Incident: CITIC Securities released its 2024 quarterly report, achieving operating income and net profit of 137.55 billion yuan and 4.959 billion yuan respectively, of -10.4% and -8.5% year-on-year respectively.
The overall business is under pressure, and the cost control results are remarkable. On the revenue side, 24Q1 brokerage, investment banking, asset management, interest, and investment income were 24.42, 8.69, 23.58, 3.25, and 5,520 billion yuan, respectively, -5.8%, -5.6%, -44.2%, and -18.0% year-on-year, accounting for 19.0%, 6.8%, 18.3%, 2.5%, and 42.9% of adjusted revenue, respectively; on the cost side, management expenses ranged -15.6% to 6.178 billion yuan, management expense ratio -0.82 pct to 48.0% year on year, credit impairment Losses were swept back to $21 million, and asset quality remained stable.
Fee revenue declined due to market cooling, but business capacity remained industry-leading. 1) Brokerage business. Stock turnover in the 24Q1 market was +0.2% year-on-year. Expected falling rates and poor consignment sales were the main reasons for the decline in the company's brokerage business revenue. 2) Investment business. According to Wind statistics, the IPOs, refinancing, and bond underwriting scales of 24Q1 were 51, 24, and 399 billion yuan respectively, or -50.4%, -94.2%, and +4.1% year-on-year respectively. The phased tightening of equity financing led to a decline in investment bank revenue, but the company's equity and bond business strength remained at the top. 3) Asset management business. The decline in management fees and performance rewards in weak markets is expected to put pressure on asset management revenue. By the end of 2023, the company's private equity asset management business had a market share of 13.7%, ranking first in the industry.
Financial assets continue to expand, and the level of leverage continues to rise. As of the end of 24Q1, the company's total assets and net assets reached 1,5673 billion yuan and 285.9 billion yuan respectively, +7.8% and +4.3% compared to the beginning of the year. The operating leverage after excluding customer funds was +4.0% to 4.44 times higher than at the beginning of the year. In terms of investment business, the size of the company's financial assets at the end of 24Q1 was +12.0% to 801.964 billion yuan, driving investment leverage +7.5% to 2.81 times higher than at the beginning of the year; in terms of credit business, at the end of 24Q1, the company raised funds, bought and resold financial assets was 1,142.80 billion yuan and 49.774 billion yuan, respectively, -3.8% and -20.0%, respectively, compared with the beginning of the year, driving credit leverage of -13.1% to 0.57 times higher than at the beginning of the year.
Investment advice: Continue to be optimistic about CITIC Securities's leading edge in building a first-class investment bank. The company is expected to achieve net profit of 213.34 billion yuan and 24.357 billion yuan in 2024-2025, respectively, +8.2% and +14.2% year-on-year respectively. The corresponding PB at the close of April 26 was 0.98 and 0.95 times, maintaining an “increase in weight” rating.
Risk warning: risk of large fluctuations in the capital market; risk of a sharp decline in market transaction scale; risk of industry regulatory policies exceeding expectations and tightening