CICC announced its 2024 interim report. In the first half of 2024, the company achieved revenue of 8.911 billion yuan, -28.26% year-on-year, net profit to mother of 2.228 billion yuan, or -37.43% year-on-year, weighted average ROE of 2.12% and -1.67 pct year over year. 2024Q2 achieved revenue of 5.037 billion yuan, -18.92% YoY, +30.02% month-on-month, net profit to mother of 1.748 billion yuan, -0.33% YoY, and +6.07% month-on-month. Segment revenue growth rate: brokerage -29.15%, investment banking -35.68%, asset management -14.97%, net interest income negative, -4.00% YoY, others -42.89%, share of segment revenue: brokerage 19.86%, investment banking 14.38%, asset management 6.24%, net interest income -9.13%, investment 47.69%, others 20.96%.

The equity financing market is sluggish, and the company's investment banking business is under significant pressure. In the first half of 2024, the company underwrote 4 IPOs with an amount of 1.571 billion yuan, -93.1% YoY, ranking eighth in the market. It underwrote 9 refinancing projects, amounting to 8.655 billion yuan, -82.7% year over year, ranking second in the market. Looking at the overall market, in the first half of 2024, a total of 44 A-share IPOs were completed, with a financing scale of 32.493 billion yuan, or -84.5%; a total of 77 A-share refinancing orders were completed, with a financing scale of 75.904 billion yuan, or -73.4% year-on-year.

Stock positions are mostly used for hedging, and the direction of investment is obvious. According to data previously disclosed by the company, nearly 90% of the company's proprietary stock holdings were used to hedge positions, which is one of the main reasons why the company fluctuated less in the first half of 2024. In addition, among the company's investment assets, bonds were 111.772 billion yuan, +24.0% year over year, fund 43.611 billion yuan, -17.7% year over year, and stock/equity 88.846 billion yuan, or -36.6% year over year. The increase in the share of bond holdings is also the main reason why the company's investment business is relatively stable.

Increase buyers' investment and deepen the wealth management business layout. In the first half of 2024, the company's wealth management product holdings stabilized at more than 340 billion yuan. Among them, the size of buyer investment products composed of products such as “China 50,” “Micro 50,” and “Public Fund 50” stabilized at nearly 80 billion yuan, all of which remained at the forefront of the industry.

At the end of the first half of the year, the total number of the company's wealth management customers was 7.7333 million, and the total asset value of customer accounts was 2.76 trillion yuan, which also ranked among the top in the industry. After merging with CICC Wealth, the company continued to embrace the trend of public offering, indexation, and globalization, and explore innovative businesses with buyers' investment as the core, and achieved good results.

Leverage continues to decline, and the lack of prosperity in the stock market limits the ability to expand tables. The leverage ratio of 4.97x at the end of the first half of 2024 was the first time in recent years that it fell below 5.0x. Customer provisions were -10.2% compared to the beginning of the year, financing -7.2% compared to the beginning of the year, and financial investment assets -6.2% compared to the beginning of the year. The stock market is not booming, customer participation may be declining, and the company's own assets are also being dragged down.

Risk warning: Market sentiment is declining, equity financing is sluggish, wealth management business falls short of expectations, etc.

Investment advice: Based on the company's interim report data, we lowered the growth rate of the company's brokerage business and investment banking business, and reduced the company's net profit to mother in 2024-26 to 5.302 billion yuan, 5.936 billion yuan, and 6.416 billion yuan, respectively. The reductions were 22.9%, 22.7%, and 22.6%, respectively. Considering the company's leading ideas in terms of business innovation, the wealth management layout continues to deepen, and I am optimistic that the company will build a moat in new business fields in the future. Maintain the company's “better than market” rating.