Event: The company released its report for the first quarter of 2024. With 2024Q1, the company achieved revenue of 13.755 billion yuan, -10.38% year-on-year, and realized net profit of 4.959 billion yuan, -8.47% year-on-year, weighted average ROE of 1.88%, and -0.19pct year-on-year.
Comment:
The company's operating performance was steady, and the decline in revenue from the fee business dragged down performance. The company's broker/investment banking/asset management/credit/ proprietary revenue was 24.42/8.69/23.58/3.25/5.460 billion yuan, respectively, -5.8%/-56.1%/-5.6%/-44.2%/-17.4%.
1) In terms of brokerage business, 2024Q1 had a market stock fund transaction volume of 59.26 trillion yuan, +1.3% year over year; in terms of wealth management, the size of newly issued “stock+hybrid” funds was 54.6 billion yuan, -41.3% year-on-year. 2) In terms of investment banking business, according to ifind statistics, the company's IPO volume in the first quarter was 3.298 billion yuan, or -67.2%, with a market share of 14.0%, ranking second in the industry; in terms of reserve projects, as of April 27, the company had 264 IPO reserve projects, ranking first in the industry. In terms of bond underwriting, the company's first-quarter bond underwriting scale was 375.940 billion yuan, +8.9% year-on-year, ranking first in the industry. 3) In terms of asset management business, Huaxia Fund's non-commodity fund size at the end of 2024Q1 was 919.540 billion yuan, +12.3% compared to the beginning of the year. 2024Q1 Huaxia Fund's profit was 518 million yuan, -5.8% YoY.
4) In terms of credit business, by the end of 2024Q1, the company's securities financing business had raised capital of 114.280 billion yuan, -3.8% from the beginning of the year, and a market share of 7.4%, a slight increase from the beginning of the year. 5) In terms of proprietary business, at the end of the first quarter, the company's financial investment assets were 801.964 billion yuan, +12.0% compared to the beginning of the year, and the size of the company's other equity instruments was 65.185 billion yuan, +585.1% compared to the beginning of the year. In addition, the company sold and repurchased financial assets of 396.527 billion yuan. Compared with +39.9% at the beginning of the year, we expect the level of leverage in the proprietary bond business to increase.
Management fees declined markedly year over year. The company's management expenses were 6.178 billion yuan, -15.6% year-on-year.
The leverage ratio continues to increase. With the exception of customer capital, the company's leverage ratio was 4.61 times, which was a slight increase of 0.18 times compared to the beginning of the year.
The company's operating performance is steady, and we are optimistic about the company's development prospects to build a first-class investment bank. Since the beginning of the year, due to the decline in the scale of investment banks' IPOs and market shocks, the company's performance has fluctuated less, and its advantage as a leading industry leader has been highlighted. On March 15, the Securities Regulatory Commission issued “Opinions on Strengthening the Supervision of Securities Companies and Public Funds and Accelerating the Construction of First-Class Investment Banks and Investment Institutions (Trial)”, which emphasizes speeding up the construction of first-class investment banks and proposes a specific schedule. Leading institutions in the industry are expected to develop at an accelerated pace, so it is recommended to pay attention.
Risk factors: capital market fluctuations; policy implementation falls short of expectations; investment banking business recovery falls short of expectations, etc.