2024 Mid-Year Report Overview: Guotai Junan achieved operating income of 17.07 billion yuan in the first half of 2024, -6.89% year over year; realized net profit to mother of 5.016 billion yuan, -12.64% year over year. Basic earnings per share were 0.52 yuan, -14.75% year over year; weighted average return on net assets was 3.11%, -0.64 percentage points year over year. It is planned to pay 1.5 yuan (tax included) for the semi-annual period of 2024.

Comment: 1.2024H The share of the company's investment income (including changes in fair value) and other revenue increased, the share of net revenue from asset management business remained basically the same, and the share of net income from brokerage, investment banks, and interest declined. 2. The market share of retail and institutional brokerage businesses continued to grow, and the net revenue from consolidated brokerage services was -12.13% compared to the same period last year. 3. The principal underwriting amount and market share of all types of bonds achieved significant growth, and the net revenue from handling fees for consolidated investment banking operations was -24.71% year-on-year. 4. The performance of the brokerage asset management business was stable, and the public fund business was under slight pressure. Net income from handling fees from the consolidated asset management business was -8.06% compared to the same period last year.

5. Fixed income self-employment achieved good results, and pan-proprietary investment performance remained stable. Consolidated investment income (including fair value changes) was -6.09% year-on-year. 6. The scale of securities financing and stock pledges declined at the same time, and net income from consolidated interest was -32.21% year-on-year. 7. Net income from overseas transactions and investments improved significantly. International business revenue was +40.69% year-on-year, and continued to pick up.

Investment advice: The main indicators of the company's retail brokerage business maintained overall growth during the reporting period, and the institutional brokerage business continued to rise; actively seize opportunities in the bond market, promote significant increases in bond underwriting and market share, and hedge against the decline in equity financing business; actively developing customer demand business, achieving good results from fixed income self-management, and maintaining stable investment income from the pan-owned business; international business continued to pick up. On the evening of September 5, the company announced that it is planning to absorb and merge Haitong Securities. If the restructuring can finally be implemented, the company will rise to the top of the industry. Without considering the merger and absorption of Haitong Securities, the company's 2024 and 2025 EPS is expected to be 0.83 yuan and 0.90 yuan, respectively, and the BVPS will be 17.19 yuan and 18.13 yuan respectively. Based on the closing price of 14.70 yuan before the suspension of trading on September 5, the corresponding P/B will be 0.86 times and 0.81 times, respectively, maintaining an “increase in holdings” investment rating.

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