The high base of self-employment in the first quarter affected performance, and fee revenue had alpha
The company's total operating revenue/net profit in 2023 was RMB 65.2/2.25 billion, +35%/+48% year over year, within the performance forecast range. The weighted average ROE was 6.7%, +1.7 pct compared to 2022, and the equity multiplier (after deducting customer security deposit) was 3.32 times, or +4% year-on-year. 2024Q1's total operating revenue/net profit to mother was 1,41/450 million yuan, -21%/-8% YoY, lower than our expectations. The annualized weighted average ROE was 5.2%, compared to -1.4pct in 2023. Affected by the high base, the year-on-year decline in earnings from proprietary investment in the first quarter dragged down performance. Considering that the company's proprietary investment income was lower than our expectations, the net profit for 2024 and 2025 was lowered to 24.30 billion yuan (29/36 before adjustment), adding an additional 2026 forecast of 3.7 billion yuan, +7%/+23%/+24%, ROE 6.8%/7.9%/9.2%, and EPS of 0.5/0.6/0.8 yuan. The company has outstanding location advantages. The parent company's wealth management and investment banking business continue to improve, and subsidiaries support ROE.
The current stock price corresponds to 0.9/0.9/0.8 times PB, maintaining a “buy” rating.
The number of clients grew significantly, and the investment banking business was resilient. Asset management AUM bucked the trend (1) 2023/2024Q1 brokerage net revenue of 12.0/300 million yuan, +1%/+8%, the number of clients outperformed the market in 2023, and the number of wealth customers and high-net-worth customers grew. The number of parent company customers exceeded 3.26 million, +14%, and the number of new accounts opened in the 2023 market was -17%. The scale of the company's innovative businesses such as securities settlement, escrow, and fund investment developed rapidly, and the contribution of securities settlement transactions increased by 157%. The contract size for fund investment business was +67% compared to the same period last year.
(2) 2023/2024Q1 investment bank's net revenue was 76/140 million yuan, +68%/-8% YoY. In 2023, the company sponsored 6 IPO projects, including 5 companies in Zhejiang Province, ranking first in the provincial market; the debt scale was 123.4 billion yuan, +79% over the same period, ranking 2nd for the provincial business. (3) Net revenue from the asset management business in 2023/2024Q1 was 1,55/ 320 million yuan, +6%/+2% year over year, and total AUM of asset management at the end of 2023 was +10%. Net profit of CaiTong Asset Management in 2023 was 460 million yuan, +1% YoY, ROE 20.2%. Compared with 2022/7 pct, 2023/2024Q1 public offering non-commodity AUM was 981/102.8 billion yuan, +13%/+14% YoY, with a market share of 0.60%/0.62%.
The ROE of Yongan Futures rebounded, and the ROE of Zhejiang assets declined, and self-operated investment promoted a dedirectional transformation (1) The net profit of Yongan Futures/Zheshang assets in 2023 was 738/1.55 billion yuan, +8%/-17% year over year, profit contribution 10%/14%, and ROE 6.0%/10.9%, compared to 2022. (2) Proprietary investment income in 2023/2024Q1 was 1,76/43 billion yuan, +1056%/-39% year-on-year, and the annualized return on proprietary investment was 3.7%/3.3%, respectively (0.4% in 2022). At the end of 2023/2024Q1, the amount of proprietary financial assets was $51.4/52.9 billion yuan, +15%/+14% year over year. The company continues to promote the transformation of investment direction, improve the stability of earnings and improve the efficiency of capital use.
Risk warning: Risk of market fluctuations; growth in wealth management and asset management falls short of expectations.