Incidents:
CICC released its 2023 annual report. In 2023, it achieved cumulative total revenue of 23 billion yuan, -12% year on year; net profit to mother of 6.2 billion yuan, -19% year over year; and ROE was 6.43%, a decrease of 2.45 pct compared to the same period last year.
Fee business: Investment banking business is under pressure in the short term
1) In 2023, the company's net brokerage fee revenue was 4.5 billion yuan, -13% year-on-year, of which 23Q4 brokerage revenue was 1.02 billion yuan in a single quarter, -32% YoY/flat month-on-month, accounting for 18.5% of the main securities revenue (excluding bulk trade and government subsidies), or -4.1pct year on year.
2) In 2023, the company's asset management business achieved net fee revenue of 1.2 billion yuan, -11% year-on-year. Of these, the 23Q4 asset management business achieved net fee revenue of 260 million yuan in a single quarter, -16% year-on-year/-11% month-on-month. The company held CICC Fund's non-cargo AUM of 61.8 billion yuan at the end of the year, +10.6% compared to the end of last year, and the net profit of CICC Fund in 23 was 40 million yuan, +87.3% over the same period last year.
3) In 2023, the company's investment bank achieved net revenue of 3.7 billion yuan, or -47% year over year, of which investment banking business revenue for the 23Q4 single quarter was 1.08 billion yuan, or -54% YoY +71%. (1) In 2023, the company completed 17 A-share IPOs as the lead underwriter, a decrease of 15 orders compared to the same period last year; the lead underwriting amount was 32.3 billion yuan, -39%, with a market share of 9%, ranking fourth in the market; (2) The A-share refinancing issuance scale was 49.3 billion, -61% YoY, with a market share of 12.3%, third in the industry. (3) Domestic debt reached 1159.5 billion yuan, +26.3% year-on-year, with a market share of 8.6%.
Capital business: The return on investment increased year on year, and the scale of derivatives increased steadily 1) The company's operating leverage in 2023 was 5.18 times, down 0.43 times year on year; in 2023, investment leverage was 3.46 times, down 0.1 times year on year.
2) In 2023, the company's net investment income (including exchange income) was 11.9 billion yuan, +9% year-on-year, including net investment income of 2.88 billion yuan in a single quarter in 23Q4, +13% YoY/+3% month-on-month. In '23, the company's net investment revenue accounted for 53% of the main income of securities (excluding bulk commerce and government subsidies), which was +10.2pct year-on-year, which positively drove the growth rate of securities's main revenue by +4.3pct. By the end of the year, the company's financial asset investment was 362.3 billion yuan, +2% compared to the beginning of the year, of which the amount of transactional financial assets was 296.7 billion yuan, +3% compared to the beginning of the year. It is estimated that the company's annualized return in 23 was 3.33%, or +0.26pct year over year. The scale of the company's derivatives has been steadily expanding. At the end of '23, the total nominal principal amount and nominal equity principal amount was 107.26/387.4 billion yuan, respectively, +5%/+12% year-on-year.
Profit Forecasts, Valuations, and Ratings
The company's revenue for 24-26 is estimated to be 240/260/275 billion, respectively, and net profit to mother is 66/74/86 billion, respectively, and net profit to mother +7.4%/+11.3%/+17% YoY; EPS is 1.37/1.52/1.78 yuan/share, respectively. We believe that the company's international business is leading, and the wealth management business is expected to recover as the equity market recovers, and in line with the company's historical situation, the company will be given 2 times PB in 24 years, with a target price of 45.25 yuan at this point, maintaining a “buy” rating.
Risk warning: Market recovery falls short of expectations, increased competition in the industry, risk of policy changes