Introduction to this report:
The year-on-year decline in investment income in 24Q1 put pressure on performance; it is expected that the company will optimize the investment banking business layout around new quality productivity while leading multiple businesses. In the context of strengthening service expertise in the nine rules of the new country, it is expected that comprehensive customer value monetization will be realized.
Key points of investment:
Maintain the “overholding” rating and maintain the target price of 12.21 yuan/share, corresponding to 25.98xPe and 1.34xPb in 2024. The company's 2023 revenue/net profit to mother was 67.3/1,718 billion yuan, +17.39%/43.41% year over year; weighted average ROE was +1.22pct year over year to 5.39%. 2024Q1 revenue/net profit to mother was 1,483/367 million yuan, -24.03%/-38.6% YoY; the weighted average RoE was -0.78pct YoY to 1.12%, and the performance was in line with expectations. Based on the company's current business situation and market environment, the company's profit forecast was lowered to 24-25 EPS 0.47/0.52 yuan (0.52/0.61 yuan before adjustment), and 26 additional EPS forecasts were added by 0.57 yuan to maintain the “gain” rating.
The recovery in the market in 2023 led to a high increase in investment performance, and the year-on-year decline in 2024Q1 investment income weighed on performance. 1) The company's net income from investment business in 2023 was 497.37% to 1,688 billion yuan, contributing 141.02% of the adjusted revenue (operating income - other business expenses) increase, which was the main reason for the performance improvement; the high increase in investment business stemmed from the return on investment +3.32pct to 4.15% year over year in the context of market recovery; in addition, the size of financial assets was +14.78% to 43.485 billion yuan at the end of 2022; 2) 2024Q1, due to the high base, the company's net income from investment business was -40.01% to $43.32 billion Yuan accounted for -61.43% of the adjusted revenue increase, putting pressure on performance.
It is expected that the company will optimize the investment banking business layout around new quality productivity and drive multiple businesses at the same time. It is expected to realize customer depth and comprehensive value monetization in the context of the higher requirements for professional service capabilities in the context of the nine rules of the new country. The introduction of the Nine Rules of the New State focuses on Chinese-style modernization centers, encouraging financial institutions to put functionality first and continuously improve the standards of professional services. The company's investment banking business focuses on optimizing the layout of new productivity, continuously consolidating project reserves, focusing on industrial mergers and acquisitions encouraged by policies, and continuously improving the quality of practice. At the same time, we unswervingly implement an investment-led strategy and insist on directing customers and assets to various businesses such as wealth, asset management, and institutional business. It is hoped that through deep and comprehensive value monetization for customers, we will achieve growth in our own performance that exceeds expectations.
Catalyst: Coordinated development of the investment and financing market.
Risk warning: The equity market fluctuates greatly.