Key investment points: The leading position in the investment banking business is stable. Wealth management relies on product, service, model innovation and fintech to achieve rapid business scale development in the context of moving towards full net worth. The reasonable value range was HK$14.25-16.29, maintaining the “better than the market” rating.
[Event] CICC announced 2023 results: achieving operating income of 22.99 billion yuan, -11.9%; net profit to mother of 6.16 billion yuan, -19.0% year on year; corresponding EPS 1.28 yuan, ROE 6.43%, -2.45 pct year on year. The fourth quarter achieved revenue of 5.52 billion yuan, -17.5% year-on-year and +9.5% month-on-month. Net profit attributable to mother was 1.55 billion yuan, -2.3% YoY and +47.9% YoY. The company's performance declined year-on-year in the fourth quarter; however, revenue and net profit improved month-on-month compared to the third quarter, mainly due to an increase in investment bank and proprietary income, as well as a decrease in management expenses.
Brokerage revenue declined with the market, and the scale of wealth management holdings and revenue continued to grow. In 2023, the company's brokerage revenue was 4.53 billion yuan, -13.4% year-on-year, accounting for 19.7% of revenue. The average daily share-based trading volume of the entire market was 962.5 billion yuan, -4.0% year-on-year. Fourth-quarter revenue of 1.02 billion yuan was -32.5% year-on-year, unchanged from month to month.
The company's wealth management business continues to deepen. The product holding scale of the wealth management business is about 350 billion yuan, and the scale has been growing for four consecutive years; in 2023, the company's revenue from consignment financial products was 1.26 billion yuan, +3.5% year-on-year, accounting for 27.7% of brokerage revenue, +4.5 pct. The company's two financing balance was 42.4 billion yuan, +3.1% year over year, market share 2.57%, -0.1 pct year on year.
The investment banking business ranks high, the scale of bond underwriting continues to rise, and IPO reserves are abundant. In 2023, the company's investment banking business revenue was 3.70 billion yuan, -47.2% year-on-year. Investment bank revenue for the fourth quarter was 1.08 billion yuan, -54.1% YoY and +71.1% YoY. In 2023, the company's shareholder underwriting scale was 108.54 billion yuan, or -50.7% over the same period, ranking 4th; of these, 17 IPOs raised 32.2 billion yuan; 37 were refunded, with an underwriting scale of 76.3 billion yuan. The principal underwriting scale of bonds was 1155.9 billion yuan, +27.6% over the same period, ranking 3rd; of these, the underwriting scale of local government bonds, financial bonds, and corporate bonds was 451.3 billion yuan, 322.3 billion yuan, and 159.6 billion yuan respectively. There are 43 IPO reserve projects, ranking 4th, including 13 main boards in the two cities, 13 science and technology innovation boards, and 17 venture capital.
Insist on promoting the high-quality development of asset management business. In 2023, the company's asset management revenue was 1.21 billion yuan, -11.2% year-on-year. Asset management revenue for the fourth quarter was 260 million yuan, -16.6% year-on-year and -11.4% month-on-month. Asset management scale was 552.6 billion yuan, -21.3% YoY.
Investment returns (including fair value) rebounded in the fourth quarter. In 2023, the company's annual investment income (including fair value) was 10.56 billion yuan, -0.5% year on year; fourth quarter investment income (including fair value) was 3.58 billion yuan, +3.0% year on year, +40.4% year on year.
Investment advice: We expect net assets per share for 2024-26E to be $18.80/19.82/20.80, respectively. We will give them 0.7-0.8x PB in 2024, with a corresponding reasonable value range of RMB 13.16-15.04, (exchange rate conversion: HK$1 = $0.9235, corresponding reasonable value range of HK$14.25-16.29), maintaining the “superior to market” rating.
Risk warning: The market fluctuates sharply, the overall decline in the stock market, and further strengthening of market supervision.