Brief performance review

On October 30, 2024, the company released its three-quarter report. In the first three quarters, it achieved total operating income of 0.78 billion yuan, an increase of 13.6% over the previous year; net profit without return to mother was -0.11 billion yuan, a year-on-year decrease of 131.4%, due to the decline in financial information service revenue, the company's expansion of brand promotion, and amortization of equity payment expenses. The Q3 Company achieved revenue of 0.23 billion yuan, a year-on-year increase of 34.5%; net profit after deducting non-attributable net income was -0.06 billion yuan, a year-on-year decrease of 3.9%.

Management analysis

McGow Securities maintained a high increase in revenue from various businesses. Net interest income in Q3 was 18.37 million yuan, an increase of 73.7% year on year; realized processing fees and commission income of 52.923 million yuan, an increase of 109.3% year on year, due to an increase in revenue from McGow's brokerage business. The company's Q3 investment revenue was 35.307 million yuan, an increase of 168.6% over the previous year, mainly formed by McGow Securities's own business. By the end of the third quarter, the amount of securities traded by the company's agents was 5.22 billion yuan, an increase of 116.6% over the previous year, due to the increase in the number of McGow Securities customers.

The company's financial information service revenue declined during the reporting period, mainly affected by a 15.1% year-on-year decline in the average daily turnover of A-shares in Q3. Despite the relative downturn in the capital market, the company continued to expand its brand promotion and customer development efforts. The number of new registered users and paid users increased significantly. Advertising and online promotion expenses increased year-on-year during the same period, and sales expenses increased 28.3% year-on-year in Q3. With the rapid recovery of the capital market as a whole at the end of September, securities market turnover increased dramatically, and the company's financial information service business is expected to experience rapid growth in the fourth quarter.

Profit forecasting

According to the company's three-quarter report and capital market recovery expectations, we raised the company's 2024-2026 operating income forecast to 1.37/1.86/2.51 billion yuan, up 23.5%/35.1%/34.9% year on year; adjusted the net profit forecast to mother to 0.06/0.16/0.31 billion yuan, up -12.1%/148.6%/95.2% year on year, corresponding to 605.9x/243.7x/124.8xPE, maintaining the “buy” rating.

Risk warning

The progress of the restructuring of McGow Securities fell short of expectations; fixed capital raising fell short of expectations; and there was a risk that approval of the Investment Pioneer Fund would not pass.