Incidents:
China Galaxy released its 2023 annual report. In 2023, it achieved a total revenue of 33.644 billion yuan, an increase of 0.01% over the previous year, and realized net profit of 7.889 billion yuan, an increase of 1.43% over the previous year. The fourth quarter of 2023 achieved operating income of 8.161 billion yuan, an increase of 28.24% year on year, and realized net profit to mother of 1,275 billion yuan, a year-on-year decrease of 3.38%. In 2023, the company's financial leverage ratio was 4.22 times, down 0.64 times year on year. The weighted average ROE was 7.52%, down 0.7 pct year on year.
Comment:
Brokerage revenue is under pressure, and the number of high-net-worth clients is growing rapidly. In 2023, the average daily stock base transaction volume of the market was 0.9 trillion yuan, down 3.09% year on year, affecting the company's brokerage business revenue falling 13.57% year on year to 5.502 billion yuan. By the end of 2023, the total number of the company's customers exceeded 15.5 million, ranking first in the industry for the number of qualified investors established by the Beijing Stock Exchange; the number of high-net-worth customers signed up reached 5,456, an increase of 156% over the previous year, and the net assets signed by high-net-worth customers exceeded 160 billion yuan, an increase of 195% over the previous year. In 2023, the company sold financial products on behalf of 94.988 billion yuan, an increase of 2.64% over the previous year.
Investment banking revenue declined, but the impact on the company's performance was small. The company's investment banking revenue in 2023 was 548 million yuan, down 19.79% year on year. The main reason for the decline was the contraction of the company's equity underwriting scale. Affected by the contraction of the IPO pace, the company's equity underwriting scale in 2023 was 3.765 billion yuan, a year-on-year decrease of 65.53%, but the bond financing business performed well. The underwriting amount was 357.954 billion yuan, an increase of 41.75% over the previous year. The company's investment banking business accounts for a relatively small share of revenue. The decline in 2023 was 135 million yuan, accounting for only 0.4% of the company's revenue, which had little impact on the company's performance.
Revenue from asset management and proprietary businesses is growing positively. (1) In 2023, Galaxy Jinhui, a subsidiary of the company, continued to improve its investment and research capabilities, forge integrated capacity building centered on research, investment and trading, and promote the development of the company's asset management business. The scale of the company's asset management business in 2023 was 94.566 billion yuan, a year-on-year decrease of 17.77%, but the share of the pooled asset management plan increased by 4.62 pct to 43.06%, driving the company's business revenue to an increase of 3.73% to 457 million yuan. (2) Due to a decrease in investment income from disposal of financial instruments, the company's investment income in 2023 was 3.136 billion yuan, a year-on-year decrease of 56.37%. However, the company achieved fair value change revenue of 4.52 billion yuan, an increase of 6.115 billion yuan over 2022, driving the company's own business revenue up 36.99% year-on-year to 7.658 billion yuan, supporting the company's stable performance.
Revenue from the credit business declined, and the scale of the two finance business grew steadily. In 2023, the company achieved net interest income of 4.163 billion yuan, down 19.38% year on year, but the company's financing balance continued to grow. In 2023, it was 84.1 billion yuan, up 6.05% year on year, and the market share was 5.09%.
Investment advice: As a large brokerage firm, China Galaxy has a balanced development of various business indicators, and the market share of many businesses ranks among the highest in the industry. At the same time, the company's strategy supports the establishment of a first-class domestic investment bank, which is expected to make up for its own business shortcomings, further enhance the company's competitiveness, and maintain a “buy” rating.
Risk warning: The company's performance falls short of expectations, equity market fluctuations have intensified, and regulatory policies have changed.