Incident: China Galaxy Securities announced the 2024 three-quarter results. 24Q1-Q3 China Galaxy Securities achieved revenue of 27.086 billion yuan, yoy +6.29%, net profit to mother of 6.964 billion yuan, yoy +5.46%. The company's weighted average ROE was 5.8%. Net income from brokerage, credit, proprietary management, investment banks, and asset management (excluding other income) accounted for 23.4%/16.64%/55.42%/2.32%/2.23% respectively in 24Q3. The company's leverage level (excluding customer assets) is 4.22X, +0.06x compared to the beginning of the year. In the Q3 quarter, the company achieved revenue of 10 billion yuan, yoy +23.9%, net profit to mother of 2.576 billion yuan, YOY +54.8%, a year-on-year increase in Q3 self-operating income, and a year-on-year decline in credit business. 1) Self-operated: 24Q1-Q3, the company achieved self-operated business revenue of 8.747 billion yuan, +50% year-on-year, of which Q3 self-operated revenue of 3.823 billion yuan in a single quarter, +16% month-on-month and +228% year-on-year, contributing the main support to the performance. As of 24Q3, the company's financial investment scale was 397.1 billion yuan, of which transactions were financial assets of 250.3 billion yuan, +21% compared to the beginning of the year.

2) Credit: 24 Q1-Q3 achieved net interest income of 2.626 billion yuan, -21% year over year, mainly affected by rising interest expenses compounded by weak demand for dual finance in the market. As of 24Q3, the company's financing capital was -10% to 82 billion yuan compared to the beginning of the year.

The brokerage business declined with the market, and the asset management business showed resilience. 1) Investment banking: 24 Q1-Q3 achieved investment banking revenue of 0.366 billion yuan, +11% year over year, of which Q3 achieved revenue of 0.1 billion yuan in a single quarter, -30% year over year.

As of 24Q3, the underwriting scale of corporate bonds reached 344.9 billion yuan, ranking 7th in the market. 2) Brokerage: Affected by the decline in market turnover in the first three quarters, 24 Q1-Q3 achieved brokerage revenue of 3.69 billion yuan, -12.1% year-on-year, of which 1.183 billion yuan was achieved in Q3, or -10%. 3) Asset management:

24 Q1-Q3 achieved asset management revenue of 0.351 billion yuan, +2% year over year, of which Q3 achieved revenue of 0.123 billion yuan in a single quarter, +2% year over year.

Investment advice: The company's leading edge is stable, and I am optimistic about the increase in performance under the subsequent market recovery. We expect China Galaxy's revenue for 2024-2026 to be 35.96/39.27/42.74 billion yuan, respectively; net profit to mother will be 8.33/9.42/10.49 billion yuan, respectively, maintaining an “gain” rating.

Risk warning: policy risk, large market fluctuations, operational and business risks.