2024 Mid-Year Report Overview: In the first half of 2024, China Merchants Securities achieved operating income of 9.595 billion yuan, -11.11%; realized net profit to mother of 4.748 billion yuan, +0.44% year over year; basic earnings per share of 0.51 yuan, unchanged year on year; weighted average return on net assets of 4.08%, -0.25 percentage points year on year. It is planned to pay 1.01 yuan (tax included) for the first half year of 2024.

Comment: 1.2024H The share of the company's investment income (including changes in fair value) increased, while the share of brokerage, investment banking, asset management, interest, and other revenue all declined. 2. The market share of equity trading volume in the entire market declined, and net revenue from consolidated brokerage business fees was -12.14% compared to the same period last year. 3. The decline in the scale of equity financing was relatively small, and the scale of debt financing continued to grow. Net income from handling fees from the consolidated investment banking business was -36.24% year-on-year. 4. The scale of brokerage asset management has steadily rebounded, and the size of public funds has continued to grow. Net income from handling fees from consolidated asset management operations was -8.60% compared to the same period last year. 5. Equity self-employment is in line with the main line of the market, fixed income self-employment significantly outperformed the benchmark index, and consolidated investment income (including changes in fair value) was +17.43% year-on-year. 6. The balance of the two loans and the size of the pledge both declined slightly, and the net income from consolidated caliber interest was -50.00% compared to the same period last year.

Investment advice: Although the market share of the company's share base trading volume declined during the reporting period, the decline in net revenue from the consolidated brokerage business was still within a normal range; the decline in the scale of equity financing was relatively small among leading brokerage firms, and the continued growth in the scale of debt financing formed a hedging effect to a certain extent; the excellent performance of the proprietary business, and the year-on-year increase in investment income (including changes in fair value) laid a solid foundation for the company's net profit to the mother. As the largest brokerage firm within the State Council's State-owned Assets Administration Commission system, the company is expected to continue to benefit from the policy orientation of fostering strengths and limitations and building first-class investment banks in the future. The company's 2024 and 2025 EPS is expected to be 0.86 yuan and 0.84 yuan, respectively, and the BVPS will be 12.96 yuan and 13.70 yuan respectively. Based on the closing price of 15.07 yuan on September 23, the corresponding P/B will be 1.16 times and 1.10 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