Incident: China Galaxy Securities announced the 2024 mid-year report. 24H1 China Galaxy Securities achieved revenue of 17.086 billion yuan, yoy -1.88%, net profit to mother 4.388 billion yuan, yoy -11.16%, of which Q2 net profit was +69% month-on-month to 2.756 billion yuan. The company's weighted average ROE was 3.63%, -1.47pcts year over year. Net income from 24H1 brokerage, credit, self-employment, investment banking, and asset management (excluding other income) accounted for 26%/19%/50%/3%/2%, respectively. The company's leverage level (excluding customer assets) is 4.37X, -0.46X year over year. The company plans to pay a cash dividend of 0.84 yuan (tax included) for every 10 shares in the medium term, with a dividend rate of 20.93%.

The brokerage business declined with the market, and the investment banking business performed well. 1) Investment banking: 24H1 achieved investment banking revenue of 0.266 billion yuan, +42.17% year over year, and achieved contrarian growth under pressure from the industry as a whole. The underwriting scale of 24H1 bonds reached 203.5 billion yuan, +22% year over year, ranking 7th in the market. 2) Brokerage: 24H1 achieved brokerage revenue of 2.51 billion yuan, -12.99% year-on-year. The company's financial product holdings at the end of the reporting period were 198.5 billion yuan, up 1.3% from the beginning of the year. 3) Asset management: 24H1 achieved asset management business revenue of 0.228 billion yuan, +2.14% over the same period last year. As of 24H1, Galaxy Gold Exchange's fiduciary asset management scale reached 101.744 billion, an increase of 7.6% over the beginning of the year.

Proprietary income contributed steadily, and credit business declined year on year. 1) Self-operated: In 24H1, the company achieved self-operating revenue of 4.925 billion yuan, +5.57% year-on-year, of which Q2 self-operating revenue in a single quarter was +102% month-on-month to 3.296 billion yuan, contributing the main support to the performance. As of 24H1, the company's financial investment was 397.831 billion yuan, +13.34% compared to the beginning of the year. 2) Credit: 24H1 achieved net interest income of 1.839 billion yuan, -16.58% year-on-year, mainly affected by the year-on-year decline in interest income from securities financing and debt investments.

As of 24H1, the company's securities financing balance was 74 billion yuan, with an average maintenance guarantee ratio of 238%. The overall risk is manageable.

Investment advice: The company's own investment performance is steady, and its leading advantage is stable. We expect China Galaxy's revenue for 2024-2026 to be 35.59/38.754/42.036 billion yuan, respectively; net profit to mother will be 7.983/8.932/9.881 billion yuan, respectively, maintaining the “gain” rating.

Risk warning: policy risk, large market fluctuations, operational and business risks.