Matters:
Q1 Revenue of 4.3 billion yuan (-9.7% YoY/-13.2% YoY), net profit to mother of 2.16 billion yuan (-4.5% YoY/-8.7% YoY), and net assets to mother of 124.3 billion yuan (+1.9% compared to the beginning of the period).
Commentary:
The brokerage and investment business contributed to major results. Q1 revenue split: Broker/investment banking/asset management/credit/investment business revenue was $13.2/0.9/1.2/2.05 billion, respectively, -7%/-43.3%/-13.6%/-75.6%/+18.8%, contributing 30.7%/2%/3.6%/2.8%/47.7% to revenue. The company's investment business is steady, and the brokering+investment business contributes about 80% of the performance.
Proprietary investments have a steady return. Q1 Proprietary business revenue of 2.05 billion yuan (+18.8% YoY/+1.9% YoY).
The financial leverage ratio at the end of Q1 was 4.57 times (+0.28 times y/month-on-month -0.35 times). Among them, the financial investment scale was 361.41 billion yuan (+18.2% YoY /-1.8% month-on-month), a slight decline from month to month, and the return on proprietary investment in a single quarter was 0.56% (flat year-on-year/-0.01pct).
Asset-light businesses are under pressure. Q1 The company's net revenue from fees and commissions was $17.01 billion (-12.3% YoY/-20.4% YoY). The average daily turnover of Q1A shares was 895.37 billion yuan (+1.9% YoY +7.5%), and the company's net brokerage fee revenue was 1.32 billion yuan (-7% YoY /+5.4%), which is basically consistent with changes in the industry.
The company's net income from investment banking fees was 90 million yuan (-43.3%/-84.2% month-on-month), IPO/refinancing/debt undertaking scale of 18.9/84.4/779.1 billion yuan, +1.89 billion yuan/ +75.1%/33%; industry IPO/refinancing/debt undertaking scale of 236.2/870.6/2709.75 billion yuan, -63.7%/-70%/+4.8% year-on-year. Since the investment banking business accounts for a relatively small share, the impact on performance is limited.
Investment advice: Considering the increase in the share of the company's own business, the investment business is steady, and the profit forecast is slightly raised.
EPS for 2024/2025/2026 is expected to be 1.11/1.22/1.32 yuan (pre-24/25 value: 1.04/1.10 yuan), BPS is 13.20/14.13/15.13 yuan, respectively. The corresponding PB of the current stock price is 1.15/1.08/1.01 times, respectively. China Merchants Securities relies on China Merchants Group and continues to be optimistic about synergy effects and institutional business development. We gave the company a valuation of 1.4 times PB in 2024, with a target price of 18.5 yuan, maintaining a “recommended” rating.
Risk warning: financial regulatory risks; declining market trading volume; declining risk appetite; capital market innovation falling short of expectations; real economic recovery falling short of expectations.