Incidents:
The company disclosed its 2023 annual report, achieving full year operating income of 17.1 billion yuan (YoY -9%), net profit attributable to mother of 2.8 billion yuan (YoY -9%), weighted average ROE of 3.45% (YoY-0.71pct), and EPS of 0.30 yuan (YoY -14%). By business, the company achieved net revenue of 2.8 billion yuan, 1.5 billion yuan, 2 billion yuan, 1.8 billion yuan, 2.4 billion yuan in 2023, respectively, -10%, -13%, -24%, +8%, and +26% compared with the same period last year.
Fund investment is progressing well, and shareholding has declined, and asset management has contracted.
1) Brokerage: In 2023, the company's securities brokerage business revenue market share was 1.63%, ranking 20th in the industry, and the market share ranking was the same year on year. By the end of 2023, the total number of the company's customer fund accounts was 2.69 million, +10%; the total service scale of the fund investment business was 14.4 billion yuan, achieving a customer reinvestment rate of 76%. I am optimistic that the company will continue to make efforts to transform wealth management into buyer investment. 2) Investment banking: In terms of shares, in 2023, Oriental Investment Bank completed 7 lead underwriting IPOs of 6.8 billion yuan, or -12% of the same amount; 8 refinancing projects worth 6.1 billion yuan, or -61% of the same amount. In terms of debt underwriting, in 2023, the company completed 755 principal underwriting bonds worth 247 billion yuan, with an amount of +11% over the same period last year. 3) Asset management: As of the end of 2023, the total management scale of Eastern Securities Asset Management was 235.8 billion yuan, -17% compared with the end of the previous year; Huitianfu Fund's average monthly non-inventory volume exceeded 450 billion yuan, ranking among the highest in the industry.
Both ends of income and expenditure drive credit growth, and profit and loss from changes in fair value boosts self-operating performance.
1) Credit: Net income from the company's credit business was +8% year-on-year in 2023, mainly due to increased interest income from stock repurchase business and reduced interest expenses payable on short-term financing notes. 2) Self-operated: The net revenue of the company's own business in 2023 was +26% year-on-year, mainly contributed by revenue from changes in fair value plus 1 billion yuan year-on-year.
Investment advice: Maintain a buy-A investment rating.
The company's 2023 youth asset business revenue declined to varying degrees due to the market environment, but the asset-heavy business grew and narrowed the overall performance decline. We believe that the company's asset management business has outstanding advantages, and the fund investment business is progressing clearly, and it is expected that it will continue to benefit from the development opportunities of the wealth management market in the long run.
We expect the company's 2024-2026 EPS to be 0.34 yuan, 0.38 yuan, and 0.44 yuan respectively, and will be given 1x2024 P/B, corresponding to a 6-month target price of 9.64 yuan.
Risk warning: tightening liquidity, wealth management transformation falling short of expectations, capital market fluctuations, etc.