Guolian Securities released its 2023 annual report. The company achieved operating income of 2,955 billion yuan in 2023, a year-on-year increase of 12.68%; realized net profit of 671 million yuan, a year-on-year decrease of 12.51%; the weighted average return on net assets for the full year of 2023 was 3.89%, a year-on-year decrease of 0.73 percentage points; and basic earnings per share was 0.24 yuan/share, down 11.11% year on year. The sharp increase in revenue was mainly due to the company's acquisition of 75.5% of the shares in the League of Nations Fund, which added 239 million yuan in revenue to the company's revenue.
Complete the consolidation of the League of Nations funds, asset management and wealth expansion. In 2023, the company's asset management achieved revenue of 443 million yuan, an increase of 128.54% over the previous year, mainly due to the consolidation of the League of Nations Fund. In the same period, the company's asset management business was entrusted with capital of 117.293 billion yuan, an increase of 14.94% over the previous year, and achieved business revenue of 190 million yuan, an increase of 2.55% over the previous year. Looking ahead to 2024, the company will benefit from the enhanced comprehensive financial service capabilities brought about by the approval and acquisition of the League of Nations Fund by its asset management subsidiary, and the asset management and wealth business will maintain steady growth.
The brokerage business is under pressure, and the list of proprietary investments is expanding. In 2023, the company's brokerage business achieved revenue of 515 million yuan, a year-on-year decrease of 6.30%, mainly due to the year-on-year decline in the overall activity of the domestic securities market. In the same period, the sales scale of the company's financial products (excluding cash management products) was 18.403 billion yuan, a year-on-year decrease of 14.76%; financial product holdings amounted to 19.330 billion yuan, an increase of 8.16% over the previous year. In 2023, the company achieved revenue of 1,243 billion yuan, an increase of 7.31% over the previous year, mainly due to the expansion of the scale of self-operation. Among them, the fair value of transactional financial assets and derivative financial instruments increased sharply by 61% year on year.
The investment banking business bucked the trend. In 2023, the company's investment banking business achieved revenue of 517 million yuan, an increase of 0.72% over the previous year, mainly due to an increase in the scale of bond underwriting. In the same period, due to the slowdown in market IPOs, the company raised 2,368 billion yuan in capital, a year-on-year decrease of 33.7%; however, the company completed 135 bond underwriting projects, with a total underwriting amount of 51,581 billion yuan, and the number of underwriters and underwriting scale increased by more than 20% year on year.
The integration with Minsheng Securities business is expected to accelerate. In March 2023, the majority shareholder, Wuxi Guolian Group, passed a judicial auction to win 3.47 billion shares of Minsheng Securities held by Oceanwide Holdings at a transaction price of 9.1 billion yuan, accounting for 30.3% of the total share capital. At the end of the year, the Securities Regulatory Commission approved Guolian Group as the main shareholder of Minsheng Securities. Recently, an executive of the League of Nations Group was appointed chairman of Minsheng Securities and strategically cooperated with Zhang Jiang Group, an important shareholder of Minsheng Securities, to determine that the next two brokerage firms will accelerate integration in various fields such as investment banking and institutional services.
Risk warning: Market decline brings uncertainty to brokerage performance and valuation repair; financial supervision is becoming stricter; market competition is intensifying; innovation is falling short of expectations, etc.
Investment advice: Based on equity market fluctuations and the impact of new regulatory regulations on the securities industry, our profit forecasts for 2024 and 2025 were lowered by 17.3% and 13.0% respectively. We expect net profit to mother for 2024-2026 to be 8.8/10.1/1.09 billion yuan, up 30.3%/15.5%/7.9% year-on-year. The PE corresponding to the current stock price is 37.2/32.2/29.9x, and PB is 1.9/1.9/1.8x. Capital market reforms continue, brokerage firms continue to strengthen public equity management business, actively increase strategic layout, and continuously improve the company's overall strength and ROE. We maintain the company's “buy” rating.