Matters:
Q1 achieved total revenue of $3.19 billion (-13.9% YoY) and net profit of 350 million yuan (YoY -59.6% /month-on-month). At the end of the reporting period, net assets attributable to the mother were $53.56 billion (+1% compared to the beginning of the period).
Commentary:
Both asset-light and capital-heavy businesses are under pressure. Q1 operating income (mainly commodity spot trade revenue from subsidiaries, extremely low profit margin)/interest income/net commission income and investment income were -43.7%/-11.6%/-8.1%/-61.5% to 2.6/12.6/16.8/260 million yuan, respectively; the contribution to total revenue was 7.4%/35.8%/47.7%/7.5%, year-on-year, -3 pct/+3.9 pct/-6.7 pct/-7.8 pct.
The investment banking business went public along with it. Q1 Industry initial/refinancing/corporate bond+ corporate bond underwriting scale was 236.2/870.6/908.6 billion yuan, respectively -63.7%/-70%/+4.8% year-on-year; SDIC Securities's initial issue/refinancing/corporate bond+ corporate bond underwriting scale was 0/4.8/15.78 billion yuan, -100%/-79.2%/+28.9%, respectively. The changes were basically consistent with the industry.
Expansion in the size of proprietary assets. Q1 Proprietary business revenue of 260 million yuan (-61.5% YoY/+248.6% YoY).
At the end of the reporting period, the company's transactional financial assets were RMB 90.76 billion (+34.8% month-on-month +40.6%), and the Q1 annualized self-employment yield was 1.3% (-3.2pct/month-on-month +1pct).
The market share of the two finance companies increased. Q1 Net interest income of $350 million (YoY -40.2% /YoY -37.4%), of which interest income/interest expenses were -11.6%/+8.3% YoY respectively. Q1 The average daily balance of two loans in the entire market was RMB 1543.26 billion (-1.8% YoY /-6.5%), the company's average balance of two loans was RMB 40.95 billion (+4.5% YoY/-0.2% YoY), and the market share of both finance was 2.65% (+0.16pct/month-on-month +0.17pct).
Investment advice: Q1 The company's management expenses were reduced by 1.16 billion month-on-month, driving net profit to turn a month-on-month loss into a profit. The asset-light business fluctuated along with the market, which was generally in line with expectations. We maintain our profit forecast. The company's 2024/2025/2026 EPS is 0.46/0.49/0.53 yuan, and BPS is 8.09/8.44/8.79 yuan respectively. The current stock price corresponds to PB of 0.82/0.78/0.75 times, respectively, and ROE of 5.71%/5.86%/6.06%, respectively.
Maintain the company's 2024 PB valuation of 1.1 times, corresponding to the target price of 8.9 yuan, and maintain the “recommended” rating.
Risk warning: Market trading volume declined; risk appetite declined; capital market innovation fell short of expectations; real economy recovery fell short of expectations.