Key investment points: The company's bond underwriting scale increased year-on-year in the first quarter of 2012. We are optimistic about the company's long-term wealth management transformation and increase in fund management. The reasonable value range is 9.80-11.58 yuan, maintaining the “superior to the market” rating.
[Event] Orient Securities announced its results for the first quarter of 2024: operating income of 3.61 billion yuan, -18.6% year on year; net profit to mother of 890 million yuan, or -37.9% year on year; corresponding EPS of 0.10 yuan, ROE 1.1%, -0.8 pct year on year.
The share of corporate brokerage, investment banking/asset management/interest/own operating income was 13%/8%/10%/8%/22%, respectively.
Brokerage revenue declined with the market. In the first quarter of 2024, the company's brokerage business revenue was 490 million yuan, or -30.1% year-on-year, accounting for 13.5% of revenue. The average daily share-based trading volume of the entire market was 102 billion yuan, +4.8% year-on-year. The company raised a capital of 208 billion yuan, -1% compared to the beginning of the year, 1.35% market share, +0.04pct year over year. The total market balance of two loans was 1537.9 billion yuan, -7% compared to the beginning of the year. The company continues to promote the transformation of wealth management business to a “buyer's investment” model, forming a collaborative matrix for brokerage securities trading, securities financing, public fund investment, personal pension, institutional finance, private wealth management, etc.; by the end of 2023, the company's share+hybrid public fund holdings ranked 14th among brokerage firms. In the first quarter of 2024, the company's balance of financing was 20.8 billion yuan, -1.3% year-on-year, and the market share stabilized at 1.35%.
The scale of bond underwriting increased 53% year over year. The company's investment banking business revenue for the first quarter of 2024 was 270 million yuan, -1.2% year-on-year. The principal underwriting scale of corporate bonds in the first quarter of 2024 was 102.6 billion yuan, +52.9% year-on-year, ranking 6th; of these, the underwriting scale of local government bonds, corporate bonds, and financial bonds was 49.6 billion yuan, 25.6 billion yuan, and 13.1 billion yuan respectively. There are 2 IPO reserve projects, ranked 22nd, all from the Beijing Stock Exchange.
Asset management revenue declined year-on-year, and asset management scale and product yield ranked first in the industry. In the first quarter of 2024, the company's asset management business revenue was 360 million yuan, -38.5% year-on-year. As of the end of 2023, TSE's asset management scale was 235.8 billion yuan, or -17.2%, of which the size of public funds was 183.4 billion yuan, or -11%; by the end of 2023, TSE Asset Management had an active management yield of 65.34% in the past seven years, ranking 9th in the industry. Its fixed income funds had an absolute yield of 22.55% in the past five years, ranking in the top 1/4 of the industry. In addition, the company's Huitianfu Fund (holding 35.4% of shares) had a net profit of 1.4 billion yuan in 2023, -32% year-on-year.
Self-employment in the first quarter dragged down overall results. The company's investment income (including fair value) for the first quarter of 2024 was $80 million, -30.6% year-on-year.
Investment advice: We expect the company's EPS to be 0.32/0.35/0.43 yuan in 2024-26E, respectively, and 8.91/9.18/9.51 yuan for BVPS, respectively. We are optimistic about the company's wealth management transformation and increase in fund management. We will give it 1.1-1.3x P/B in 2024, corresponding to a reasonable value range of 9.80-11.58 yuan, maintaining a “superior to the market” rating.
Risk warning: Trading volume continues to decline, and investment returns continue to decline due to increased equity market fluctuations.