Introduction to this report:
In a volatile market environment, risk management business is dragging down performance; it is expected that the company will continue to consolidate and improve its ability to meet the needs of industrial customers, seize opportunities for rising risk management needs of physical enterprises, and drive performance growth.
Key points of investment:
Maintain the “increase” rating and maintain the target price of 19.94 yuan/share, corresponding to 39.01xPe and 2.22xPb in 2024. The company's 2023 revenue/net profit to mother was 238.23/729 million yuan, -31.5%/8.34%; weighted average ROE +0.26pct yoy to 5.97%; 2024Q1 revenue/net profit to mother 43.38/78 billion yuan, -19.12%/-62.58% yoy; weighted average ROE was -1.10pct to 0.63% yoy, which was lower than expected. Based on the latest business development environment, the profit forecast was lowered to 24-25 EPS of 0.51 /0.56 yuan (0.65 /0.70 yuan before adjustment), and an additional forecast of EPS of 0.62 yuan for 26 years; considering that the company will continue to consolidate and improve its ability to meet the needs of industrial customers, seize opportunities for rising risk management needs of physical enterprises, maintain a target price of 19.94 yuan, and maintain an “gain” rating.
In a volatile market environment, risk management is becoming more difficult, and declining return on investment and rising cost ratios drag down performance. 1) The net revenue from the company's investment business in 2023 was -49.43% year-on-year to 177 million yuan, contributing -171.08% of the adjusted revenue increase, putting pressure on performance. The main reason is that in a highly volatile market environment, risk management business hedging and market making are becoming more difficult, and the return on financial asset investment declined to -3.06 pct to 1.77% year over year. 2) 2024Q1's net revenue from other businesses was -140 million yuan to -109 million yuan year-on-year, contributing -129.87% of the adjusted revenue increase, which was the main reason for the decline in performance.
It is expected that the company will continue to consolidate and improve its ability to meet the needs of industrial customers, seize opportunities for rising risk management needs of physical enterprises, and drive performance growth. 1) The introduction of the Nine Rules of the New State encourages financial institutions to put functionality first and continuously improve the standards of professional services. At the same time, external uncertainties have increased, and the demand for risk management in physical enterprises has increased. 2) The company actively embraces transformation opportunities and makes efforts to deepen mother-child collaboration and enhance investment capacity. It is expected to continue to consolidate and improve its ability to meet the needs of industrial customers and drive performance growth beyond expectations.
Catalyst: Rapid rise in enterprise risk management needs
Risk warning: commodity and equity market fluctuations are increasing; corporate risk management demand is growing slowly