Industrial Securities(SH:601377) Huachuang Securities·2024-09-02 07:11Investment Rating - The report maintains a "Recommended" rating for the company with a target price of 5.99 CNY, compared to the current price of 5.17 CNY [2]. Core Views - The company's performance has shown improvement on a quarter-on-quarter basis, with an increase in leverage year-on-year. The total revenue, excluding other business income, was 4.2 billion CNY, down 28.3% year-on-year, but up 5.6% quarter-on-quarter. The net profit attributable to the parent company was 0.94 billion CNY, down 47.6% year-on-year, but up 2.9% quarter-on-quarter [2]. - The return on equity (ROE) decreased year-on-year, primarily due to a decline in return on assets (ROA). The ROE for the reporting period was 1.7%, down 1.7 percentage points year-on-year, while the quarterly ROE was 1.1%, up 0.5 percentage points quarter-on-quarter [2]. - The financial leverage ratio at the end of the reporting period was 3.7 times, an increase of 0.16 times year-on-year and 0.3 times quarter-on-quarter [2]. Financial Performance Summary - The company's total revenue for 2023 is projected at 10,627 million CNY, with expected growth rates of 5% in 2024, 7% in 2025, and 7% in 2026. The net profit attributable to the parent company is expected to be 1,964 million CNY in 2023, with a projected growth of 11% in 2024, 13% in 2025, and 12% in 2026 [5]. - Earnings per share (EPS) are forecasted to be 0.23 CNY in 2023, increasing to 0.25 CNY in 2024, 0.29 CNY in 2025, and 0.32 CNY in 2026 [5]. - The price-to-earnings (P/E) ratio is expected to decrease from 22.5 in 2023 to 16.2 in 2026, indicating a more attractive valuation over time [5]. Business Segment Performance - The company's proprietary business revenue totaled 1.17 billion CNY, with a quarterly revenue of 840 million CNY, reflecting a quarter-on-quarter increase of 5.1%. The quarterly proprietary return rate was 1%, up 0.6 percentage points quarter-on-quarter [2]. - The brokerage business revenue was 930 million CNY, with a quarterly revenue of 460 million CNY, showing a quarter-on-quarter decline of 1.9%. This decline was less than the market's average trading volume drop of 7.3% during the same period [2]. - Investment banking revenue improved quarter-on-quarter, totaling 260 million CNY, with a quarterly revenue of 150 million CNY, reflecting a quarter-on-quarter increase of 0.3 billion CNY [2].