Core views:

Performance declined markedly under a high base. The company released its 2024 quarterly report. 2024Q1 achieved revenue of 3.874 billion yuan, or -37.61% year-on-year; realized net profit to mother of 1,239 billion yuan, or -45.13% year-on-year.

The weighted average ROE was 1.21%, -1.29 pct year over year. The leverage ratio has declined. 24Q1 The company's total assets were 613.7 billion yuan, -7.8% YoY. Excluding clients' funds, the leverage ratio of 4.96 times decreased by 0.64 from the same period last year and 0.20 from the beginning of the year.

Pan-ownership has been drastically reduced by market and environmental pressure. The 24Q1 net income of the company's investment+fair change was 1,848 billion yuan in a single quarter, -49% year-on-year. Derivatives valuations declined. 24Q1 companies' transactional financial assets, derivative financial assets, and derivative financial liabilities were -13%, -32%, and +9%, respectively.

Investment in bonds increased, with 24Q1 selling and repurchasing financial assets of 83.5 billion yuan, +26.3% year over year; investment in other debt was 62.7 billion yuan, +18.2% year over year.

(1) The net revenue of brokerage business in Q1 was 831 million yuan, -33% year-on-year. The average daily transaction volume of the entire market in the first quarter was +1.90%, and the new issue hybrid fund was -33% year-on-year. (2) Net revenue from asset management business in Q1 was 268 million yuan, -18% year-on-year. According to Wind data, the non-trading volume of CICC Fund in 24Q1 was 67.7 billion yuan, +21% year-on-year. (3) Net revenue from the investment banking business was 450 million yuan, -25%; according to Wind's release date data, the total equity financing amount of 2024Q1 was 110.7 billion yuan (-69% YoY), while the company's A share financing amount was 9.5 billion yuan (-76% YoY); (4) The balance of the two loans at the end of the first quarter was 1537.9 billion yuan, -4% YoY. The company's Q1 net interest expenditure was 594 million yuan, +144% year-on-year.

Profit prediction and investment advice: Under the development wave of industry leadership, internationalization, and customer base institutionalization, the company's comprehensive advantages are outstanding. It is expected that the company will consolidate its outstanding advantages and maintain its leading position. The company's net assets are estimated at $22.87/23.77 per share in 2024-2025. Given 0.4-1.4 times the PB core of H shares in the past five years, H shares are given a PB valuation of 0.60 times in 2024. The reasonable value is HK$14.84 per share, maintaining the H share “buy” rating. (HKD/CNY=0.93)? Risk warning. Downside risks in the market, falling short of expectations in equity investment, interest rate risks, rising equity and asset management credit risk, etc.