维持“增持”评级，维持目标价 19.85港元，对应2024 年 1.05xPB。Introduction to this report:
The pressure on the light capital business and exchange fluctuations dragged down performance. Looking at the long-term, the company has the advantage of internationalization and specialization, and is expected to benefit from the construction of world-class investment banks.
Key points of investment:
Maintain the “Overweight” rating and maintain the target price of HK$19.85, corresponding to 1.05xPb in 2024.
The company's revenue/net profit for the first three quarters of 2024 was 13.45/2.86 billion yuan, -23.0%/-38.0% YoY, of which Q3 profit was 0.63 billion yuan, or -36.3% YoY; the weighted average ROE was -2.2 pct to 2.64% year over year. Considering the acceleration of supply-side reforms in the industry, the company's internationalization and specialization capabilities are outstanding, and it is expected that it will continue to consolidate its business advantages and build a world-class investment bank. Taking into account market environment factors, the company's profit forecast was lowered to 2024-2026 EPS of RMB 0.85/1.13/1.37 (previous value was RMB 1.10/1.27/1.40), and the target price was maintained at HK$19.85, corresponding to 1.05xPb in 2024, maintaining the “gain” rating.
The overall light capital business is under pressure, and fluctuations in exchange also hamper performance. The reasons for the decline in adjusted revenue (operating income - other business costs) were dismantled. Wealth management/brokerage, investment banking, asset management, net interest, investment, and other business revenue contributed to the decline of -24%, -14%, -3%, -9%, +12%, and -62%, respectively. The decline in the company's performance was mainly due to pressure on the light capital business and exchange fluctuations: 1) brokerage, investment banking, and asset management businesses were -27%, -21%, and -12%, respectively; 2) The decline in other business revenue was mainly due to net exchange earnings of -0.09 billion yuan in the first three quarters, compared to 2.06 billion yuan in the same period last year.
The new stage of supply-side industry reforms may be accelerated. The company's internationalization and specialization capabilities are outstanding, and it is expected that it will continue to consolidate various business advantages and build a world-class investment bank. The State Council said it will concentrate its efforts on building a “national team” for the financial industry and push large state-owned financial enterprises to become stronger and better. It is expected that supply-side reforms in the industry will accelerate. The company has cultivated advantages in international business, investment banking business, etc., and is expected to continue to consolidate its service capability advantages. The wealth management business continues to improve asset allocation and investment service capabilities, the investment banking business innovates fixed income products, and continues to improve merger and acquisition service capabilities, and is expected to develop beyond expectations.
Catalyst: Supply-side reforms in the industry are advancing at an accelerated pace.
Risk warning: The equity market fluctuates greatly. Supply-side reforms in the industry have fallen short of expectations.
