Incident: Orient Securities achieved revenue/net profit of 170.90/2,754 billion yuan in 2023, -8.75%/-8.53% year-on-year. The weighted average ROE was 3.45%, -0.71 pct compared to the end of the previous year. In '23, the share of corporate brokerage, investment banking, asset management, credit, and proprietary investment (excluding other income) was 27%, 14%, 19%, 17%, and 23%, respectively. By the end of '23, the company's leverage level was 3.46 times, +0.29X year over year.

The overall fee-related business declined with the market. 1) Brokerage: Affected by the stock index fluctuation and downturn in 23, the company achieved net brokerage business revenue of 2,781 billion yuan in 23, -9.85% over the same period last year. The market share of the company's securities brokerage business in fiscal year 23 was the same as last year, with AUM of 402 billion yuan, or -8.43% year-on-year. 2) Asset management: The company's asset management business revenue in fiscal year 23 was 2,029 billion yuan, or -23.31% year-on-year, mainly due to the decline in management scale compounded by the impact of public fund rate reform. As of the end of '23, the management scale of Eastern Securities Asset Management/Huitianfu was 235.754 billion yuan/, respectively, -17.21% over the same period last year. 3) Investment banking: In '23, the company achieved investment banking revenue of 1,510 billion yuan, -12.86% year-on-year, mainly due to the slowdown in the overall financing pace of A-share shares, putting pressure on the investment banking business. The subsidiary Oriental Investment Bank completed 15 equity financing projects during the reporting period, with an underwriting amount of 12.930 billion yuan, or -44.69% over the same period last year.

The capital business performed strongly, and impairment accruals dragged down performance. 1) Self-employment: The company's own investment revenue in fiscal year 23 was 2,388 billion yuan, +25.67% year-on-year. The company is steadily promoting the development of its own investment business, continuously innovating and promoting the coverage and expansion of all types of FICC from self-operated to sales transactions, domestic customers to overseas customers, and interest rate types. By the end of '23, the company's self-operated and institutional sales transactions reached $154.695 billion, +20.37% year-on-year; the scale of the derivatives business increased 50% year-on-year. 2) Credit: The company's net interest income in fiscal year 23 was 1,764 billion yuan, +7.57% year on year. As of the end of '23, the company's two financing balance was 20.769 billion yuan, +7.25% YoY, with a market share of 1.26%. The company's stock pledge scale declined further, to -35.4% year-on-year to 5.899 billion yuan. At the end of the reporting period, the company lost 1,030 billion yuan in credit impairment, an increase of 23.68%, mainly due to an increase in impairment preparations calculated in the stock pledge business.

Investment advice: The transformation of the company's wealth management continues to advance, and the asset management business has significant advantages. The company's net profit in 2024 is estimated to be 2,986 billion yuan, yoy +8.4%, maintaining a “buy” rating.

Risk warning: policy risk, market fluctuation risk, operation and business risk.