[Event] Yongan Futures announced the full year of 2023 and 2024Q1 results: 1) 2023 revenue of 23.8 billion yuan, -31.5% year-on-year. Net profit attributable to mother was 730 million yuan, +8.3% year over year. Net assets to mother were +3.7% at the beginning of the year and +0.4% compared to the end of Q3. The dividend per share was 0.15 yuan, a slight increase over the previous year. The dividend rate was about 30.2%, which remained stable. 2) 23Q4 revenue was 5 billion yuan in a single quarter, -17.8% year on year, and net profit to mother was 170 million yuan, -15.2% year over year. 3) 24Q1 revenue of 4.3 billion yuan, -19.1% YoY. Net profit attributable to mother was 80 million yuan, -62.6% YoY. Net assets due to mother were +0.6% compared to the beginning of the year.
2023 performance: Net income from handling fees and investment income declined, and overseas business profits increased dramatically. 1) The company's net interest income was 680 million yuan, +5.5% year on year; net income from handling fees and commissions was 760 million yuan, -3.8% year over year, mainly due to the decline in asset management and fund sales business; while investment income was -029 million yuan, compared to 340 million yuan in the same period last year, mainly due to a decrease in financial asset investment income. 2) By sector, the operating profits of futures brokering/asset management/fund sales/risk management/overseas business were 540 million yuan, -350,000 yuan, 0.2 billion yuan, 200 million yuan, and 140 million yuan, respectively, +33%, from profit to loss, -55%, -37%, and +163%, respectively.
Futures brokerage business: Against the backdrop of increased competition in the industry, the basic market of the company's brokerage business remains stable. 1) Operating revenue of 1.14 billion yuan, +23.1% YoY, of which net revenue from handling fees was +3.8% YoY. 2) The company's domestic futures agency transaction volume was 234 million lots, +17% year over year, and the transaction amount was 15.9 trillion yuan, -1.1% year over year. Customer equity at the end of the year was 45.7 billion yuan, +0.4% compared to the beginning of the year.
Asset management & fund sales business: Business growth is under significant pressure in the context of capital market fluctuations. Revenue from the asset management business and fund sales business was RMB 14 million and RMB 61 million respectively, or -43.9% and -46.3%, respectively, mainly due to fluctuations in the capital market.
Risk management business: The scale of margin trading has shrunk, and the OTC derivatives and market making business is still improving. 1) Risk management business revenue of 22.3 billion yuan, or -33.4% year-on-year, mainly due to the reduction in the scale of the base margin trading business, and the OTC derivatives and market making business maintained a relatively rapid development. 2) Yongan Capital is the main platform for the company's risk management business. It achieved a profit of 200 million yuan for the whole year, accounting for 20.0% of the industry, -3.7 pct year on year.
Overseas business: Continued strengthening of overseas comprehensive financial business layout, net profit contribution increased significantly in '23. Operating income was 280 million yuan, +39% year over year, operating profit of 140 million yuan, +163% year over year, return on net assets exceeded 14%, and net profit reached a new high. It is expected to mainly benefit from factors such as increased demand for overseas business and a high overseas interest rate environment.
2024Q1 performance: Profits declined sharply due to declining investment returns and adjustments to exchange revenue reduction policies. 1) The company's revenue was 4.3 billion yuan, -19.1% year-on-year. Among them, net income from handling fees and commissions, net income from interest and investment income were -28.5%, -25.2%, and -47.3%, respectively. 2) Net profit attributable to mother was 80 million yuan, -62.6% year-on-year, mainly due to declining returns on financial products and equity investments due to fluctuations in the securities market and the effects of changes in exchange revenue reduction policies.
Maintain an “better than the market” rating. We believe that as a leader in the domestic futures industry, Yongan Futures is expected to gain continuous growth momentum in the rapid development of the industry. We gave the company 31-32x 2024E PE, with a corresponding reasonable value range of 14.41-14.88 yuan. The current stock price corresponds to 29x 2024E PE, maintaining a “superior to market” rating.
Risk warning: Commodity price fluctuations exceeded expectations, and domestic futures market regulatory policies changed.