[Event] China Galaxy announced its results for the first quarter of 2024: in Q1 2024, the company achieved operating income of 7.21 billion yuan, -17.1% year over year; net profit to mother of 1.63 billion yuan, -27.5% year on year; corresponding EPS of 0.12 yuan, ROE 1.3%, year-on-year.
The brokerage business declined slightly, and the market share of the two finance companies increased. 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 1.26 billion yuan, or -9.8%, accounting for 17.4% of revenue; net interest income was 930 million yuan, -16.9% year-on-year, and the company raised capital of 84.6 billion yuan, +0.6% compared to the beginning of the year, with a market share of 5.50%, and +0.27pct year over year.
Bond underwriting has performed well, and investment banks' revenue has risen sharply against the market. The company's investment banking business revenue for the first quarter of 2024 was 90 million yuan, +65.1% year-on-year. The company did not complete equity underwriting business in the first quarter of 2024. The principal underwriting scale of bonds was 84.4 billion yuan, +16.9% over the same period, ranking 9th. Among them, the underwriting scale of local government bonds, financial bonds, and corporate bonds was 47.7 billion yuan, 17.6 billion yuan, and 9.1 billion yuan respectively. The company has 2 IPO reserve projects, ranking 22nd, of which 1 is the main board of the two cities and 1 is the GEM.
Revenue from the asset management business increased against the market, and the product lineage was further improved. In the first quarter of 2024, the company's asset management business revenue was 110 million yuan, +7.3% year-on-year. At the end of 2023, the company's asset management scale was 94.6 billion yuan, -17.8% year-on-year. Galaxy Jinhui accelerated the layout of specialty products, actively developed and cultivated equity and hybrid products, and completed the creation of products based on ESG and dividends based on its own management characteristics. The product spectrum was further improved, and the quality and efficiency of the creation was effectively improved.
Self-employment is dragging down overall performance and adhering to an absolute profit strategy. The company's investment income (including fair value) for the first quarter of 2024 was 1.63 billion yuan, -32.5% year-on-year. The company's equity investment business adheres to the purpose of “low risk + absolute return”. Among them, the dividend strategy achieved good investment results and contributed to the company's stable performance and increase in net assets. In terms of fixed income investment, we adhere to a sound investment strategy, continuously optimize the holding structure, stabilize the size of interest rate bonds, increase stable income investment types, and steadily develop investments such as ABS, notes, REITs, and overseas fixed income.
Investment advice: We expect the company's EPS to be 0.81/0.87/0.91 yuan in 2024-26E, and 9.70/10.27/10.87 yuan for BVPS, respectively. We gave it 1.5x P/B for 2023, corresponding to a target price of 14.56 yuan, maintaining the “better than the market” rating.
Risk warning: Trading volume continues to decline, and investment returns continue to decline due to increased equity market fluctuations.