Core views:
The 24Q1 performance was stable, and the cost pressure reduction paid off. The company achieved revenue of 13.755 billion yuan in the first quarter of 2024, -10.38% year-on-year; realized net profit to mother of 4.959 billion yuan, -8.47% year-on-year. (The company's net profit for 2023Q1/2/3/4 was +3.6%/-1.3%/-4.9%/-30.4%, respectively, with a relatively high base for Q1). Q1 weighted ROE was 1.88%. The ability to expand the table has been steadily restored. The total assets of 2024Q1 were 1.57 trillion yuan, +8.8% year-on-year; excluding customer capital leverage ratio of 4.44 times, +0.17 at the end of last year, and +0.11 compared to the same period last year. The 24Q1 management fee rate was 45%, down 3 bps from the same period last year.
The investment banking business is yet to resume. 1. Investment Bank: According to Wind's release date data, the total equity financing amount of 2024Q1 market was 110.666 billion yuan (-68.87% YoY), and the company's investment bank's Q1 net revenue was 869 million yuan, or -56.1% YoY. 2. Wealth management: The average daily transaction volume of the entire market in the first quarter was +1.9%, and the net revenue of brokerage business in Q1 was 2,442 billion yuan, -5.78% year-on-year. 3. Asset management business Q1 net revenue of 2,358 billion yuan, -5.59% year over year, mainly dragged down by CITIC Asset Management. Huaxia Fund's net profit was 518 million yuan, -5.77% year over year. 4. At the end of the first quarter, the balance of the two loans in the market was 1537.949 billion yuan, -4% year-on-year. The company's Q1 net interest income was $325 million, -44% year over year, mainly due to an increase in interest expenses.
Pan-owned operations declined slightly due to market fluctuations. The 24Q1 Shanghai and Shenzhen 300 rose +3.10% (+4.63% in the same period last year); China Securities full debt +2.34% (+0.98% in the same period last year), the company's net investment income + fair value change income Q1 was 5.52 billion yuan, -17.96% year over year. Investment and fair changes in primary and secondary markets caused a dynamic decline in performance, and the fixed income business strongly improved stability. At the end of the quarter, trading financial assets of 673 billion yuan, +7.7% year over year, sold and repurchased financial assets of 396.5 billion yuan, +40% year over year.
Profit forecasting and investment advice: Leading brokerage firms operate more steadily in a strictly regulated environment and benefit more from the process of building first-class investment banks. The company's many businesses rank first in the industry, with outstanding comprehensive advantages and leading international layout. The company's net assets are estimated to be 19.23/20.58 yuan per share in 2024-2025. Given the PB pivot of 1.1-2.1 times in the past three years, the reasonable value of A shares is 25 yuan/share, and since the AH premium corresponds to a reasonable value of HK$16.08 per share for H shares, maintaining the “buy” ratings for A and H shares. (HKD/CNY=0.91)
Risk warning. The economic downturn exceeded expectations, industry policy changes, and fluctuations in equity and bond markets caused performance to fall short of expectations, etc.