Core views:
The decline in performance under the high base was slightly better than expected, mainly due to a recovery in pan-owned operations. In the first quarter of 2024, the company achieved revenue of 4.299 billion yuan, -9.7% YoY; net profit to mother was 2.557 billion yuan, -4.5% YoY. Q1 The company's total assets were 642.6 billion yuan, +7.0% year over year; the leverage ratio without agent payments was 4.42 times, up 0.25 from the previous year.
Pan-owned businesses are developing steadily, and there is some recovery. The company's net investment income plus fair value change income Q1 was 2,399 billion yuan, +13.5% year on year. Transactional financial assets at the end of the first quarter were 26.8 billion yuan, -6.4% compared with the beginning of the year, while derivative financial assets were 7.283 billion yuan, +9.0% month-on-month. The company increased its fixed income investment. 24Q1 debt investment and other debt investments totaled 74.108 billion yuan, +25% over the same period last year.
The decline in the investment banking business was superior to that of the market, and the pan-wealth business was under pressure from the market. (1) The average daily transaction volume of the entire market in Q1 was +1.9%, and the net revenue of brokerage business in Q1 in a single quarter was 1.32 billion yuan, -7% year-on-year. (2) Q1 Asset Management's net revenue in a single quarter was 155 million yuan, -13.9% year-on-year, continuing the decline; according to Wind data, the Q1 non-commodity scale of the Joint Venture Capital Fund and China Merchants Fund was +12.3%/-0.6%, respectively. (3) Investment banking business Q1 net revenue of 88 million yuan, -43.2% YoY. According to Wind's release date data, the total market equity financing amount in 23Q1 was 110.7 billion yuan, -69% year-on-year, and the company's equity underwriting was 10.3 billion yuan, +114% year-on-year. (4) Net interest income in Q1 was 120 million yuan, -76% year-on-year, mainly due to increased interest expenses from the repurchase business. Q1 The balance of the two loans in the market was 1537.9 billion yuan, -4% year-on-year. (5) Net revenue from other businesses reached 23 million yuan in the first quarter, -85% year-on-year.
Profit forecasting and investment suggestions: Comprehensive state-owned brokerage firms with deep shareholder resources have improved the internal stability of the capital market, and leading brokerage firms have benefited more in the process of building first-class investment banks. The company's profits have steadily increased, and its ability to use capital has increased, and efforts have been made to optimize the customer base at both retail and institutional levels. The company's net assets are estimated to be $14.85/15.93 per share in 2024-2025. Given 0.9-1.8 times the PB core in the past five years, the reasonable value of A shares is 19.31 yuan/share, and since the AH premium corresponds to a reasonable value of HK$8.40 per share for H shares, maintaining the “buy” ratings for A and H shares. (HKD/CNY=0.93)
Risk warning: the economy falls short of expectations, large market fluctuations, interest rate risks, policy changes, etc.