Incident: COFCO Capital released its 2023 annual report. During the reporting period, the company achieved operating income of 22.282 billion yuan, +19.76% year over year; realized net profit of 1,021 billion yuan, +70.95% year over year; and ROE (weighted) of 5.41%, +2.15 pct year on year.
Revenue has increased, and profitability has increased dramatically. The company's total revenue in 2023 reached 22.282 billion yuan, +19.76% year-on-year, and net profit to mother reached 1,021 billion yuan, +70.95% year-on-year. Revenue grew rapidly, and profitability increased dramatically.
Life insurance business: Strong profitability and steady operation. In 2023, Zhongying Life achieved net profit of 525 million yuan, original insurance premium income of 16.169 billion yuan, and new annual premium income of 6.06 billion yuan.
The company focuses on long-term steady operation. At the end of 2023, the comprehensive solvency ratio of Sino-British Life reached 273.13%, and the core solvency ratio reached 166.87%. It continued to remain at a high level, and its solvency was basically sufficient and stable.
Futures business: The international brokerage business has entered healthy development, and the scale of futures asset management has increased rapidly. As of the end of the reporting period in 2023, COFCO Futures achieved net profit of 238 million yuan, ROE reached 6.8%, and net assets and net capital (parent company) reached 3,584 million yuan and 1,422 million yuan respectively at the end of the year. The brokerage business is developing steadily, moderately and positively, with domestic futures brokerage trading volume of 146.47 million lots, with a transaction amount of 7.729 billion yuan, and the average daily equity remained stable throughout the year; the international brokerage business entered a healthy development path of self-hematopoiesis, with international business clients' equity of 3,033 billion yuan at the end of the year, +2.34% compared to the same period last year, and international business revenue +114% year-on-year. Futures asset management has achieved relatively rapid growth, and the influence of the industry has increased.
Trust business: Active management capabilities improved, trust business transformation accelerated. In the fixed income business, standard bonds have grown significantly. A full range of asset management product systems, including cash management, pure debt, and income enhancement, with multiple assets and steady returns have been formed. The size of standard bonds reached 78.9 billion yuan, +87% over the same period last year.
In the equity business, investment, research and construction was enhanced, and the equity scale of standard products reached 2.5 billion yuan. In the asset securitization business, various business types such as ABS and ABN are actively deployed. The annual new issuance scale is among the highest in the industry, reaching 34.2 billion yuan at the end of the year. In recent years, the company has been deeply involved in the securities service trust business, and has started rapidly, reaching 119.7 billion yuan at the end of the year. Multi-business development, acceleration of trust business transformation, and improvement of quality and efficiency.
Investment advice: After asset restructuring, COFCO Capital achieved business transformation, steady improvement in operating quality, and continuous increase in profitability. The life insurance business is operating steadily and has strong profitability. The futures business is developing steadily, moderately and positively, the influence of the industry continues to increase, and the transformation of the trust business is accelerating, improving quality and efficiency. The company's revenue for 2024-2026 is estimated to be 34.54, 43.95, and 5.141 billion yuan; net profit due to mother is 12.38, 16.31, and 1,987 billion yuan; EPS is 0.54, 0.71, and 0.86 yuan/share, respectively. PE corresponding to the closing price on May 7 is 15.60, 11.84, and 9.72, respectively. Upgraded to “Buy” rating.
Risk warning: capital market fluctuates greatly, life insurance sales decline beyond expectations, industry competition intensifies