2023 Annual Report Overview: Huaan Securities achieved operating income of 3.652 billion yuan in 2023, +15.60% year over year; realized net profit to mother of 1,274 billion yuan, +7.78% year over year; basic earnings per share of 0.27 yuan, +8.00% year over year; weighted average return on net assets of 6.20%, +0.22 percentage points year on year. It is proposed to pay $1.00 (tax included) in 2023.

Comment: 1. In 2023, the share of the company's investment income (including changes in fair value) and other revenue increased, and the share of net income from brokerage, investment banking, asset management, and interest declined. 2. Net income from securities brokerage business declined slightly with the market. Various indicators of institutional brokerage business showed impressive growth. Net revenue from consolidated brokerage business fees was -5.94% year-on-year. 3. There was a sharp decline in the scale of equity financing. The principal underwriting amount of various types of bonds increased significantly. Net income from handling fees from consolidated investment banking operations was -28.48% year-on-year. 4. The scale of brokerage asset management continues to grow, and the soft power of market competition is progressing steadily. Net revenue from handling fees for consolidated asset management business was +0.83% year-on-year, reaching another record high. 5. Investment income from financial instruments declined year on year, and income from changes in fair value improved significantly. Consolidated investment income (including changes in fair value) was +61.26% year-on-year. 6. The scale of the two loans increased slightly, further reducing the size of stock pledges. Net income from consolidated caliber interest was -6.62% compared to the same period last year.

Investment advice: The growth rate of corporate institutional clients was impressive during the reporting period. The decline in net fee revenue from consolidated brokerage business was superior to that of the industry; asset management business created a “fixed income +” characteristic, and net fee revenue reached a record high; proprietary business accelerated the transformation from directional to transactional, diversified, and strategic transformation, and the return on fixed income investment remained at a high level in the industry. The company has maintained a steady, progressive and positive development trend for a long time. Currently, its main operating indicators have ranked in the top one-third of the industry, and some business indicators have entered the top 20 in the industry, and it has gradually stood out among small and medium-sized brokerage firms. The company's 2024 and 2025 EPS is expected to be 0.24 yuan and 0.27 yuan, respectively, and the BVPS is 4.57 yuan and 4.76 yuan respectively. Based on the closing price of 4.57 yuan on April 11, the corresponding P/B will be 1.00 times and 0.96 times, respectively, maintaining an investment rating of “increase in holdings”.

Risk warning: 1. The weakening equity and fixed income market environment has led to a decline in the company's performance; 2. Risk of market fluctuations; 3. The policy effects of investment-side reforms fall short of expectations