Key investment points: Affected by the decline in market activity, the company's brokerage business is under pressure. The investment banking business has performed well in bond underwriting. The asset management business has been consolidated into a public offering. Revenue declined slightly over the same period last year, the scale of active management continued to increase, and proprietary income increased dramatically. The reasonable value range is 13.59-14.56 yuan, maintaining the “superior to the market” rating.
[Event] China Galaxy announced its 2023 annual results: in 2023, the company achieved operating income of 33.64 billion yuan, which is basically the same as the previous year; net profit to mother was 7.88 billion yuan, +1.5% year-on-year; corresponding EPS of 0.65 yuan, and ROE 7.5%.
The fourth quarter achieved revenue of 8.16 billion yuan, +28.2% YoY and +1.1% YoY. Net profit attributable to mother was 1.28 billion yuan, -3.4% YoY and -23.4% YoY. The decline in net profit in the fourth quarter was mainly due to credit impairment losses.
The brokerage business declined slightly, and the market share of the two finance companies remained stable. The average daily share base transaction volume of the entire market in 2023 was 962.5 billion yuan, -4.0% year-on-year, with a balance of 1650.9 billion yuan, +7% compared to the beginning of the year. In this context, the company's brokerage business revenue was 5.50 billion yuan, or -13.6%, accounting for 16.4% of revenue. The company's revenue from consignment sales of financial products was 470 million yuan, -25.8%, accounting for 8.5% of brokerage business revenue. The company's balance of two loans was 84.1 billion yuan, +6% compared to the beginning of the year, and the market share remained stable at 5.1%.
The performance of bond underwriting was impressive. In 2023, the company's investment banking revenue was 550 million yuan, -19.8% year-on-year. The underwriting scale of the equity business was -68.4% year-on-year, and the underwriting scale of the bond business was +40.4% year-on-year. Shareholders' underwriting scale was 3.77 billion yuan, ranking 33rd; all 7 companies were refinancing, with an underwriting scale of 3.8 billion yuan. The principal underwriting scale of bonds was 358 billion yuan, ranking 12th; of these, the underwriting scale of local government bonds, financial bonds, and corporate bonds was 191.3 billion yuan, 107.8 billion yuan, and 23.9 billion yuan, respectively. There are 3 IPO reserve projects, ranking 35th, including 1 main board of the two cities and 2 science and technology innovation boards.
Revenue from the asset management business increased against the market, and the product lineage was further improved. In 2023, the company's asset management business revenue was 460 million yuan, +3.7% year-on-year. The asset management scale was 94.6 billion yuan, -17.8% YoY. Galaxy Jinhui accelerated the layout of specialty products, actively developed and cultivated equity and hybrid products, and completed the creation of products based on ESG and dividends based on its own management characteristics. The product spectrum was further improved, and the quality and efficiency of the creation was effectively improved.
Excellent self-employment performance has become a key factor in performance growth. Investment income for the full year of 2023 (including fair value) was $7.66 billion, +37.0% year over year; investment income (including fair value) for the fourth quarter was $1.83 billion, +153.6% year over year. The company's equity investment business adheres to the purpose of “low risk + absolute return”. Among them, the dividend strategy achieved good investment results and contributed to the company's stable performance and increase in net assets. In terms of fixed income investment, we adhere to a sound investment strategy, continuously optimize the holding structure, stabilize the size of interest rate bonds, increase stable income investment types, and steadily develop investments such as ABS, notes, REITs, and overseas fixed income.
Investment advice: We expect the company's EPS to be 0.81/0.87/0.91 yuan in 2024-26E, and 9.70/10.27/10.87 yuan for BVPS, respectively. We gave it 1.4-1.5x P/B in 2023, corresponding to a reasonable value range of 13.59-14.56 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.