HTSC(601688) HUAXI Securities·2024-09-01 08:03Investment Rating - The investment rating for the company is "Buy" [2][6]. Core Views - The company's performance has been negatively impacted by declines in foreign exchange and investment income, leading to a 27% year-on-year decrease in operating revenue to 12.34 billion yuan and a 19% drop in net profit attributable to shareholders to 5.31 billion yuan [2][3]. - The second quarter of 2024 saw operating revenue of 6.62 billion yuan, reflecting a year-on-year decrease of 19% but a quarter-on-quarter increase of 16% [2][3]. - The company plans to distribute a dividend of 25.50% of net profit attributable to shareholders for the first half of 2024 [2]. Revenue Analysis - The decline in revenue is primarily attributed to significant drops in foreign exchange income (down 87%), equity investment income (down 50%), and investment banking income (down 42%) [3]. - Securities proprietary trading and brokerage business also saw declines of 28% and 14%, respectively, while asset management and interest income experienced slight growth of 6% and 11% [3]. - The revenue structure indicates that securities investment and brokerage income account for the highest proportions at 34% and 22%, respectively [3]. Business Segments Performance - The brokerage business generated net income of 2.72 billion yuan, down 14% year-on-year, with retail brokerage and institutional brokerage incomes decreasing by 9% and 10%, respectively [4]. - Investment banking revenue fell to 930 million yuan, a 42% decrease, with the company holding a 16.6% market share in IPOs, which is an increase of 11.2 percentage points year-on-year [4]. - The asset management business showed resilience with a revenue increase of 6% to 2.22 billion yuan, and the total asset management scale reached 506 billion yuan, up 11% year-on-year [4]. Financial Metrics - The company's proprietary trading income was 4.21 billion yuan, down 28% year-on-year, with a financial asset investment scale of 425.2 billion yuan, a decrease of 7% [5]. - Interest income increased by 11% to 710 million yuan, outperforming the industry [5]. - The company plans to sell its entire stake in AssetMark, which could enhance profits if completed successfully [6]. Earnings Forecast - Revenue forecasts for 2024 and 2025 have been adjusted down to 38.053 billion yuan and 42.872 billion yuan, respectively, with an increase in the 2026 forecast to 51.889 billion yuan [6]. - Earnings per share (EPS) estimates have been revised down to 1.15 yuan and 1.35 yuan for 2024 and 2025, respectively, with an increase to 1.73 yuan for 2026 [6].