Key investment points: The company is a state-owned brokerage firm. The management has rich experience in the industry and is highly trusted by shareholders. As one of the first pilot brokerage firms for fund investment, the company's first-mover advantage will promote the rapid development of wealth management business. In 2023, the League of Nations Fund officially merged, and is optimistic about the synergy between the company's asset management and wealth management business. The corresponding reasonable value range is 12.92-13.57 yuan/share, maintaining the “superior to the market” rating.
[Event] Guolian Securities released its 2023 annual report: achieved operating income of 2.96 billion yuan, +12.7% year on year; net profit to mother of 670 million yuan, -12.5% year on year; corresponding EPS of 0.24 yuan, ROE 3.9%, -0.7 pct year on year.
The fourth quarter of 2023 achieved revenue of 450 million yuan, -21.1% YoY and -36.0% YoY. Net loss to mother was 55.46 million yuan. Losses in the fourth quarter of 2023 are mainly due to the company's negative investment income in the fourth quarter, which is expected to be mainly investment losses due to the disposal of derivative financial instruments.
Affected by market trading volume, brokerage business declined, and the market share of the two finance companies increased rapidly. In 2023, brokerage revenue was 520 million yuan, -6.3% year-on-year, accounting for 17.4% of revenue. The average daily share-based trading volume of the entire market was 962.5 billion yuan, -4.0% year-on-year. Brokerage revenue for the fourth quarter of 2023 was 125 million yuan, -7.8% YoY and -3.0% YoY. The company's revenue from consignment financial products was 32.83 million yuan, or -22.3%, accounting for 6.4% of brokerage business revenue. The scale of consignment financial products was 18.4 billion yuan, -14.8% year-on-year. The average daily balance of the company's two loans was 10.2 billion yuan, +11% compared to the beginning of the year, with an average daily market share of 0.64%. The company continues to promote wealth management transformation from a buyer's perspective, further consolidating its customer base and further optimizing its customer structure. The number of new customers was 156,600 in 2023, with a cumulative total of 1.7364 million customers, an increase of 9.64% over the previous year.
Investment banking business revenue has achieved positive growth, and bond underwriting is growing rapidly. Investment banking revenue in 2023 was 490 million yuan, +2.5% year-on-year. Investment banking revenue for the fourth quarter of 2023 was 63.2 million yuan, +18.9% year-on-year and -56% month-on-month. The equity and debt underwriting scales were -33.7% and +96.5%, respectively. Shareholders' underwriting scale was 4.44 billion yuan, ranking 31st; of these, 3 IPOs raised 2.4 billion yuan; and 5 were refunded, with an underwriting scale of 2.1 billion yuan. The principal underwriting scale of bonds was 64.5 billion yuan, ranking 30th; among them, the underwriting scale of corporate bonds, ABS, and corporate bonds was 32.7 billion yuan, 29.4 billion yuan, and 1.6 billion yuan, respectively. The company has 4 IPO reserve projects, ranking 30th, including 2 main boards of the two markets, 1 Beijing Stock Exchange, and 1 GEM.
The League of Nations funds merged to embark on a new journey of development. Asset management revenue in 2023 was 440 million yuan, +128.5% year on year, and asset management revenue for the fourth quarter of 2023 was 150 million yuan, +145% year over year, and -28.6% month on month. The sharp increase in the company's asset management business revenue in 2023 is mainly due to China Finance Fund officially changing its name to the League of Nations Fund and officially merging within 2023. The company's brokerage asset management scale was 117.3 billion yuan, +14.9% year-on-year; the fund management scale of the League of Nations funds was 148.8 billion yuan.
Equity self-employment significantly outperformed Shanghai and Shenzhen 300, and fixed income investment continuously promoted applications for new business qualifications and enhanced customer service capabilities. The company's investment income in 2023 (including fair value) was 1.24 billion yuan, +7.3% year-on-year; investment income (including fair value) for the fourth quarter of 2023 was 110 million yuan, -52.3% year-on-year.
[Investment Proposal] The company's 2024-2026E EPS is expected to be 0.25, 0.27, and 0.28 yuan respectively, with net assets of 6.46, 6.67, and 6.91 yuan per share, respectively. Referring to the valuation level of comparable companies, we gave it 2024E2.0-2.1x P/B, corresponding to a reasonable value range of 12.92-13.57 yuan/share, maintaining a “superior to market” rating.
Risk warning: Trading volume continues to decline, and investment returns continue to decline due to increased equity market fluctuations.