Key investment points: The company's self-operated business performed well, driving an increase in overall performance. The brokerage business, asset management business, and investment banking business declined year-on-year. We are still optimistic about business collaboration between the company and China Merchants Group and China Merchants Bank. The reasonable value range is 15.76-17.07 yuan, maintaining the “superior to the market” rating.
[Event] China Merchants Securities announced results for the first quarter of 2024: operating income of 4.30 billion yuan, -9.7% year on year; net profit to mother of 2.16 billion yuan, -4.5% year on year; corresponding EPS of 0.23 yuan, ROE 1.9%, -0.22pct year on year.
The decline in the company's operating income and net profit to mother in the first quarter was mainly due to a decline in net interest income.
The brokerage business declined, and the scale of financing increased year-on-year. The company's brokerage revenue for the first quarter of 2024 was 1.32 billion yuan, -7.0% year-on-year, accounting for 30.7% of revenue. The average daily stock base transaction volume of the entire market was 102 billion yuan, +4.8% year-on-year. The company's financing balance was RMB 80.4 billion, -3.9% compared to the beginning of the year, with a market share of 5.23%, and +0.16pct year-on-year. The company firmly implements the “platform empowers marketing teams, two-wheel marketing and operation” online and offline development strategy; accelerates the transformation of wealth management, and vigorously builds a professional and leading wealth advisory team.
Investment banking revenue has declined, and IPO reserves are sufficient. In the first quarter of 2024, the company's investment banking business revenue was 90 million yuan, -43.3% year-on-year. The underwriting scale of the equity business was +71.4% year over year, and the underwriting scale of the bond business was +31.0% year over year.
The shareholder underwriting scale was 8.26 billion yuan, ranking 3rd. It was the 4 refinancing companies. The principal underwriting scale of bonds was 76.7 billion yuan, ranking 12th; of these, financial bonds, ABS, and corporate bonds were 35.3 billion yuan, 21.8 billion yuan, and 13.2 billion yuan respectively. There are 7 IPO reserve projects, ranking 6th, including 2 from the Beijing Stock Exchange, 1 from the Science and Technology Innovation Board, and 4 from the GEM.
Revenue from the asset management business declined slightly, and the leading position of public equity subsidiaries was stable. In the first quarter of 2024, the company's asset management business revenue was 160 million yuan, -13.6% year-on-year. Asset management was $294.9 billion, -7.0% YoY. At the end of 2023, Bosch Fund's asset management scale was 156.49 billion yuan, down 4.87% from the end of 2022. It ranked 7th in the size of non-monetary public funds and 2nd in terms of the size of bond-type public funds. The asset management scale of China Merchants Fund at the end of 2023 was 1550.4 billion yuan, an increase of 4.85% over the end of 2022. The management scale of public funds (excluding linked funds) was 860.6 billion yuan, an increase of 11.70% over the end of 2022. Non-monetary public funds ranked 4th and bond-type public funds ranked 1st in size.
Investment income (including fair value) in the first quarter achieved positive growth for the second year in a row. The company's investment income (including fair value) for the first quarter of 2024 was $2.05 billion, +18.8% year-on-year. The company continues to implement the “big and stable” asset allocation strategy, coordinate asset allocation, investment decisions and risk management from the top down, adjust and optimize the investment structure in a timely manner according to changes in the market situation, continuously improve the business strategy, and effectively improve the stability of investment returns.
Investment advice: We expect the company's EPS to be 1.15/1.26/1.32 yuan in 2024-26E, and 13.13/14.16/15.08 yuan for BVPS, respectively. We gave it 1.2-1.3x P/B in 2024, corresponding to a reasonable value range of 15.76-17.07 yuan, maintaining the “better than the market” rating.
Risk warning: Trading volume continues to decline, and investment returns continue to decline due to increased equity market fluctuations.