Matters:

China Investment Corporation released its 2024 three-quarter report. The first three quarters achieved total operating income of 10.25 billion yuan (-20.1% YoY) and net profit to mother of 2.08 billion yuan (-14.3% YoY).

The third quarter achieved total revenue of 3.53 billion yuan (-19.8% YoY +0.4%) and net profit to mother of 0.83 billion yuan (+12.2% YoY/-7.9%).

Commentary:

24Q1-Q3 performance split: According to income statement accounts, operating income (mainly spot trade income from subsidiaries, extremely low profit margin) /interest income/handling fee and commission income were 1.3/3.53/5.43 billion yuan, respectively, -25%/-21.2%/-18% over the same period last year, contributing 12.7%/34.4%/52.9% to total operating income. Specifically, net income from interest/fees and net commissions/revenue from proprietary operations were $1.15/4.5/2.05 billion, respectively, or -29.8%/-20.8%/+53.2% compared to the same period last year. Net profit recovery was driven by self-operated business revenue.

Proprietary income increased significantly year over year. 24Q3's self-operating revenue was 0.82 billion yuan (year-on-year +0.47 billion yuan/month-on-month -0.14 billion yuan), and the self-operating yield in a single quarter was 0.72% (+0.46pct/month-on-month -0.08pct). Although Q3 self-operated business revenue declined month-on-month under the high base in Q2, the self-operating return (annualized) for the first three quarters still reached 2.31%, +0.82pct year on year.

Some subsidiary businesses: 1) SDIC Securities: In terms of investment banking business, SDIC Securities had an equity underwriting scale of 1.277 billion yuan from 24Q1 to Q3, -85% year-on-year, with a market share ratio of 0.63%; the share underwriting scale of the entire industry was 202.268 billion yuan, or -77% year-on-year. Currently, there are 5 IPOs under review, ranking 6th in the industry in terms of number. 2) SDIC UBS Fund: Non-cargo base management scale at the end of 24Q3 was 158.9 billion yuan, +17% year over year; mixed stock management scale was 40.1 billion yuan, -9% year over year; debt base management scale was 115.7 billion yuan, +28% year over year.

Investment advice: China's investment is mainly based on the securities business, which is expected to give full play to the advantages of industrial and financial synergy with the diversified investment business of the majority shareholder SDIC Group. We maintain our profit forecast. We expect the company's EPS to be 0.43/0.46/0.52 yuan and BPS to be 8.06/8.39/8.73 yuan in 2024/2025/2026, respectively. The corresponding PB of the current stock price is 0.97/0.93/0.90 times, and the ROE is 5.29%/5.46%/5.95%, respectively. The company's wealth management transformation continues to advance, and the synergy advantages of multiple licenses have been shown. We gave it a PB valuation of 1.2 times its 2025 performance, corresponding to a target price of 10.06 yuan, maintaining a “recommended” rating.

Risk warning: Market trading volume declined; risk appetite declined; capital market innovation fell short of expectations; real economy recovery fell short of expectations