The 24Q3 company achieved operating income of 14.3 billion, -22% year over year; net profit to mother was 4.3 billion yuan, -24% year over year.

As of 24Q3, the company's total assets were 554.7 billion, +6% compared to the beginning of the year; net assets to mother were 101.2 billion yuan, +4% compared to the beginning of the year. The annualized ROE is 6.28%, compared to 23 years -2.31 pct. The operating leverage ratio declined slightly to 4.35 times.

Overall overview: Strong self-operated restoration, overall in line with expectations. 24Q3 achieved operating income of 14.3 billion yuan, -22% year over year; net profit of 4.3 billion yuan, -24% year on year; single quarter revenue of 4.8 billion yuan, -3% year on year, -9% month on month, and net profit of 1.4 billion yuan to mother, +4% year on year and -12% month on month. As of 24Q3, the company's total assets were 554.7 billion, +6% compared to the beginning of the year; net assets to mother were 101.2 billion yuan, +4% compared to the beginning of the year. The annualized ROE is 6.28%, compared to 23 years -2.31 pct. The operating leverage ratio declined slightly to 4.35 times. Proprietary business/brokering/investment banking/asset management/credit/other businesses accounted for 43%/31%/12%/8%/4%/3% of the main business, respectively, +12/+4/-12/+2/-6/+1 pct.

Fee business: Brokerage asset management follows the market, and the tightening of policies affects the labeling business.

(1) The market is sluggish, dragging down brokerage revenue. 24Q3 brokerage net revenue was 3.7 billion, -13% year over year; net revenue in the single quarter was 1.2 billion, -20% year over year, -3% month on month. The average daily share base turnover in 24Q3 was 921 billion, -9% year-on-year. The company's share market share is expected to decline.

(2) Policies have been tightened, and the labeling business has been greatly impacted negatively. The 24Q3 investment bank's net revenue was 1.5 billion, -62% year over year; net revenue for the single quarter was 0.5 billion, -61% year over year, -11% month on month. According to the date of issuance, 24Q3's A-share IPO raised 4.4 billion dollars, -88% year-on-year, with a market share of 9.59%, and a year-on-year market share of -1.99pct, maintaining the 3rd position in the industry ranking; the refinancing scale was 7.6 billion, the year-on-year market share was -87%, and the market share was 5%, and the industry ranking fell from 4th to 7th. Bond underwriting was 1111.3 billion, -0.3% YoY, 11.02% market share, -0.16pct YoY, ranking 2nd in the industry.

(3) Volume reduction and price decline, asset management declined year on year. Net revenue from 24Q3 asset management was 0.93 billion, -2.6% year on year; net revenue for the single quarter was 0.28 billion, -17% year over year, -22% month on month. It is expected that the second-phase fee reform of public offering will reduce transaction commissions, equity market fluctuations, and the scale of asset management products will shrink. Asset management will increase negatively year-on-year due to two factors.

Capital business: Self-employment is recovering strongly, credit business is under pressure, and asset quality is improving.

(1) Equity generally rose at the end of September, and self-employment recovered significantly year over year. 24Q3 self-operating revenue was 5.3 billion, +5% year over year; single quarter revenue was 1.8 billion, +131% year over month, -10% month on month. As of 24Q3, transactional financial assets were 232 billion, +8% from the beginning of the year; derivative financial assets were 4.9 billion yuan, +17% from the beginning of the year; investment in other equity instruments was 3.4 billion yuan, up 3.3 billion yuan from the beginning of the year. Mainly due to the general rise in equity at the end of September, the fair value of financial instruments rose.

(2) Liquidity easing reduces business interest spread space and improves the quality of credit assets. 24Q3 net interest income was 0.45 billion, -70% year over year; net interest income in the single quarter was 0.07 billion, -84% year over year, -69% month on month. As of 24Q3, the company had raised 48.5 billion in capital, -14% from the beginning of the year, with a market share of 3.37%, down slightly from the beginning of the year; buying and reselling financial assets of 16 billion yuan, +15% compared to the beginning of the year. Overall, the scale of the credit business was relatively stable.

The decline in net income may be attributed to the continuing narrowing of interest spreads in the two finance/equity businesses due to liquidity easing. Asset quality continued to improve, and 24Q3 transferred back 0.13 billion in credit impairment losses.

Investment advice: Maintain a “Highly Recommended” rating. The company continues to improve its various businesses, has rich management experience, and long-term ROE leadership. The company's investment banking label is still bright, and the wealth management transformation has achieved remarkable results. Self-employment is mainly fixed income investments, derivatives business is progressing steadily, and asset quality continues to improve. Considering the 924 financial press conference, the 926 Politburo meeting, and the 1018 Financial Street Forum annual meeting, regulatory and caring capital markets and policy warming often blow, the market trend is favorable, and sentiment has clearly recovered, which is beneficial to most brokerage sectors. In the context of liquidity being relaxed, the valuation of the brokerage sector will continue to benefit. As a result, we raised our original profit forecast. We expect the company's net profit to be 6.6 billion/7.8 billion/8.5 billion for 24/25/26, or -6%/+18%/+9% year-on-year.

Risk warning: Policies are not as strong as expected, market fluctuations have intensified, and the company's market share has not increased as much as expected.