Key investment points: The company's self-operated business performed well, driving an increase in overall performance. The brokerage business, asset management business, and investment banking business declined year-on-year. We are still optimistic about business collaboration between the company and China Merchants Group and China Merchants Bank. The reasonable value range is 15.68-16.99 yuan, maintaining the “superior to the market” rating.

[Event] China Merchants Securities announced results for the first three quarters of 2024: operating income of 14.28 billion yuan, -4.0% year over year; net profit to mother of 7.15 billion yuan, +11.7% year over year; corresponding EPS of 0.77 yuan, ROE 6.1%, +0.3 pct year on year. The third quarter achieved operating income of 4.68 billion yuan, +14.9% year over month, and -11.6% month on month; net profit to mother was 2.4 billion yuan, +43.4% year over year, and -7.3% month on month.

Wealth management and institutional business transformation have entered a new phase. Brokerage revenue for the first three quarters of 2024 was 3.67 billion yuan, -14.1% year-on-year, accounting for 25.9% of revenue. The average daily share-based trading volume of the entire market was 897.6 billion yuan, -7.8% YoY. The company continues to strengthen the professional capacity building of the wealth advisory team, optimize the wealth advisor empowerment system, and comprehensively improve the quality and efficiency of customer service. Revenue from sales of financial products in the first half of 2023 was 0.227 billion yuan, +5.8% year-on-year, accounting for 8.8% of brokerage revenue; at the end of the first half of the year, financial product holdings were 6.314 billion yuan, +35.6% compared to the beginning of the year. At the end of the first three quarters of 2024, the company's two financing balance was 83.6 billion yuan, -0.1% compared to the beginning of the year, 5.8% market share, and +0.7pct compared to the beginning of the year.

The company actively grasped the issuance time window, and the share underwriting amount and the ranking of the number of households increased year-on-year. Investment banking revenue for the first three quarters of 2024 was 0.42 billion yuan, -43.8% YoY. The share business underwriting scale was -33.7% year-on-year, and the bond business underwriting scale was +35.4% year-on-year. Shareholders' underwriting scale was 12.7 billion yuan, ranking 6th; of these, 3 IPOs raised 3.7 billion yuan; 6 refinancing companies had an underwriting scale of 9 billion yuan. The principal underwriting scale of bonds was 292.6 billion yuan, ranking 10th; among them, the underwriting scale of ABS, financial bonds, and corporate bonds was 106.9 billion yuan, 95.4 billion yuan, and 62.9 billion yuan, respectively. There are 3 IPO reserve projects, ranking 12th, including 1 from the Beijing Stock Exchange and 2 from GEM.

The scale of asset management has grown steadily. China Merchants Asset Management continues to build active management capabilities, strengthen the construction of investment and research systems, drive steady growth in the performance of many products, and achieve steady growth in the scale of asset management. Asset management revenue for the first three quarters of 2024 was 0.5 billion yuan, -8.5% year-on-year. At the end of the first half of 2024, the asset management scale was 302.2 billion yuan, +2.5% year-on-year. At the end of the first half of 2024, the asset management scale of Bosch Fund was 1698.7 billion yuan, +8.55% compared with the beginning of the year, of which the public fund management scale was 1077.3 billion yuan, +13.44% compared to the beginning of the year, and the asset management scale of China Merchants Fund was 1608.6 billion yuan, +3.75% compared to the beginning of the year, of which the public fund management scale was 888.2 billion yuan, +3.20% compared to the beginning of the year

Proprietary investment showed positive growth. Investment income for the first three quarters (including fair value) was 7.17 billion yuan, +51.9% year-on-year; investment income (including fair value) for the third quarter was 2.41 billion yuan, +201.6% year-on-year. The company continues to implement the company's “big and stable” investment strategy, adjust and optimize the investment structure in a timely manner according to changes in the market situation, continuously improve business strategies, and effectively enhance investment income and income stability.

Investment advice: We expect the company's 2024-26E EPS to be 1.15/1.30/1.40 yuan, and the BVPS will be 13.07/14.05/15.13 yuan respectively. We gave it 1.6-1.7x P/B in 2024, corresponding to a reasonable value range of 20.91-22.22 yuan, maintaining the “better than the market” rating.

Risk warning: Trading volume continues to decline, and investment returns continue to decline due to increased equity market fluctuations.