Key investment points: The company's self-operated business performed well, driving an increase in overall performance. The brokerage business, asset management business, and investment banking business declined year-on-year. We are still optimistic about business collaboration between the company and China Merchants Group and China Merchants Bank. The reasonable value range is 15.76-17.07 yuan, maintaining the “superior to the market” rating.
[Event] China Merchants Securities announced its 2023 annual results: in 2023, the company achieved operating income of 19.82 billion yuan, +3.1% year over year; net profit to mother of 8.76 billion yuan, +8.6% year on year; corresponding EPS of 0.94 yuan, ROE 7.9%.
The fourth quarter achieved revenue of 4.95 billion yuan, +26.2% year-on-year and +21.4% month-on-month. Net profit attributable to mother was 2.36 billion yuan, +31.8% YoY and +41.1% YoY.
The brokerage business has declined, and the market share of the two finance companies has declined. The average daily share base transaction volume of the entire market in 2023 was 962.5 billion yuan, -4.0% year-on-year, with a balance of 1650.9 billion yuan, +7% compared to the beginning of the year. In this context, the company's brokerage business revenue was 5.53 billion yuan, or -14.2%, accounting for 27.9% of revenue; revenue from consignment financial products was 425 million yuan, -24.0% year-on-year, accounting for 7.7% of brokerage business revenue. The balance of the two loans was 82.8 billion yuan, +3% compared to the beginning of the year, and the market share was 5.01%, or -0.18pct year on year.
Investment banking revenue declined slightly, and IPO reserves were sufficient. In 2023, the company's investment banking business revenue was 1.30 billion yuan, -6.5% year-on-year. The share business underwriting scale was -42.9% year-on-year, and the bond business underwriting scale was +20.3% year-on-year. Shareholders' underwriting scale was 23.88 billion yuan, ranking 13th; of these, 6 were IPOs, which raised 7.1 billion yuan; and 20 were refunded, with an underwriting scale of 16.8 billion yuan. The principal underwriting scale of bonds was 325.7 billion yuan, ranking 10th; of these, the underwriting scale for financial bonds, ABS, and corporate bonds was 122 billion yuan, 91.8 billion yuan, and 78.1 billion yuan, respectively. There are 26 IPO reserve projects, ranking 9th, including 9 on the main boards of the two cities, 3 on the Beijing Stock Exchange, 5 on the Science and Technology Innovation Board, and 9 on the GEM.
Revenue from the asset management business declined slightly, and the leading position of public equity subsidiaries was stable. In 2023, the company's asset management business revenue was 710 million yuan, -14.0% year-on-year. The asset management scale was 294.9 billion yuan, -7.0% YoY. The asset management scale of Bosch Fund was 156.49 billion yuan, down 4.87% from the end of 2022. It ranked 7th in the size of non-monetary public funds and 2nd in the size of bond-type public funds. The asset management scale of China Merchants Fund was 1550.4 billion yuan, an increase of 4.85% over the end of 2022. The management scale of fund-raising funds (excluding linked funds) was 860.6 billion yuan, an increase of 11.70% over the end of 2022. Non-monetary public funds ranked 4th, and bond-type public funds ranked 1st.
Proprietary performance was excellent, and the size of equity assets increased dramatically. The company's investment income (including fair value) for the full year of 2023 was 6.73 billion yuan, +31.6% year on year, and the size of proprietary assets was 310 billion yuan, +13% year over year, of which equity assets were 26 billion yuan, +31.4% year over year; investment income for the fourth quarter (including fair value) was 2.01 billion yuan, +266.3% year over year.
Investment advice: We expect the company's EPS to be 1.15/1.26/1.32 yuan in 2024-26E, and 13.13/14.16/15.08 yuan for BVPS, respectively. We gave it 1.2-1.3x P/B in 2023, corresponding to a reasonable value range of 15.76-17.07 yuan, maintaining the “better than the market” rating.
Risk warning: Trading volume continues to decline, and investment returns continue to decline due to increased equity market fluctuations.