Incidents:
CITIC Securities released its annual report for 2023. In 2023, it achieved a total operating income of 60.68 billion yuan, a year-on-year decrease of 7.74%; realized net profit to mother of 19.721 billion yuan, a year-on-year decrease of 7.49%. The fourth quarter of 2023 achieved operating income of 14.261 billion yuan, a year-on-year decrease of 6.71%, and realized net profit to mother of 3.307 billion yuan, a year-on-year decrease of 30.39%. The company's basic EPS in 2023 was 1.33 yuan; the weighted average ROE was 7.81%, down 0.86pct from 2022; the financial leverage ratio was 4.52 times, up 0.32 times from last year. The share of broker/investment banking/asset management/credit/own/other business revenue in 2023 was 17.02%/10.48%/16.4%/6.71%/36.37%/13.02% of total revenue.
Comment: The investment banking business has declined in revenue due to the contraction in the scale of equity financing in the market, but the scale of equity underwriting still ranks first in the market. The total volume of A-share IPOs issued in 2023 was 356.539 billion yuan, down 39.26% year on year, and the refinancing scale was 777.891 billion yuan, down 29.26% year on year. Affected by market contraction, the company's investment banking business revenue in 2023 was 6.293 billion yuan, down 27.28% year on year.
In 2023, the company completed a total of 140 A-share underwriting projects, with a main underwriting scale of 277.913 billion yuan, with a market share of 24.5%, ranking first in the market. Among them, the IPO and refinancing underwriting scales were 50,033 billion yuan and 227.88 billion yuan respectively, with a market share ratio of 14.03%/29.29% respectively, ranking first in the market. The company's debt underwriting scale in 2023 was 1909.92 billion yuan, an increase of 21.01% over the previous year, accounting for 14.14% of the total underwriting scale of securities companies, ranking first in the industry.
Proprietary business revenue increased, partially offsetting the decline in performance brought about by other businesses. In 2023, the company achieved revenue of 21,846 billion yuan from its own business, an increase of 23.87% over the previous year, partially offsetting the impact of the decline in revenue from other businesses. Among them, investment income was 18.914 billion yuan, a year-on-year decrease of 40.84%, but income from changes in fair value was 3,574 billion yuan, an increase of 17.234 billion yuan over 2022, which led to an increase in the company's own business revenue.
Revenue from brokerage, asset management and credit businesses is under pressure. (1) The average daily stock base transaction volume in the 2023 market was 991.7 billion yuan, down 3.1% year on year. Affected by this, the company's securities brokerage business revenue in 2023 fell 13.86% year on year, driving the company's brokerage business revenue down 8.47% to 10.223 billion yuan. (2) In 2023, the company's asset management business achieved revenue of 9.849 billion yuan, a year-on-year decrease of 9.98%. The main reason was that the company's asset management scale fell 17.99% year on year to 1388.461 billion yuan in 2023.
(3) In 2023, the company achieved net interest income of 4,029 billion yuan, a year-on-year decrease of 30.6%. The reason for the change was an increase in interest expenses on sales and repurchase and interest expenses payable on short-term financing notes.
Investment advice: As a leading company in the securities industry, the company has strong competitive advantages in its main business, and ranks first in the industry in many business indicators. Due to low market activity in 2023, and the company's investment banking business was greatly affected by the contraction in the IPO pace, the 2024-2025 net profit forecast was lowered to 227.61 billion yuan, 25.607 billion yuan, and a forecast value of 28.552 billion yuan was introduced to maintain the “buy” rating.
Risk warning: The company's performance falls short of expectations, regulatory policies have changed, and the epidemic has been repeatedly affected.