First Venture published the 2023 Annual Report and the 2024 First Quarter Report. In 2023, the company achieved total revenue of 2,489 billion yuan, down 4.7% year on year; realized net profit of 331 million yuan, down 17.5% year on year; EPS was 0.08 yuan/share, down 20.0% year on year; and ROE was 2.25%, down 0.51 pct year on year.

In the first quarter of 2024, the company achieved operating income of 673 million yuan, a year-on-year decrease of 2.66%; realized net profit of 143 million yuan, an increase of 1.64%; EPS was 0.030 yuan/share, and ROE was 0.96%, all unchanged year-on-year. Subsequent companies are expected to continue to consolidate the “fixed income+asset management” two-wheel drive business advantages and achieve the continuous growth of the Beijing Stock Exchange business, empowered by Beijing State Administration, the largest shareholder.

Bond trading is active, and the investment business is growing against the trend. In 2023, the company achieved investment revenue of 592 million yuan, an increase of 217% over the previous year, mainly due to the good performance of the bond investment business; the company's bond trading volume in the interbank and exchange markets was 7.95 trillion yuan, an increase of 14% over the previous year; and the interbank market trading volume was 2.65 trillion yuan, an increase of 9% over the previous year. In the first quarter of 2024, the company achieved investment business revenue of 229 million yuan, an increase of 9% over the previous year. The company's trading strategies are flexible and diverse, and cash trading volume, trading activity and influence are expected to increase steadily.

Expanding the listing on the New Third Board, the Beijing Stock Exchange's business is working hard. In 2023, due to the tightening of IPOs in the market, the company achieved investment banking revenue of 190 million yuan, a year-on-year decrease of 31.85%. In the first quarter of 2024, investment banking business revenue was 65 million yuan, up 41.62% year on year; in terms of equity underwriting, raised capital of 555 million yuan, up 40% year on year; market share increased 0.63 pct to 0.76%; market ranking rose 23 places from the same period last year to rank 17th; during the same period, bond underwriting business volume was 1,846 billion yuan, down 35% year on year, and market share was 0.01, down 0.03 pct year on year. The company's investment bank grasped the strategic development opportunities of the Beijing Stock Exchange and increased its efforts to expand its listing business on the New Third Board.

The brokerage business was under pressure, and the asset management business declined. Affected by market sentiment, the company achieved brokerage revenue of 351 million yuan in 2023, a year-on-year decrease of 9%; in the first quarter, it achieved brokerage business revenue of 84 million yuan, a year-on-year decrease of 5%. By the end of 2023, the company's “Yichuang Zhifutong” continued to upgrade, with a cumulative total of more than 1.42 million registered users, an increase of 7% over the previous year; stocks and hybrid public funds held 4.2 billion yuan, ranking 46th in the industry. In the first quarter of 2024, the company achieved asset management revenue of 226 million yuan, a year-on-year decrease of 1.79%.

The fund subsidiary has strong fintech capabilities and collaborates with wealth management.

Risk warning: Market decline brings uncertainty to brokers' performance and valuation repair; financial supervision is becoming stricter.

Investment advice: Based on equity market fluctuations, continued tightening of IPOs, and the impact of new regulatory regulations on the securities industry, we lowered the company's profit forecasts for 2024 and 2025 by 21% and 17%, respectively, and added a profit forecast for 2026. The company's net profit for 2024-2026 is estimated to be 4.7/5.3/580 million yuan, up 40.8%/14.8%/8.3% year on year. The PE corresponding to the current stock price is 50.7/44.1/40.8x and PB is 1.7/1.6/1.6x. As a special brokerage firm, the company has obvious advantages in the “asset management+fixed income” business, and we maintain the company's “increase in holdings” rating.