2023 results are in line with market expectations
The company's revenue in 2023 was -7.7% YoY to 60.1 billion yuan, net profit to mother -7.5% YoY to 19.7 billion yuan, and annualized ROAE (Company Caliber) -0.86ppt to 7.8% yoy, in line with previous rapid reports and in line with market expectations; of these, 4Q net profit to mother was -30% YoY /-35% YoY. Total assets maintained double-digit growth at the end of the period (+11%), and the leverage ratio of own assets was +0.29x/month-on-month +0.06x to 4.35x.
In addition, the company announced plans to distribute a cash dividend of 7 billion yuan, accounting for 35.7% of the current profit.
Development trends
Wealth management and institutional brokerage business performed steadily. 1) Net revenue from brokerage business in 2023 was -8% year-on-year to 10.2 billion yuan, of which: net revenue from transaction unit seat leasing was +14% to 1.5 billion yuan, accounting for +2.9ppt to 14% of brokerage business; revenue from consignment financial products was +1% to 1.7 billion yuan, accounting for +1.5ppt to 17% of brokerage business, and +10% to 190.2 billion yuan at the end of the period. The company has 14.2 million retail customers, +4% of its assets over the same period to 1 billion yuan, and is also active in the dropshipping business for overseas high-net-worth customers. 2) Net interest income was -31% to $4 billion (interest income +3% /interest expense +16%), of which: interest income of the two loans was -5% YoY, +11% YoY to 118.7 billion yuan, market share +0.2ppt to 7.2%, and interest income from other debt investments and purchases and resales (mainly stock pledges) +38%/+15% YoY.
The share of investment banking business increased, the scale of brokerage asset management declined slightly, and the scale of public offering continued to grow. 1) Investment banking revenue in 2023 was -27% to 6.3 billion yuan, of which domestic stock underwriting was -26% to 277.9 billion yuan, share +2.2ppt to 24.5%, bond underwriting +21% to 1.9 trillion yuan, and share +0.53 ppt to 6.85%, all ranking first in the market. 2) Asset management business revenue -10% to 9.8 billion yuan, securities asset management scale -18% to 1.39 trillion yuan, market share -2.4ppt to 13.7%, of which the pooled asset management scale was -41% to 297.7 billion yuan; in terms of public funding, Huaxia Fund's public offering scale was +16% to 1.32 trillion yuan, and net profit was -7% to 2.01 billion yuan YoY.
Investment business contributed to growth, and international business expanded against the market. Comprehensive investment income in 2023 was +20% YoY to $23 billion, with year-end transactional financial assets +18% YoY to 625 billion yuan, and corresponding return on investment +0.4ppt to 3.9%, of which, stocks (+17% YoY): bonds (+26%): funds (+4% YoY): Others = 35%: 8%: 22%. In terms of private equity, the net profit of Jinshi Investment and CITIC Securities was +81%/-3.3% year-on-year to $11.14 billion, respectively. In terms of international business, CITIC International's profit was +97% year-on-year to US$250 million, and performance increased against the market.
Profit forecasting and valuation
Based on recent activity in various businesses in the market, profit for 2024/25 was reduced by 11%/11% to 219.25.4 billion yuan. The current stock price of A shares corresponds to 1.1/1.0x P/B in 2024/25 (excluding perpetual bonds), and the share price of H shares corresponds to 0.7/0.6x P/B in 2024/25 (excluding perpetual bonds); maintaining the A/H performance industry rating, maintaining the target price of A shares of 26 yuan, corresponding to 2024e 1.45x P/B (excluding perpetual bonds), which has 33% upside compared to the current price; the target price for H shares was lowered by 12% to HK$18.2, corresponding to 2024e P/B (excluding perpetual bonds), up 0.9% from the current 38% Row space.
risks
Trade volume shrinks, markets fluctuate greatly, and regulatory uncertainty.