Introduction to this report:

The company's revenue growth is due to the continued rapid development of the securities business. The decline in profit is mainly due to the decline in financial information service business revenue and the increase in the company's sales expenses, active market trading, and investment points that are optimistic about the company's performance:

Maintain an increase in holdings rating and adjust the target price to 110 yuan, corresponding to 60xp/E in 2025. The company's 2024Q3 adjusted revenue (including investment business revenue) /net profit was 0.875/ -0.11 billion yuan, 19.62%/-171.18% YoY, lower than expected. Considering that the results for the first three quarters fell short of expectations, the net profit forecast for 2024 was lowered; considering the sharp increase in market trading volume, the net profit forecast value for 2025-2026 was raised, and the net profit for 2024-2026 was 0.104/0.408/0.588 billion yuan (previously adjusted 0.128/0.332/0.557 billion yuan), and EPS was 0.26/1.00/1.44 yuan (before adjustment of 0.31/0.81/1.36 yuan). Maintaining the “gain” rating, the adjusted target price is 110 yuan, which corresponds to 110 xP/E in 25 years.

Securities growth led to an increase in the company's revenue, and weak market transactions combined with increased advertising expenses led to a decline in 2024Q3 profits. The company's revenue increased year-on-year, mainly due to the continued rapid development of McGow Securities's brokerage business and proprietary business. Net income from handling fees and commissions was 0.135 billion yuan, +125.92% year over year; net interest income was 0.046 billion yuan, +92.70% year over year; and brokerage securities trading was 5.22 billion yuan at the end of the third quarter, up 116.60% from the end of the previous year. There are three main reasons for the decline in the company's net profit: 1) The year-on-year decline in market turnover and the decline in revenue from the financial information services business. 2) The company continued to expand its brand promotion and customer development efforts. The number of new registered users and paid users increased significantly. During the same period, advertising and online promotion expenses increased year on year, and sales expenses increased year on year. 2024Q3's sales expenses were 0.479 billion yuan, an increase of 25% year on year.

3) The three equity incentive plans implemented by the company year by year showed a certain degree of increase over the previous year after the payment fees for related shares were superimposed.

Market reversal trading was active in the fourth quarter, and the company's performance is expected to explode. Recently, the market continued to pick up. From September 24 to October 30, the Wandequan A Index rose 28%, and trading volume and balance increased rapidly. From the beginning of October to October 29, the average daily stock turnover reached 2 trillion yuan, and the balance of the two loans reached 1,687 billion yuan, an increase of 17% over the end of September; the company's financial information service business and securities business all benefited from continued market recovery. The company's application materials to issue shares to specific targets are still in the process of being reviewed by the Shenzhen Stock Exchange. Affected by individual objective matters and the overall market refinancing environment, progress falls short of expectations, and the company is still advancing refinancing matters.

I am optimistic that the company's performance will explode as the market recovers.

Catalyst: The customer conversion rate of the company's securities business exceeded expectations, and the company's refinancing was implemented.

Risk warning: The capital market fluctuates greatly, and the company's securities business falls short of expectations.