Incident: Oriental Wealth disclosed its results for the first quarter of 2024. The company achieved total operating income of 2,456 billion yuan, yoy -12.6%; net profit to mother of 1,954 billion yuan, yoy -3.7%; EPS was 0.12 yuan, yoy -3.36%; weighted average ROE was 2.69%, down 0.38 pct from the same period last year.
Overall performance was in line with expectations, and the fund's business performance was under pressure. By business, the company's fund business/brokerage/credit business accounted for 48%/21%/31% of revenue, respectively. In the first quarter, the company achieved fund business revenue of 751 million yuan, YOY -30%. The total share of 24Q1 equities and hybrid new development funds was 50.1 billion shares, a year-on-year decrease of 47%. Weak equity funds dragged down the company's fund business performance.
The performance of brokerage and finance businesses is relatively consistent with the market, and proprietary investment contributes to the increase in performance. 1) Brokerage:
In 24Q1, the company achieved net revenue from handling fees and commissions (mainly in the securities brokerage business) of RMB 1,182 million, yoy +0.25%; the average daily share base turnover of the Shanghai and Shenzhen markets was RMB 1021.7 billion, +3% over the same period last year. 2) Credit:
In 24Q1, the company achieved net interest income of 522 million yuan, yoy -5%; in 24Q1, the average daily volume of securities financing in the Shanghai and Shenzhen markets was 1547.4 billion yuan, -2% year-on-year. As of 24Q1, the company's financing capital was -3% month-on-month to 44.8 billion yuan at the end of '23, and the market share of the two loans increased by 0.11pct to 2.91%. 3) Self-operated: In 24Q1, the company's self-operated business revenue increased sharply by 65% year-on-year to 811 million yuan, which is expected to benefit from the increase in revenue from the self-operated fixed income business. At the end of the period, the company's transactional financial assets increased slightly by 2% to 69.7 billion yuan compared to the end of '23.
Management costs have declined slightly, and R&D investment has continued to increase. In 24Q1, the company's operating expenses were YOY -6% to 562 million yuan, R&D expenses YOY +16% to 284 million yuan, and the R&D expenses ratio was +1.8pct to 11.6% year-on-year. In January 2024, the company's self-developed “Wonderful Vision” financial model officially began closed testing. Active investment in R&D is expected to consolidate the company's technological advantages.
Investment advice: The company's securities and funds business is expected to usher in 24 years of restoration, AI development, or a new round of catalysis. The company's net profit in 2024 is estimated to be 9.04 billion yuan, yoy +10%, corresponding EPS is 0.57 yuan, and the current stock price corresponding to 24E is 21.8 x PE, maintaining a “buy” rating.
Risk warning: policy risk, market fluctuation risk, operating and business risk, fund sales fall short of expectations.