The company disclosed its 2024 quarterly report: in 24Q1, the company achieved total revenue of 3,028 billion yuan, a year-on-year decrease of 21.92%. Net profit from mother was 467 million yuan in 24Q1, compared to 712 million yuan in the same period last year, a year-on-year decrease of 34.41%. As of 24Q1, total assets were $194.191 billion, up 3.75% from the end of '23. The balance ratio at the end of the period remained stable at 79%.

Affected by capital market fluctuations, Yuexiu Industrial Investment dragged down performance. According to the company's 2024Q1 financial report, the company's fair value change revenue was -297 million yuan, which changed from positive to negative year-on-year compared to 83 million yuan in the same period last year. The change was the core reason for the decline in 24Q1 performance. The report showed that it was mainly due to fluctuations in the stock price of Yuexiu Industrial Investment Investment's capital market. As the economic environment improves and capital market activity improves, the block's performance is expected to pick up from a low level. In addition, the decline in profit may also be related to a decrease in revenue and a narrowing in gross profit from the futures warehouse receipt business. If other business revenue is simply deducted from other business costs to represent the futures warehouse receipt business, 23Q1 was 54.61 million yuan, while 24Q1 shrank to -1.32 million yuan.

Interest income has declined slightly, but the orderly launch of the new energy business is expected to support performance.

The 24Q1 company's interest income was $1,090 million, down about 16% year-on-year from $1,301 billion in 23Q1. Affected by macroeconomic fluctuations, it became more difficult to invest in interest-bearing assets. The balance of leases receivable fell nearly 10% year on year, and 24Q1 long-term receivables (including non-current assets due within one year) were 67 billion yuan, a slight increase over the previous year and remained flat. In '23, the company strengthened its new energy business layout and actively built a product chain such as direct leasing, leasing back, operating leasing, and investment co-construction of household and industrial photovoltaics. The orderly launch of the new energy business can support the recovery of Yuexiu Leasing's performance.

Profit forecasting and investment advice. The estimated net profit of Yuexiu Capital in 2024 is 2.405 billion yuan, which is basically the same as the previous year; corresponding to ROE of 7.8%, the estimated EPS is 0.48 yuan in 2024. Considering the change in fair value in 24Q1, the 24-year PE valuation is 14x, with a reasonable value of 6.7 yuan per share. Maintain an “Overweight” rating.

Risk warning: economic downturn, business reforms falling short of expectations, subsidiary operations falling short of expectations, etc.