year. Commission rates declined across the industry due to increased competition. (2) Net interest income of 2.23 billion yuan, -9% YoY, with a market share of 2.84% (excluding margin trading), +0.38pct compared to the beginning of 2023. (3) Proprietary investment income of 2.23 billion yuan, +100% year over year, annualized return on investment 3.2%, +1pct year over year. Financial investment assets at the end of the period were 73.1 billion yuan (mainly bonds), +15% year-on-year. (4) Sales, management and R&D expenses of 4.7/23.2/1.08 billion yuan, -11%/+6%/+15% year-on-year. The three types of expenses accounted for 35% of revenue, an increase of 6 pcts over 2022. (5) The company strengthens R&D capabilities, focuses on strengthening AI capacity building, and actively explores the application of big models in various financial scenarios. In January 2024, the company's self-developed “Miaoxiang” financial model officially began closed testing. The “Miaoxiang” financial model focuses on core financial scenarios and continuously optimizes financial vertical capabilities, and is being integrated into the company's product ecosystem in an orderly manner.
Risk warning: risk of market fluctuations; uncertainty about fund channel fee reduction policies; market share growth falls short of expectations.