In 2023, the operating income of Guolian Securities was 2.96 billion yuan, +13% year on year; net profit to mother was 670 million yuan, -12.5% year over year. Total assets were 87.1 billion yuan, +17% year over year; net assets attributable to mother were 17.8 billion yuan, +6% year over year. The annualized ROE was 3.89%, -0.73 pct year over year. Operating leverage was 4.35 times, up from 3.85 times in 2022.
Overall overview: Excellent asset management, stable credit, non-directional investments take the lead in self-management, and outstanding performance resilience.
In 2023, the company achieved revenue of 2.96 billion yuan, +13% year over year; Q4 was 450 million yuan in a single quarter, -21% year over year, -36% month on month. Net profit due to mother in 2023 was 670 million yuan, -13% year over year; Q4 net profit to mother was -55 million yuan in a single quarter, down 180 million yuan from the same period in 2022. The company's total assets were 87.1 billion yuan, +17% year on year; net assets attributable to mother were 17.8 billion yuan, +6% year over year. The annualized ROE was 3.89%, -0.73 pct year over year. The company's derivatives business and pledge repurchase business expanded, and operating leverage increased from 3.85 times in 2022 to 4.35 times. In terms of revenue structure, 44% of self-employment, 18% of brokers, 17% of investment banks, 16% of asset management, and 3% of credit, compared with -2, -3, -1, +8, and -2pct, respectively.
Fee business: Brokerage and investment banks are under pressure, and the asset management business has entered a period of rapid change. (1) The market is sluggish and new fund developments are cooling down, dragging down the brokerage business. In 2023, brokerage revenue was 520 million yuan, -6% year on year; Q4 revenue in a single quarter was 130 million yuan, -8% year over year, -3% month on month. By category, revenue from securities trading agents was 570 million yuan, -14% year over year; seat rental revenue was 102 million yuan, +25% year over year. Revenue from consignment financial products was 0.3 million yuan, -22% year over year, mainly due to the collapse of the new development fund. The sales scale of the company's financial products (excluding cash management product “cash addition”) was 18.4 billion yuan, -15% year over year. (2) The three markets of Shanghai, Shenzhen and Beijing are fully covered, and the debt undertaking business is progressing steadily. Investment bank revenue in 2023 was 490 million yuan, +2% year over year; Q4 single quarter revenue was 63 million yuan, +19% year over year, -56% month over month. The annual IPO amount was 2.37 billion yuan, -1.3% YoY; the refinancing scale was 1.59 billion yuan, -43% YoY; and the debt undertaking scale was 51.6 billion yuan, +31% YoY. With the Beijing Stock Exchange IPO as its key business direction, the company's “follow investment+investment bank” strategy deepened, helping the company rise to 21st place in the industry ranking for the number of IPO sponsors. (3) The League of Nations funds merged, and the asset management business entered a period of rapid change. Asset management revenue in 2023 was 440 million yuan, up 129% year on year; Q4 asset management revenue in a single quarter was 150 million yuan, +146% year over year, and -29% month on month. At the end of 2023, the non-commodity volume of the League of Nations Fund was 101.5 billion yuan, +21% over the same period last year. It is expected that with the development of the business structure and rich product system, the League of Nations Fund will continue to unleash its performance potential.
Capital business: The derivatives business remained stable and self-operated, and the scale of the credit business expanded. (1) Equity pullbacks cause fluctuations in self-employment performance, and the role of non-directional investment as a stabilizer is prominent. Proprietary revenue in 2023 was 1.24 billion yuan, +7% year over year; Q4 was 110 million yuan in a single quarter, -52% year over year, and -37% month over month, or affected by the equity market correction in the fourth quarter. At the end of 2023, transactional financial assets were 39 billion yuan, +20% year over year; derivative financial assets were 1.75 billion yuan, +78% year over year. (2) The two loans are stable, the scale of shares has expanded, and the quality of assets has improved.
Net interest income in 2023 was 80 million yuan, -33% YoY; Q4 net interest income in a single quarter was -57 million yuan.
At the end of 2023, the company raised capital of 10.1 billion yuan, +15% year-on-year, with a market share of 0.61%, the same as in previous years; it bought and resold financial assets of 5.3 billion yuan, +63% year-on-year. Asset quality improved, and depreciation surged back $29 million this year. The decline in revenue was due to self-employment plus leverage to increase interest expenses. Interest expenses in 2023 were $1.25 billion, +15% YoY.
Investment advice: Maintain a “Highly Recommended” rating. The company's management has excellent strategic foresight and management capabilities. The company's structure, talent, strategy, business and financial highlights are outstanding, and the layout continues to expand. On the business side, seize strategic development opportunities in the wealth management industry. The large-scale performance of the League of Nations funds has increased rapidly, the transformation of non-directional self-operation continues, people's livelihood integration and empowerment, and “investment banking+follow-up investment” is deepening the construction of a boutique investment bank. Looking ahead to the future market, the policy attitude to support the development of the capital market is firm, and market sentiment has clearly recovered, which is beneficial to the brokerage sector. Considering the peripheral market environment, we revised the original profit forecast. The company's net profit for 24/25/26 is expected to be 780 million/93 million/1.11 billion, respectively, +16%/+19%/+20% over the same period last year. We maintain the company's target price of 14.22 yuan, about 26% space, and maintain a highly recommended rating.
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.