Incidents:
CITIC Securities released its 2024 quarterly report. The company achieved cumulative operating income of 13.76 billion yuan, -10.4%/-4% month-on-month; net profit to mother of 4.96 billion yuan, -8.5% YoY/+50% month-on-month. Under a low base, the company's 1Q24 net profit improved significantly from month to month. ROE 1.88%, down 0.19pct from the same period last year.
Fee business: Investment banks continue to consolidate their leading position, showing advantages in institutional business 1) The company achieved cumulative brokerage revenue of 2.44 billion yuan in 1Q24, -6% YoY /+2% month-on-month, accounting for 19.4% of the main securities revenue (excluding bulk commerce and government subsidies). Mainly due to the reduction in the size of the 1Q24 New Development Fund and the reduction in commission rates, the company's brokerage revenue was dragged down.
2) The company achieved cumulative asset management revenue of 2.36 billion yuan in 1Q24, -6% YoY /-4% YoY. 1Q24 Holdings Huaxia Fund achieved net profit of 518 million yuan, -5.8% year-on-year, contributing 6.5% to the company's net profit. By the end of 1Q24, Huaxia Fund had a non-cargo AUM of 919.5 billion yuan, +29.1% year-on-year, ranking second in the industry in terms of scale.
3) The company achieved cumulative investment banking revenue of 870 million yuan in 1Q24, -56% YoY/-16% month-on-month, maintaining the lead in various indicators. (1) According to statistics from the release date, 1Q24 had a cumulative IPO volume of 5.1 billion, with a market share of 22.6%, leading the industry; the number of IPOs was 4, a decrease of 9 compared with the same period last year; (2) the scale of refinancing was 9.4 billion, -84% YoY, with a market share of 20%, ranking first in the industry. (3) Debt of 399 billion dollars, +10% year-on-year, with a market share of 14.5%, ranking first in the industry.
Capital business: The investment business improved month-on-month, and the credit business was under pressure 1) The company achieved cumulative net investment income (including exchange income) of 6.33 billion yuan in 1Q24, -6% year-on-year/month-on-month +38%. We estimate that 1Q24 operating leverage was 4.52 times, a slight increase of 0.17 times from the end of '23. At the end of 1Q24, the company's total financial assets were 8375 billion yuan, +15% year over year, including transactional financial assets of 708.6 billion yuan, +7% year-on-year. The estimated return on the company's 1Q24 investment was 3.02%, +0.58pct at the end of 23.
2) Credit business was under slight pressure. The company achieved cumulative net interest income of 330 million yuan in 1Q24, -44% YoY/-57% YoY. Mainly due to the year-on-year increase in the company's interest expenses. In 1Q24, the company's interest expenses were 4.86 billion yuan, +4% YoY +8%.
Profit Forecasts, Valuations, and Ratings
We expect the company's 24-26 revenue to be 602/635/81 billion, respectively, +0.2%/+5.5%/+6%; net profit to mother will be 200/213/27.9 billion, respectively, +1.5%/+6.5% YoY; and EPS 1.35/1.44/1.53 yuan/share, respectively. We believe that the company will continue to maintain its leading position in the industry in the future, and its performance is expected to grow steadily. Maintain the company's PB 1.6 times in 24 years, target price 27.57 yuan, and maintain a “buy” rating.
Risk warning: Market recovery falls short of expectations, increased competition in the industry, risk of policy changes