Overview of the 2023 Annual Report and 2024 Quarterly Report: Fangzheng Securities achieved operating income of 7.119 billion yuan in 2023, -8.46% year over year; realized net profit of 2.152 billion yuan, +0.21% year over year; weighted average return on net assets of 4.88%, -0.21 percentage points year on year. In 2023, it is proposed to pay 0.13 yuan (tax included) for 10. 24Q1 achieved operating income of 1,985 million yuan, +11.97% year over year; net profit to mother of 784 million yuan, +41.06% year over year.
Comment: The number of customers and proxy buying market share increased in 1.23, and the institutional brokerage business quickly broke down. Net revenue from consolidated brokerage services was -9.06% YoY and -0.62% YoY in 24Q1. 2.23 saw a marked decline in the scale of equity financing and underwriting amounts for various types of bonds. Net income from consolidated investment banking services was -60.41% YoY and -33.33% YoY in 24Q1. In 3.23, the asset management scale and revenue of brokerage firms declined, and the size and revenue contribution of public funds increased. Net revenue from consolidated asset management fees was -22.98% YoY and +40.00% YoY in 24Q1. 4.23 Equity self-management was a good defense against market risks. Fixed income self-operation achieved good results. Consolidated investment income (including changes in fair value) was +53.63% YoY and +97.30% YoY in 24Q1. 5.23 The balance of the two loans reached a record high, and the share pledge scale was low. Net income from consolidated interest was -19.58% YoY and -37.31% YoY in 24Q1.
Investment advice: In 2023, the company's core revenue source brokerage business reached a 3-year high, and institutional brokerage quickly broke through; the proprietary business redistributed debt and light shares to effectively avoid recent equity market fluctuations, and the performance contribution increased year by year; the market share of the balance of two loans continued to grow rapidly, and interest income from the credit business rose steadily. In '23, the company's net profit grew for 5 consecutive years and hit a 7-year high. In 24Q1, performance bucked the trend and achieved further significant growth, driven by fixed income and self-operation. After Ping An in China becomes the actual controller of the company, it is expected that it will continue to inject new momentum into the company in the future. The company's 2024 and 2025 EPS is expected to be 0.28 yuan and 0.31 yuan, respectively, and BVPS is 5.70 yuan and 5.97 yuan respectively. Based on the closing price of 8.76 yuan on May 8, the corresponding P/B is 1.54 times and 1.47 times, respectively, covering the investment rating of “increase in holdings” for the first time.
Risk warning: 1. The weakening equity and fixed income market environment has led to a decline in the company's performance; 2. Risk of market fluctuations; 3. The policy effect of capital market reform falls short of expectations