收费类业务：四平八稳、符合预期。The 24Q3 company achieved revenue of 13.4 billion yuan, -23% year over year, and net profit of 2.9 billion yuan to mother, -38% year over year.
The annualized ROE is 3.52%; operating leverage is 5.16 times.
Overview: The 24Q3 company achieved revenue of 13.4 billion yuan, -23% year over year, and net profit of 2.9 billion yuan to mother, -38% year over year. Revenue in a single quarter was 4.5 billion, -10% YoY, -10% month-on-month; net profit to mother was 0.63 billion, -40% YoY, -36%. As of 24Q3, the company's total assets were 655.4 billion, +5% compared to the beginning of the year; net assets to mother were 108.8 billion yuan, +4% compared to the beginning of the year. The annualized ROE was 3.52%, compared to -2.91 pct in 23; operating leverage was 5.16 times, continuing the downward trend. Proprietary employment/broker/investment banking/others/asset management/credit accounted for 56%/19%/15%/13%/6%/-9% of main revenue, respectively, and +10/-4/-2/-0/-0/-3pct, respectively.
Fee business: stable and in line with expectations.
(1) Under pressure from brokers, a solid customer base and professional investment team may support a strong return to the business.
24Q3 brokerage net revenue was 2.6 billion, -27% year over year; net revenue for the single quarter was 0.79 billion yuan, -22% year over year, -16% month on month. The decline in brokerage revenue is greater than the year-on-year decline in the average daily share base of the entire market (24Q3 yoy -9%, 3q24yoY -12%). It is expected that market sentiment will be low, trading will be lackluster, and sales of financial products will be blocked, dragging down brokerage revenue. Benefiting from the reversal of the stock market at the end of September and the overall recovery in wind, investors actively entered the market. As of 24Q3, the company's agents traded securities worth 103.1 billion, +25% compared to the beginning of the year. Looking back, with the company's large high-net-worth customer base, high-level products and solutions, and a professional investment advisory team, the brokerage business may be clearly flexible.
(2) The pace of IPOs is slowing down, dragging down investment banks' revenue. The 24Q3 investment bank's net revenue was 2.1 billion yuan, -21% year over year; single quarter revenue was 0.78 billion, +24% year over year, -6% month on month. According to the issuance date, 24Q3's A-share IPO raised 3.6 billion dollars, -88% year-on-year, with a market share of 7.87%, and a year-on-year market share of -1.54 pct. The industry ranking fell from 4th to 6th; refinancing raised 28.4 billion, -60% YoY, with a market share ratio of 18.64%, and +6.38pct year over year. The industry ranking rose from 3rd to 2nd. The bond underwriting amount was 876 billion, -0.3% YoY, with a market share of 8.69%, or -0.16pct YoY, maintaining 4th place in the industry ranking.
(3) Asset management is in line with expectations. Net revenue from 24Q3 asset management was 0.84 billion, -12% year on year; net revenue for the single quarter was 0.28 billion, -4% year over year, -2% month on month. Compared with 24H1 performance, the year-on-year decline in net asset management revenue is expected to be due to the reversal of equity boosting investment income and increasing the net value of asset management products.
Capital business: Self-employment is steady, and the share of the two financing markets is growing against the market.
(1) Self-employment added equity OCI, continued undirected investment, and overall steady progress. Benefiting from the equity market at the end of September, 24Q3's net revenue was 7.5 billion, which was a year-on-year correction of +7%; revenue in a single quarter was 3.2 billion, +26% year-on-year, and +34% month-on-month. As of 24Q3, transactional financial assets were 275.4 billion, -3% compared to the beginning of the year; derivative financial assets were 13.7 billion, +14% compared to the beginning of the year; in addition, the company added 1.8 billion in investment in other equity instruments.
It is expected that the company will continue to increase its allocation of high-dividend assets while making undirected self-management efforts to avoid the impact on overall revenue and net profit of one-way overscaling and reduced probability events in the equity and bond markets.
(2) The market share ratio of the two loans increased against the market, and the increase in proprietary debt squeezed out net interest income. Net interest expenses for 24Q3 were 1.2 billion, up 0.37 billion from year on year; single quarter expenditure was 0.38 billion yuan, a decrease of 0.03 billion yuan year on year, an increase of 0.16 billion yuan over the previous year. As of 24Q3, the company had raised 34.3 billion in capital, -4% compared to the beginning of the year, 2.38% of the market share of the two loans, +0.21pct compared to 23; bought and resold financial assets of 13.7 billion yuan, +14% compared to the beginning of the year. The increase in net interest expenses was mainly due to a sluggish market, insufficient demand for capital leverage, shrinking credit business, and a decrease in interest income; on the other hand, as of 24Q3, derivative financial liabilities were +61% compared to the beginning of the year, increasing interest expenses.
In addition, the 24Q3 company lost 0.09 billion in exchange and 0.75 billion yuan in exchange in a single quarter, making it the second largest loss in a single quarter in the past 3 years. Mainly due to the appreciation of the RMB, foreign exchange derivatives transactions carried out to hedge foreign currency exposure caused losses. However, in the long run, the company's net exchange earnings were positive.
Investment advice: Maintain a “Highly Recommended” rating. The company leads the strategic layout, insists on advancing the “three modernizations and one family” strategy, is rooted in China, integrates the world, embraces the future, and deeply cultivates the region. In terms of institutional business, the company has built a full range of comprehensive financial service capabilities. From early investment to late-stage listing and financing, through in-depth exploration of the diverse needs of different customer groups, the “CICC Solution” can provide professional services throughout the life cycle. In terms of retail business, the company accelerates digital intelligence transformation, embraces AIGC trends, and enhances customer reach and service radius. Considering the 924 financial press conference, the 926 Politburo meeting, and the 1018 Financial Street Forum annual meeting, regulatory and caring capital markets and policy warming often blow, the market trend is favorable, and sentiment has clearly recovered, which is beneficial to most brokerage sectors. In the context of liquidity being relaxed, the valuation of the brokerage sector will continue to benefit. As an industry leader, CICC will benefit first. After comprehensive consideration, we adjusted the company's net profit due to mother in 24/25/26 to 4/5.8 billion yuan, -34%/+6% year-on-year.
Risk warning: Policies are not as strong as expected, market fluctuations have intensified, and the company's market share has not increased as much as expected.
