[Incident] Huatai Securities released its 2024 quarterly report, achieving operating income of 6.11 billion yuan, -32.1% year on year; net profit to mother of 2.29 billion yuan, -29.4% year on year; corresponding EPS of 0.24 yuan, ROE 1.4%, -0.5 pct year on year.
We expect the decline in the company's net profit to mother mainly due to factors such as poor self-operating performance. The share of corporate broker/investment banking/asset management/interest/proprietary income was 22%/9%/18%/4%/31%, respectively.
Build a wealth management platform with differentiated competitive advantages and continuously expand brand influence. The company's brokerage revenue for the first quarter of 2024 was 1.36 billion yuan, -11.4% year-on-year, accounting for 22.2% of revenue. The average daily share-based trading volume of the entire market was 102 billion yuan, +4.8% year-on-year. At the end of the first quarter of 2024, the company raised capital of 104.9 billion yuan, -7% compared to the beginning of the year, 6.82% market share, +0.02pct compared to the beginning of the year. The total market balance was 1537.9 billion yuan, -7% compared to the beginning of the year. The company relies on high-quality platforms and services to continuously improve user experience and create a wealth management platform with differentiated competitive advantages. The company continues to promote product and service innovation on the “Zangle Fortune Connect” platform. In 2023, the number of downloads of “Zangle Fortune Connect” was 3.9524 million, with a cumulative total of 74.012,400 downloads since its launch.
Actively build a first-class investment banking service system with an international perspective. The company's investment banking business revenue for the first quarter of 2024 was 580 million yuan, -26.1% year-on-year. The underwriting scale of the equity business was -83.7% year-on-year, and the underwriting scale of the bond business was +4.2% year-on-year. Shareholders' underwriting scale was 7.90 billion yuan, ranking 4th; of these, 4 IPOs raised 5 billion yuan; and 4 refinancings, with an underwriting scale of 2.9 billion yuan. The principal underwriting scale of bonds was 233.9 billion yuan, ranking 3rd; of these, the underwriting scale of local government bonds, corporate bonds, and financial bonds was 116.5 billion yuan, 45.8 billion yuan, and 42.2 billion yuan respectively. There are 6 IPO reserve projects, ranking 8th, including 1 on the main board of the two cities, 1 on the Beijing Stock Exchange, 2 on the Science and Technology Innovation Board, and 2 on the GEM.
The asset management business continues to deepen the construction of investment and research systems, and continuously enhance active investment management capabilities. The company's asset management business revenue for the first quarter of 2024 was 1.11 billion yuan, +10.2% year-on-year. The company provides diversified investment products, asset allocation and overall financial service solutions in one stop to meet the asset management needs of customers throughout the life cycle. At the end of 2023, Huatai's asset management scale was 475.5 billion yuan, -0.9% year-on-year, of which the public fund size was 95.9 billion yuan, +3% year-on-year; Southern Fund and Huatai Berry had management scales of 1.89 trillion yuan and 398.2 billion yuan respectively, +9% and +10%, respectively.
Self-operating performance declined significantly due to market influence. The company's investment income (including fair value) for the first quarter of 2024 was 1.88 billion yuan, -58.9% year-on-year. The company continues to expand the breadth, depth and intensity of basic equity research, improve the strategic trading system, enrich trading scenarios and business models, dynamically adjust positions, leverage and hedging methods, and actively seize market investment and trading opportunities.
The valuation is still low, and the rating is “superior to the market”. We expect the company's 2024-2026E EPS to be 1.48/1.66/1.81 yuan, and BVPS to be 20.87/22.07/23.37. Considering that the company's various business rankings were high, it was given 0.8-0.9x P/B for 24 years, corresponding to a reasonable value range of 16.70-18.78 yuan, maintaining a “superior to the market” rating.
Risk warning: Continued market downturn led to a decline in business scale; investment returns fell short of expectations due to increased equity market fluctuations.