Incidents:
Orient Securities released its 2023 annual report. The company achieved cumulative operating income of 17.09 billion yuan, -8.7% YoY; net profit to mother of 2.754 billion yuan, -8.5% YoY; and ROE 3.45%, a decrease of 0.71 pct over the same period last year.
Fee business: Equity market fluctuations affect wealth and asset management business revenue 1) The company achieved cumulative net brokerage fee revenue of 2.78 billion yuan in 2023, -10% year-on-year, and achieved brokerage business revenue of 620 million in a single quarter in 23Q4, -19% /month-on-month +2%. 23Q4 brokerage business revenue accounted for 30.8% of the main securities revenue, +9.3 pcts month-on-month.
2) The company achieved cumulative asset management revenue of 2.03 billion yuan in 2023, -23% year over year, and achieved asset management business revenue of 410 million in a single quarter in 23Q4, -30% YoY /-10%. It is expected that the company's active equity public fund rate will decline after the public fund rate reform. The cumulative revenue of long-term stock investment in 2023 (mainly Huitianfu Fund) was 580 million yuan, -12% year over year, and 110 million in the 23Q4 single quarter, -41% YoY /-30% month-on-month. In terms of management scale, Huitianfu Fund's non-cargo AUM at the end of '23 was 447.6 billion yuan, -13.1% year-on-year; Eastern Securities Asset Management's non-cargo AUM was 166.5 billion yuan, yoy -12.9%.
3) The company achieved cumulative investment banking revenue of 1.51 billion yuan in 2023, -13% year-on-year, and achieved investment banking business revenue of 320 million yuan in a single quarter in 23Q4, -11% YoY /-30%. (1) The company's IPO in 2023 was 6.8 billion yuan, -11.6% YoY, with a market share of 1.91%; (2) Refinancing of 6.104 billion yuan, -61% YoY. (3) Debt of 383.8 billion yuan, +14.1% year-on-year, with a market share of 2.84%.
Capital business: The investment business improved significantly, and the scale of stock pledges was further reduced 1) The company achieved cumulative net investment income of 2.33 billion yuan in 2023, +35% over the same period last year. The net investment income changed from profit to loss in a single quarter in 23Q4. The financial investment scale at the end of the year 23 billion yuan/+17.3% compared to the beginning of the year, of which transactional financial assets were 98.9 billion yuan/ +16.7% compared to the beginning of the year, and the estimated investment leverage in 2023 was 2.51 times, +0.33 times higher than at the beginning of the year; we estimated the return on investment in 2023 was 1.27%, +0.22pct year over year.
2) In terms of credit business, the company achieved cumulative net interest income of 1.76 billion yuan in 2023, +8% year-on-year, and 23Q4 net interest income of 440 million yuan in a single quarter, -11% YoY/+5% month-on-month. At the end of 23, the company's stock pledge scale was 5.899 billion yuan, compared to -35.4% at the beginning of the year, and the share size dropped further. In terms of securities financing, the company raised $21.07 billion at the end of 2023, +5.4% compared to the beginning of the year.
Profit Forecasts, Valuations, and Ratings
The company's 24-26 revenue is estimated to be 190/221/24.8 billion, +11.2%/16.1%/12.3%; net profit to mother will be 31/36/40 billion, +11.7%/+16.5%/+12.4%, respectively; EPS will be 0.36/0.42/0.47 yuan/share, respectively. We expect subsequent companies to benefit from the popularity of trading and the recovery of the new development fund market, and the performance is expected to recover. Based on the company's historical situation, the company will be given 1.2 times PB for 24 years, with a target price of 11.66 yuan at the current point, maintaining a “buy” rating.
Risk warning: Market recovery falls short of expectations, increased competition in the industry, risk of policy changes