Incidents:
The company disclosed its 2023 annual report, achieving full year operating income of 2,813 billion yuan (+46% year over year), net profit to mother of 1,082 million yuan (+29% year over year), EPS of 0.2117 yuan (+0.14% year over year), and a weighted average ROE of 6.51% (-0.20pct year over year).
Follow the new regulatory classification guidelines and actively promote the transformation of trust business.
The company achieved net revenue of 1.54 billion yuan in handling fees and commissions in 2023, +12% over the same period; 618 new trust projects were added, and the project scale was 488.6 billion yuan. By the end of 2023, the company's trust assets reached 531.8 billion yuan, +88% compared to the beginning of the year; among them, the property rights category was +321% to 267.3 billion yuan compared to the beginning of the year, accounting for +28pct to 50% of the comparison at the beginning of the year. In the context of the new classification of trust business, the company has accelerated the transformation of asset management trusts, and the scale of standard asset management trusts has exceeded 100 billion yuan; expanded asset service trusts, focusing on accounts receivable from state-owned enterprises, etc., to develop property rights service trusts exceeding 200 billion yuan.
Interest income has led to a high increase in investment income, and the efficiency of using own funds has been steadily improving.
The company achieved investment income plus fair value change income of 640 million yuan in 2023 (same period last year: -50 million yuan), mainly due to a significant increase in interest income earned during the holding period due to debt investments. By the end of 2023, the company's own assets reached 20.4 billion yuan, +4% compared to the beginning of the year. The company deepens cooperation with credit insurance funds, financial peers, and private equity managers to enhance the efficiency of the use of its own funds and the ability to benefit from investment. It is expected to strengthen the performance contribution and risk control of the inherent business.
Investment advice: Maintain a buy-A investment rating.
We believe that the company achieved contrarian growth in performance during the period under pressure from industry changes, highlighting the results of its transformation and innovation. Looking ahead, the company relies on the Shaanxi Provincial State-owned Assets Administration Commission, grasps outstanding capabilities for high-quality projects in the province, actively explores business transformation and development, adheres to inherit+trust two-wheel drive development, and has certain growth and competitive advantages. We expect the company's EPS from 2024 to 2026 to be 0.24 yuan, 0.27 yuan, and 0.32 yuan, respectively, and 0.95x2024 P/B will be given, corresponding to a 6-month target price of 3.36 yuan.
Risk warning: macroeconomic downturn, regulatory policy changes, trust project defaults, etc.