Key investment points: The leading position in the investment banking business is stable. Wealth management relies on product, service, model innovation and fintech to achieve rapid business scale development in the context of moving towards full net worth. The reasonable value range was HK$14.25-16.29, maintaining the “better than the market” rating.

[Event] CICC announced its results for the first quarter of 2024: in Q1 2024, the company achieved operating income of 3.87 billion yuan, or -37.6% year on year; net profit to mother of 1.24 billion yuan, or -45.1% year on year; corresponding EPS of 0.22 yuan, ROE 1.2%, year-on-year.

The brokerage business is under pressure, and the market share of the two finance companies has declined. The average daily share base transaction volume of the entire market in the first quarter of 2024 was 102 billion yuan, +4.8% year-on-year. The balance of the two loans was 1537.9 billion yuan, -4.3% compared to the beginning of the year. In this context, the company's brokerage business revenue was 830 million yuan, or -32.8%, accounting for 21.4% of revenue; the company's financing balance was 34.3 billion yuan, -19.2% compared to the beginning of the year, and the market share was 2.23%, or 0.41 pct year on year.

The investment banking business ranks high, the scale of bond underwriting continues to rise, and IPO reserves are abundant. The company's investment banking business revenue for the first quarter of 2024 was 450 million yuan, -25.0% year-on-year. The underwriting scale of the equity business was -81.5% year-on-year, and the underwriting scale of the bond business was -5.6% year-on-year. Shareholders' underwriting scale was 9.48 billion yuan, ranking 2nd; of these, 3 IPOs raised 1.2 billion yuan; and 5 were refunded, with an underwriting scale of 8.3 billion yuan. The principal underwriting scale of bonds was 221.4 billion yuan, ranking 5th; of these, the underwriting scale of local government bonds, financial bonds, and corporate bonds was 81.8 billion yuan, 62.9 billion yuan, and 40.6 billion yuan respectively. There are 5 IPO reserve projects, ranking 11th, including 3 main boards in 2 cities and 2 science and technology innovation boards.

Revenue from the asset management business has declined, and the product lineage has been further improved. In the first quarter of 2024, the company's asset management business revenue was 270 million yuan, -17.9% year-on-year. At the end of 2023, the company's assets were managed at 552.6 billion yuan. In terms of product categories, the management scale of the pooled asset management plan and the single asset management plan (including social security, corporate pensions, occupational annuities and pensions) was 138.8 billion yuan and 413.7 billion yuan, respectively, and the number of managed products was 758.

Self-employment dragged down overall performance, and FICC's business led the market. The company's investment income (including fair value) for the first quarter of 2024 was 1.85 billion yuan, -48.8% year-on-year. The company continues to lay out market opportunities such as public REITs, carbon trading, green finance, specialized, special and non-equity ETFs; strengthens domestic and foreign product innovation, realizes the implementation of many innovative businesses, and creates customized service capabilities; continues to develop cross-border derivatives business, expand the scope of interest rate, credit and foreign exchange business, and rank key commodities at the top of the market.

Investment advice: We expect net assets per share for 2024-26E to be $18.80/19.82/20.80, respectively. We will give them 0.7-0.8x PB in 2024, with a corresponding reasonable value range of RMB 13.16-15.04, (exchange rate conversion: HK$1 = $0.9235, corresponding reasonable value range of HK$14.25-16.29), maintaining the “superior to market” rating.

Risk warning: The market fluctuates sharply, the overall decline in the stock market, and further strengthening of market supervision.