Incident: CITIC Securities released its 2023 Annual Report. In 2023, the company achieved revenue/net profit of 60.68/19.721 billion yuan, -7.74%/-7.49% year-on-year, and a weighted average ROE of 7.81%, a year-on-year decrease of 0.86 percentage points.
Comment:
The cumulative revenue of the company's brokering/investment banking/asset management/ credit/ proprietary business in 2023 was 102.23/62.93/98.49/40.29/21.846 billion yuan, respectively, -8.5%/-27.3%/-10.0%/-30.6%/+23.9%.
The self-operated business contributed to a marked increase in performance throughout the year, and the fee business and credit business were affected by the downturn in the market.
1) In terms of brokerage business, net income from brokerage securities business/ transaction unit seat leasing revenue/consignment financial product business/ net revenue from futures brokerage business in 2023 were 59.39/14.74/16.94/11.16 billion yuan, respectively, -16.7%/+14.4%/+0.6%/+4.6% compared to the same period last year. In terms of wealth management, by the end of 2023, the total number of the company's wealth management clients reached 14.2 million; the asset size of custodian clients remained at the level of RMB 10 trillion, an increase of 4% over the previous year; and the non-monetary market public fund holdings were RMB 190.2 billion, ranking first in the industry. 2) In terms of investment banking business, the main underwriting scale was RMB 50,033 billion, ranking first in the market; there were 106 refinancing projects, with a main underwriting scale of RMB 227.88 billion, with a market share of 29.29%, ranking first in the market; in terms of reserve projects, by the end of 2023, the company had 321 IPO reserve projects, ranking first in the market. The company's 2023 bond underwriting scale was 1.70 trillion yuan, ranking first in the industry. 3) In terms of asset management business, as of the end of 2023, the total asset management scale of the company was 1.39 trillion dollars. The consolidated, single, and special projects were 2977.04, 8417.15, and 249.042 billion yuan, respectively, or -40.9%/-8.0%/-9.5% compared with the same period last year. 4) In terms of credit business, by the end of 2023, the company's financing and securities lending business had raised capital of 115.811 billion yuan, +10.8% from the beginning of the year, with a market share of 7.0%, up slightly from the beginning of the year. The scale of the stock pledge business was 39.392 billion yuan, +34.0% compared to the beginning of the year. The reverse repurchase scale of bond pledges was RMB 23.524 billion, +293.8% 5) In terms of proprietary business, as of the end of 2023, the company's financial investment assets were RMB 715.744 billion, +19.1% compared to the beginning of the year. We expect the overall performance of our proprietary business to be steady throughout the year, mainly due to an increase in the surplus of transactional bonds.
Use of balance sheets: Active use of statements to increase leverage, and there is a marked increase in proprietary investment and bond pledge business. In 2023, the company's total assets were $1.45 trillion, +11.1% compared to the end of the previous year. Excluding the customer capital leverage ratio of 4.43 times, there was a slight increase from 4.11 times at the beginning of the year. The risk coverage ratio, corporate capital leverage ratio, and net stable capital ratio were 187.21%/1632%/124.86%, respectively, down from the previous year, and the liquidity coverage rate was 148.28%, an improvement over the previous year.
Accelerate the construction of a first-class investment bank. As a leader in the industry, the company operates steadily and is expected to fully benefit. Since 2023, the market environment has fluctuated, and the company's performance has fluctuated less, and its advantage as an industry leader is obvious. On November 3, the Securities Regulatory Commission optimized the calculation standards for risk control indicators for securities companies and appropriately relaxed capital restrictions on high-quality securities companies. On March 15 of this year, the Securities Regulatory Commission proposed “Opinions on Strengthening the Supervision of Securities Companies and Public Funds and Accelerating the Construction of First-Class Investment Banks and Investment Institutions (Trial)” and proposed a schedule for the construction of first-class investment banks in the securities industry. We expect the company to benefit from increased leverage and incremental regulatory policy guidelines to form a leading edge in business and drive ROE upward. We recommend that you pay attention.
Risk factors: Increased market competition, policy implementation falling short of expectations, increased market volatility, etc.