3Q22 performance is lower than we expected.
CNAC Industry & Finance announced 1-3Q22 results: total operating income 13.04 billion yuan, year-on-year-5.6%, return to the mother net profit 1.87 billion yuan, year-on-year-36.4%, ROAE year-on-year-3.26ppt to 4.73% (company caliber) 3Q's total operating income in a single quarter is from + 2.5% to 4.54 billion yuan compared with the same period last year, and the net profit returned to the mother is from-58.5% / month to 540 million yuan compared with the same period last year, and the ROAE per quarter is 1.83% (company caliber), which is lower than our expectation. The main reason is that the investment income in a single quarter has dropped significantly with the market.
Trend of development
The main leasing business has led to a steady increase in revenue, while the trust business is still under pressure. 1) 1-3Q22, lease-based operating income from + 3.3% to 7.8 billion yuan, of which 3Q single-quarter operating income from year-on-year + 6.5% / month-on-month + 13.4% to 2.94 billion yuan, corresponding to maturing non-current assets + long-term receivables (mainly including financial leases receivable) at the end of the period compared with the beginning of the year + 5.0% / month-on-month + 4.7% to 200.9 billion yuan 2) the net income of 1-3Q22 handling fees and commissions is-21.6% to 2.99 billion yuan compared with the same period last year, of which 3Q single-quarter handling fees are from-23.0% / month-on-month to 850 million yuan, or the handling fees of securities subsidiaries have declined mainly due to the pressure of trust business and the drop in market trading. 3) 1-3Q22 interest income-8.0% to 2.25 billion yuan, of which 3Q single-quarter interest income is + 32.5% / month-on-month + 16.1% to 750 million yuan.
The investment income in a single quarter fell obviously with the market, and the marginal impairment increased. 1-3Q22's investment business income (investment income + fair value change profit and loss) is-3.7% to 2.09 billion yuan compared with the same period last year, but in a single quarter of 3Q, the investment income is-61% / month-on-month-71% to 1.12 billion yuan, which is a drag on single-quarter profit. In addition, the impairment loss of 3Q in a single quarter is + 9% to 420 million yuan compared with the same period last year (vs. 2Q returned to 41.85 million yuan in a single quarter), which may be affected by the marginal increase in market credit risk.
Securities subsidiaries strengthen aerospace characteristic business cards, and their market competitiveness has been improved. In the first half of 2022, securities subsidiaries benefited from investment banking and investment-driven business, and their performance was significantly better than that of the industry (revenue from + 3.2% to 1.07 billion yuan and net profit from + 26% to 330 million yuan). 3Q22, AVIC Securities completed the IPO sponsor of excellent Aviation Division (vs. 3Q21 without IPO project), driving the main underwriting amount of 1-3Q22 equity to be + 42% to 5.62 billion yuan (vs. The market as a whole is + 5.7% compared with the same period last year, of which the amount of IPO underwriting is from + 186% to 2.65 billion yuan, and the market share is from + 0.3ppt to 0.54%. In addition, 1-3Q22 AVIC Securities bonds are underwritten from-1.7% to 14.6 billion yuan (vs. The overall market is-5.6% compared with the same period last year.
Profit forecast and valuation
Considering the internal and external environmental pressure, the trust industry may still be under pressure, and adjusting the investment return assumption of the parent company, we downgrade the 2022e/2023e profit by 21% to 2.91 billion yuan / 3.89 billion yuan to maintain the "outperform industry" rating. The company trades on 0.64x/0.59x 2022e/23e Pamp B; the target price is lowered by 9% to 4.10 yuan based on the valuation of Pamp B, corresponding to 0.83x/0.77x 2022max 23e Pamp B and 30% upstream space.
Risk
The quality of assets is lower than expected; the development of new business is not as expected; the return on investment fluctuates greatly with the market.
