Oriental Wealth issued an annual performance forecast for 2022, which is expected to achieve a net profit of 80% 9 billion yuan, a year-on-year net profit of-6.5% and 5.2% compared with the same period last year, and an estimated net profit of 777.7 billion yuan, or-8.8% and 3.1%, respectively, compared with the same period last year.
The quarterly net profit of 2022Q1 to Q3 is 21.71,22.73 and 2.15 billion yuan, respectively. Q4 is expected to achieve a net profit of 1.42.4 billion yuan in a single quarter, which is 3.8% from the same period last year and 11.9% from the previous quarter.
The performance of securities business is better than that of the industry, and the increase in share leads to income growth. Under the volatility of the equity market in 2022, the trading activity dropped sharply, with the average daily turnover ranging from-12.6% to 925.6 billion yuan and the monthly balance from-9.3% to 1.6 trillion yuan. Oriental Wealth reversed the trend by virtue of its flow advantage and low commission strategy to reverse the market share of the brokerage business. It is expected that the cumulative market share of the company's turnover at the end of the year increased from + 0.38pcts to 4.2% compared with the same period last year, leading to a slight increase in securities business-related income.
The downturn in the fund market is a drag on consignment income. Affected by the prosperity of the capital market, the new issuance and retention scale of funds in the whole market both declined in 2022. In terms of newly issued funds, the new issuance scale of all funds / equity funds in 2022 was-49.8% and 78.7% respectively compared with the same period last year. In terms of holdings, the 2022 partial stock mixed fund index fell 21.0% year on year. At the end of December, the net stock of equity funds in the whole market was-13.4% to 7.48 trillion yuan, and by the end of the third quarter, the number of corporate equity funds was 455.1 billion yuan,-6.0% year on year and-10.4% compared with the same period last year. The base effect superimposed market downturn led to year-on-year pressure on consignment income, but the market share of holdings remained strong and resilient. Compared with the beginning of the year, + 0.14pcts reached 6.4%.
Short-term subject to the market environment performance growth pressure, optimistic about Oriental Wealth with flow and platform advantages in the wealth management expansion cycle of long-term growth space. We have adjusted our profit forecast and expect the company to achieve a net profit of 106.29 and 12.751 billion yuan respectively from 2023 to 2024, which is + 20.0% and + 20.0% respectively compared with the same period last year. The PE valuation corresponding to the closing price on January 20, 2023 is 28.9 and 24.1 times, respectively, maintaining the "prudent overweight" rating.
Risk hints: capital market volatility risk, macroeconomic downside risk, market share increase less than expected risk, new business promotion less than expected risk.