Societe Generale Securities announced its 2023 annual report and the first quarter report for 2024. In 2023, the company achieved operating income of 10.627 billion yuan, a slight decrease of 0.3% year on year; realized net profit of 1.964 billion yuan, down 26% year on year; net profit after deducting non-recurring profit and loss was 1,865 billion yuan, down 24% year on year. The company also disclosed its 2024 quarterly report. The company achieved operating income of 2,377 million yuan, down 43% year on year; realized net profit of 328 million yuan, down 60% year on year; net profit after deducting non-recurring profit and loss was 297 million yuan, down 61% year on year, corresponding EPS 0.035 yuan, down 64% year on year; ROE was 0.56%, down 1.01 pct year on year. The decline in performance was mainly due to the decline in processing fees and commission income, compounded by the increase in the company's operating costs. Subsequent companies continued to deepen the two-round linkage strategy of “wealth management and large institutional business”.
Brokerage performance is under pressure, and the wealth structure is optimized. In 2023, due to the decline in capital market prosperity and poor trading activity, brokerage business revenue was 2,253 billion yuan, a year-on-year decrease of 18%; the company's share base trading volume was 6.69 trillion yuan, accounting for 1.39% of the market share. In the first quarter of 2024, the company achieved brokerage revenue of 467 million yuan, a year-on-year decrease of 23%. The company continues to optimize the wealth management business structure, such as enriching the ETF ecosystem, upgrading the account structure, building asset management boutiques, and promoting the two-wheel drive of “wealth management+large institutional business”.
Investment performance is under pressure, and the scale of debt is growing. As the IPO review becomes more stringent, the overall scale of stock financing in the market continues to decline. In 2023, the company achieved investment banking revenue of 1,044 billion yuan, an increase of 9% over the previous year.
In the first quarter of 2024, the company achieved investment banking revenue of 116 million yuan, a year-on-year decrease of 69%. In 2023, the company's equity underwriting amount was 17.325 billion yuan, down 12% year on year; bond underwriting amount was 133.1 billion yuan, up 20% year on year, and the corporate bond underwriting scale continued to grow.
The scale of financial assets has increased, and investment returns are stable. In 2023, the increase in investment scale and yield led to a significant increase in investment income. In that year, investment business revenue (including changes in fair value) was 601 million yuan, an increase of 57% over the previous year; the size of financial assets increased 35% year over year to 129.7 billion yuan. In the first quarter, the company achieved self-operated business revenue of 329 million yuan, a year-on-year decrease of 68%, mainly due to a year-on-year decrease in investment income from transactional financial instruments.
Asset management business improved, and overseas performance was outstanding. The asset management business achieved net revenue of 148 million yuan in 2023, a year-on-year decrease of 8%; AUM reached 84.4 billion yuan, an increase of 13% over the end of 2022. In the first quarter of 2024, the asset management business achieved net revenue of 36 million yuan, an increase of 10% over the previous year. Overseas business has become a new opportunity. The company's overseas business achieved revenue of 382 million yuan in 2023, an increase of 3 times over the previous year, and is expected to become a new driving force for growth.
Risk warning: risk of large profit forecasting bias; risk of large market fluctuations; risk of overseas regulation.
Investment advice: Based on equity market fluctuations and the impact of new regulatory regulations on the securities business, we lowered the company's profit forecasts for 2024 and 2025 by 19% and 21%, respectively, and predicted that the company's net profit to mother in 2024-2026 would be 2,669 billion yuan, 2,893 billion yuan, and 3.362 billion yuan, respectively, up 36%/8%/16% year over year. The PE corresponding to the current stock price is 19.4/17.9/15.4x, and PB is 0.9/0.9/0.8x. The company will continue to deepen the “two-wheel linkage” strategy, further build an international professional platform, and maintain the “gain” rating for the company.