The company disclosed the 2024 semi-annual report on August 29

In the first half of 2024, the company achieved total revenue of 17.07 billion yuan (-6.89%), net profit to mother of 5.016 billion yuan (-12.64%), net profit after deducting 4.557 billion yuan (-15.78%), and basic earnings per share of 0.52 yuan (-14.75%). The company's ROE for the first half of 2024 was 3.11%, a decrease of 0.64 pct from the same period last year.

The bond underwriting data is impressive, and the decline in equity business is similar to that of the industry

The total amount of underwritten financing by securities companies in the first half of 2024 was 47,110.316 billion yuan (-4.9%) (excluding local government bonds). Among them, total equity financing was 99.317 billion yuan (-81.3%); total bond financing was 46,10.999 billion yuan (+4.3%). Against the backdrop of a sharp contraction in the scale of market issuance, the company actively grasped the opportunities in the bond market, and the significant increase in debt financing supported the decline in principal underwriting volume against the trend. As of 24H1, the company's securities principal underwriting amount was 4,34.589 billion yuan (+26.4%), with a market share of 9.23%, an increase of 1.11 pct over 23, ranking third in the industry. Among them, the shareholder underwriting amount was 4.851 billion yuan (-77.5%), a market share of 4.88%, a decrease of 1.33 pct from 23, a decrease of 1.33 pct, and a bondholder underwriting amount of 4,29.738 billion yuan (+33.3%), a market share of 9.32%, an increase of 1.01 pct over 23, ranking 3rd in the industry.

Asset management revenue declined slightly, and the scale of management achieved a positive increase

In the first half of 2024, the company achieved net revenue of 1.921 billion yuan (-8.04%) from asset management, of which 1.47 billion yuan (-15.6%) from public fund management. In terms of management scale, as of 24H1, the assets managed by Cathay Pacific Junan Asset Management and Huaan Fund were 5,870.30/7 and 39.484 billion yuan respectively, up 6.3%/9.5% respectively from the end of 23. Among them, the increase in the size of Guotai Junan's asset management capital was mainly due to a sharp increase in the scale of pooled asset management (2,57.2 billion yuan) (an increase of 17.3 pcts over the end of 23).

The brokerage business remained steady and market share increased

In the first half of the year, the total market share base trading volume was 115.2 percent (-7.62%), and the company's stock fund trading volume was 11.51 trillion yuan (-3.3%), with a market share ratio of 5.00%, an increase of 0.23 pct over the previous year. Due to weak capital market activity and poor trading performance, 24H1's brokerage business net revenue was 3.078 billion yuan (-12.13%). Among them, the revenue from agent trading of securities/trading unit seat leasing/consignment sales of financial products/futures brokerage was 27.44/0.381/0.281/2.045 billion yuan, respectively, or -10.75%/-20.71%/21.12%/71.75% year-on-year, respectively. The two finance markets contracted, and the credit business declined in the first half of the year. The company's net interest income was 1.043 billion yuan (-32.21%). Affected by regulatory policies such as the suspension of securities transactions, the market financing balance (14,80.899 billion yuan) fell 10.3% from the end of the previous year. As of 24H1, the company's securities financing balance was 79.433 billion yuan, a decrease of 10.7 pct from the end of 23, a market share of 5.36%, and a decrease of 0.02 pct from the end of 23. In terms of stock pledge business, as of 24H1, the balance pending repurchase of the company's stock pledge business was 23.038 billion yuan, down 13.2% from the end of 23.

Proprietary business declined slightly, and overall steady

In the first half of the year, the company achieved revenue of 4.933 billion yuan (-5.08%) from its own business. As of 24H1, the size of proprietary financial assets was 4,33.901 billion, down 8.11% from the end of '23. Among them, the scale of transactional financial assets/debt investments/other debt investments/other equity instruments was 3503/3.8/74/5.8 billion yuan, respectively, or -5.97%/+5.20%/-21.40%/+208.48% year-on-year, respectively. The company's own investment income was 5.317 billion yuan (-13.54%), and the yield was 1.47% (-16.95%).

Investment advice

The overall performance reported by the company was steady and in line with expectations. Significant optimization of the debt financing business and the increase in brokerage market share brought positive expectations. On September 5, the company announced the suspension of major asset restructuring. It plans to absorb and merge Haitong Securities. If the merger is successfully completed, the company's total assets and net assets will rise to number one in the industry; the two sides have complementary advantages and enhanced core functions, which will help optimize Shanghai's financial state-owned assets layout, build a world-class investment bank, and be optimistic that subsequent companies' performance will improve and accelerate. We forecast that the company's basic earnings per share for 2024-2026 will be 0.90 yuan, 0.98 yuan, and 1.36 yuan, respectively, and net assets per share will be 16.69 yuan, 17.46 yuan, and 18.61 yuan respectively. This is the first coverage, giving it a “buy” rating.

Risk warning: Risk of market fluctuations, market activity falling short of expectations, increased competition in the fund sales market