Introduction to this report:
The company's 2023 performance growth was mainly due to the release of performance rewards, and the 2024Q1 performance was mainly weighed down by investment losses. It is expected that future performance will be released at an accelerated pace as the size of new funds increases and old fund projects withdraw to meet performance rewards.
Key points of investment:
Maintain the “Overweight” rating and lower the target price to 24.3 yuan, corresponding to 2024 18xP/E:
The company's adjusted revenue (including private equity investment income) /net profit for 2023 was $1,856/985 million yuan, +2.2%/+19.4% YoY, in line with expectations; 2024Q1 adjusted revenue/net profit of $115/0.09 million yuan, -73%/-96% YoY, lower than expected. Considering the company's investment fluctuations, we adjusted the net profit forecast for 24/25/26 to be 10/15/1.9 billion yuan (the net profit forecast for 24/25 was 21/2.6 billion yuan before adjustment), and the corresponding EPS was 1.35/2.02/2.44 yuan. Maintaining the “Overweight” rating, the target price was lowered to 24.3 yuan, corresponding to 18 xP/E in 24 years.
The confirmation of performance compensation was the main reason for the increase in performance in 2023. Investment loss was the main reason for the decline in the company's 2024Q1 performance: the increase in performance in 2023 was mainly due to the increase in private equity business, where the company confirmed performance compensation for the first time and management fee revenue increased: 2023 private equity business revenue of 466 million yuan, +70.52% year over year, contributing 482.19% of revenue growth, of which excess performance compensation revenue was 133 million yuan, 22% year over year. The main reason for the decline in performance in the first quarter of 2024 was a sharp decline in investment income: the private equity business investment income for the first quarter of 2024 was -98 million yuan, which changed from profit to loss over the previous year.
The company's initiation of a buyback shows confidence. New fund raising continues to advance, the old fund withdraws and gradually realizes profits, and future performance is expected to be released at an accelerated pace: the company announced that it plans to repurchase the company's shares for no less than 50 million yuan and no more than 10 million yuan, demonstrating the company's confidence. The total amount pledged by the Company's Harmonious Green Industry Fund has reached 9.5 billion yuan, which is expected to lead to a positive increase in management fee revenue as the scale increases. The listing and subsequent exit of the company's first phase fund project will accelerate the implementation of the company's investment income and performance rewards, and the release of performance is expected to accelerate.
Catalyst: Accelerating the company's new fund raising.
Risk warning: The prosperity of the private equity investment industry has declined, and regulatory policies have changed.