Core views
CICC released its annual report. In 2023, it achieved revenue of 22.99 billion yuan (yoy -11.87%), net profit to mother of 6.156 billion yuan (yoy -18.97%), after deducting non-net profit of 6.180 billion yuan (yoy -17.64%). Among them, Q4 achieved revenue of 5,525 billion yuan (yoy -17.47%, qoq +9.51%) and net profit of 1,548 billion yuan (yoy -2.33%, qoq +47.89%) in a single quarter. Dividend of 0.18 yuan per share, dividend rate of 14%, +3pct year over year. Considering the current market environment, we have appropriately lowered the company's investment income and investment banking business scale. The company's EPS for 2024-2026 is estimated to be 1.06/1.24/1.36 yuan, respectively (previous value 1.44/1.78 yuan in 24-25). A/H Comparable's 2024 Wind agreed that the average PB value was 0.8/0.4 times, considering the company's leading international business and remarkable high-end wealth management characteristics; however, the liquidity of H shares was relatively average, which suppressed the valuation. A/H shares were given 1.9/0.5 times PB in 2024, and the target price was 42.86 yuan/12.26 Hong Kong dollars (previous value 47.63 yuan/23.59 Hong Kong dollars), maintaining the “buy” rating.
Total assets have shrunk, and investment banking business advantages continue
At the end of 2023, the company's total assets were 624.3 billion yuan, -4% year-on-year, and the asset size has shrunk. Excluding customer security deposits, the leverage ratio was 5.2 times, -0.43 times year over year. The investment banking business remains in the lead, and A-share owners rank 3rd in the market in terms of underwriting amount. In 2023, the company's A-share IPO/refinancing underwriting amount was 32.2 billion yuan/$54.3 billion, -39%/-57%; the Hong Kong stock business continued to consolidate the advantages of major projects, underwriting 20 Hong Kong stock IPOs as the sponsor; the domestic bond underwriting amount was 1159.5 billion yuan, +26% compared to the same period, ranking 4th among brokerage firms; the M&A business continued to rank first in the Chinese M&A market (according to Dealogic data). The net revenue of the company's investment bank in '23 was 3.7 billion yuan, -47% year-on-year.
Wealth management remains in the lead, and asset management revenue declined year-on-year
The company continues to consolidate its leading position in terms of wealth management model and scale. In 2023, the product holdings were about 350 billion yuan, and the scale was growing for four consecutive years; the buyer investment product system continued to improve. The number of wealth management customers at the end of the year was 6.8038 million, +17% compared to the beginning of the year; total customer assets were 2.88 trillion yuan, +4.3% year-on-year. Net revenue from brokerage business was 4.5 billion yuan, -13% year over year. The asset management business consolidates core investment and research capacity building, deepens retail and online channel customer base development, and enhances overseas customer coverage. At the end of the year, the asset management department's business scale was 552.6 billion yuan, -21% compared to the beginning of the year, and net asset management revenue was 1.2 billion yuan, -11% year-on-year.
Investment performance is relatively stable, and derivatives are expanding steadily
The company's investment business revenue was relatively stable. It recorded 10.6 billion yuan for the whole year, -0.5% year-on-year. Financial investment assets increased. Equity and fixed income assets at the end of the year were 1401/155.8 billion yuan respectively, +12% +5% over the same period last year. Derivatives expanded steadily. At the end of the year, the total nominal principal and equity nominal principal amount were $10726/387.4 billion yuan respectively, +5%/+12% over the same period last year. Net interest income was $1.3 billion, a year-on-year decrease from -$1 billion in 2022.
Risk warning: Business development falls short of expectations, risk of market fluctuations.