Huatai Securities announced its 2023 annual report. In 2023, the company achieved operating income of 36.578 billion yuan, up 14.19% year on year; realized net profit of 12.751 billion yuan, up 15.36% year on year; net profit after deducting non-recurring profit and loss was 12.887 billion yuan, up 19.61% year on year, corresponding EPS 1.35 yuan, up 14.41% year on year; ROE was 8.12%, up 0.63 pct year on year. The increase in performance is mainly due to the increase in investment income to hedge the decline in brokerage business. In the future, it is expected that the FICC valet system will continue to be built around the concept of digitalization, platformization, and ecology, exploring “AI intelligence improvement”, and “business+technology” integration to enhance value.
Stable brokerage share and optimized wealth structure. Affected by the decline in trading volume in 2023, brokerage business revenue was 5.959 billion yuan, down 15.75% year on year; the company's stock base trading volume was 37.16 trillion yuan, and the market share continued to rank first in the industry. The company continues to optimize the wealth management business structure, deepen core customer service, upgrade financial management and transaction service systems, and enhance customer stickiness. By the end of December, the cumulative number of registered downloads of “Zangle Fortune Connect” was over 74.1 million, with an average monthly activity of 9.06.43 million, ranking first among securities company apps; the total asset size of customer accounts reached 4.94 trillion yuan; the “stock+hybrid” and non-money market public fund holdings were 134.5 billion yuan and 159.7 billion yuan respectively, ranking second only to the CITIC securities industry. At the same time, the buyer's fund investment business continued to improve. The overall company formed a multi-level wealth service system for retail customers.
Investment performance is under pressure, and debt is fueled by mergers and acquisitions. In 2023, as the IPO review continues to be tightened, the total scale of stock financing in the market declined. During the same period, the company achieved investment banking revenue of 3,037 billion yuan, a year-on-year decrease of 24.54%. In 2023, the company's equity underwriting amount was 91,299 billion yuan, down 41% year on year; bond underwriting amount was 1.26 trillion yuan, up 35.65% year on year, and the corporate bond underwriting scale continued to grow. Currently, the company has 34 IPO reserve projects, ranking fifth in the industry, and there is potential for future mergers and acquisitions.
Insist on self-employment to open up, and the return on investment is stable. In 2023, the company actively promoted the transformation of FICC's quantitative trading strategy, increased bond allocation, and increased investment scale and yield to drive a significant increase in investment income. In that year, it achieved investment business revenue (including changes in fair value) of 11.671 billion yuan, nearly doubling the previous year.
Asset management business has improved, and overseas strength continues to grow. The asset management business achieved net revenue of 4.256 billion yuan in 2023, an increase of 12.92% over the previous year; AUM reached 475.5 billion yuan, a slight decrease of 0.86% over the end of 2022. Overseas has become a new opportunity. The company's international business revenue for the year reached 7.926 billion yuan, an increase of 19.5% over the previous year. As of the end of the third quarter of 2023, AssetMark's market share in the US TAMP industry was 10.8%, ranking second.
Risk warning: risk of large profit forecasting bias; risk of large market fluctuations; risk of overseas regulation.
Investment advice: Based on equity market fluctuations and the impact of new regulatory regulations on the securities business, we lowered the company's profit forecast for 2024 and 2025 by 1.4% and 7.2%, respectively, and predicted that the company's net profit to mother in 2024-2026 would be 143.21 yuan, 15.017 billion yuan, and 16.257 billion yuan, respectively, up 9.2%/4.9%/8.3% year over year. The PE corresponding to the current stock price is 10.8/10.3/9.5x, and PB is 0.8/0.8/0.7x. In the context of the restart of the tripartite diversion policy, the company will highlight the advantages of the Internet and products, and maintain a “buy” rating for the company.