Key investment points: The company is characterized by fixed income and is a scarce target among existing listed brokerage firms. The company is committed to building a securities company with fixed income characteristics, with asset management business as the core. The reasonable value range is 5.46-6.19 yuan, maintaining a “neutral” rating.

[Event] The company released its 2023 annual report and 2024 quarterly report. In 2023, we achieved operating income of 2.49 billion yuan, -4.7% year on year; net profit to mother of 330 million yuan, -17.5% year on year; corresponding EPS 0.09 yuan, ROE 2.7%, -0.7 pct year on year. In the first quarter of 2024, we achieved operating income of 670 million yuan, -2.7% year on year; net profit to mother of 140 million yuan, +1.6% year on year; corresponding EPS 0.03 yuan, ROE 1.0%, the same as year on year.

The brokerage business accelerates the transformation of wealth management and focuses on all types of products and services throughout the customer life cycle. In 2023, brokerage revenue was 350 million yuan, -8.6% year-on-year, accounting for 14.1% of revenue. Brokerage revenue for the first quarter of 2024 was 80 million yuan, -4.8% year-on-year. In 2023, the company's revenue from consignment financial products was 0.18 million yuan, -1.3% year-on-year, accounting for 5.2% of brokerage business revenue. At the end of 2023, the company's balance of two loans was 7.2 billion yuan, +17% compared to the beginning of the year, with a market share of 1.48%, and +1.08pct year-on-year.

Strengthening the Beijing Stock Exchange's business layout, the Beijing Stock Exchange ranked first in the first-quarter brokerage practice quality evaluation. Investment banking revenue in 2023 was 190 million yuan, -31.8% YoY. Investment banking revenue for the first quarter of 2024 was 70 million yuan, +41.6% year-on-year. In 2023, the equity underwriting scale was -72.3% year-on-year, and the bond business underwriting scale was +37.2% year-on-year.

In 2023, the shareholder underwriting scale was 2.69 billion yuan, ranking 38th, and refinancing 3 companies. In 2023, the principal underwriting scale of bonds was 14.5 billion yuan, ranking 60th; among them, the underwriting scale of corporate bonds, ABS, and financial bonds was 12.5 billion yuan, 1.5 billion yuan, and 600 million yuan respectively.

The company's fixed income sales and investment trading business continues to be recognized by customers and the market. The company's fixed income business revolves around the positioning of “trading as the core, investment and sales as the two wings” to promote transaction-driven transformation and deepen linkages through first-level sales and second-level transactions to build a service organization throughout the customer transaction life cycle, and continuously enhance customer service capabilities and market influence. In 2023, the company's total fixed income sales amount was 177.212 billion yuan, up 2.26% year on year; bond trading volume in the interbank and exchange markets was 7.95 trillion yuan, up 14.38% year on year.

Actively promote active management transformation, and the scale of brokerage asset management and public funds is growing against the market. Asset management revenue in 2023 was 90,000,000 yuan, -12.1% YoY. Asset management revenue for the first quarter of 2024 was 230 million yuan, -1.8% year-on-year.

As of the end of 2023, the total amount of fiduciary management capital for the company's asset management business was 61.118 billion yuan, an increase of 6.190 billion yuan over the end of 2022, an increase of 11.25%. The total management capital of Chuangjin Hexin was 998.180 billion yuan, an increase of 158.67 billion yuan over the end of 2022, an increase of 18.90%. Among them, the management scale of public funds was 114.059 billion yuan, an increase of 27.483 billion yuan over the end of 2022, an increase of 31.74%. As of the end of 2023, Chuangjin Hexin Equity Public Fund had a yield of 116.79% in the past five years, ranking 11th in the industry.

There was a sharp year-on-year recovery under the low base of self-employment in 2023. Investment income in 2023 (including fair value) was $590 million, +217.3% year-on-year; investment income (including fair value) for the fourth quarter was 160 million yuan, turning a year-on-year loss into a profit. Investment income (including fair value) for the first quarter of 2024 was 230 million yuan, +9.2% year-on-year.

[Investment Proposal] We expect the company's 2024E-2026E net profit to be 365 million yuan, 409 million yuan, and 459 million yuan, respectively, +10%/+12%/+12% year-on-year, net profit per share of 0.09/0.10/0.11 yuan, respectively, and net assets per share of 3.64/3.74/3.85 yuan, respectively. We gave it 1.5-1.7 x 2024 PB (considering that the company is characterized by fixed income, is a scarce target among existing listed brokerage firms, and an appropriate valuation premium is given for active asset management products). The corresponding reasonable value range is 5.46-6.19 yuan, maintaining a “neutral” rating.

Risk warning: Continued market downturn has led to a decline in business scale, and market supervision has been further strengthened.