HTSC(601688) Tianfeng Securities·2024-10-31 13:01Investment Rating - The investment rating for Huatai Securities is maintained at "Buy" with a target price of 17.41 CNY [1]. Core Views - The report highlights a significant decline in non-recurring net profit for Q3 2024, with overall performance falling short of expectations. Adjusted revenue for Q3 and the first three quarters of 2024 reached 117 billion CNY and 240 billion CNY, respectively, showing a year-on-year growth of 61.1% and a decline of 0.9% [1]. - The report emphasizes the resilience of the credit business, which saw revenue growth of 175.2% year-on-year in Q3 2024, despite a decline in other business lines [1]. - The brokerage and investment banking sectors faced challenges due to regulatory tightening, leading to a significant drop in underwriting revenue [1]. Summary by Sections Financial Performance - For Q3 2024, Huatai Securities reported adjusted revenue of 117 billion CNY, with a year-on-year growth of 61.1%. The net profit attributable to shareholders was 72 billion CNY, reflecting a year-on-year increase of 138.0% [1]. - The non-recurring net profit for Q3 2024 was 11 billion CNY, showing a year-on-year decline of 61.4% [1]. - The return on equity (ROE) was reported at 10.1%, an increase of 1.9 percentage points compared to the same period last year [1]. Business Segments - The credit business achieved revenue of 5.9 billion CNY in Q3 2024, marking a year-on-year increase of 175.2%. However, the self-operated business revenue declined by 12.7% year-on-year to 16.2 billion CNY in Q3 2024 [1]. - The brokerage business generated 39.7 billion CNY in revenue for the first three quarters of 2024, down 14.3% year-on-year, attributed to a decrease in market trading volume [1]. - Investment banking revenue fell by 40.8% year-on-year to 13.6 billion CNY, impacted by regulatory policies that tightened IPO and refinancing activities [1]. Future Outlook - The report anticipates that the current policy benefits will be fully realized, leading to increased trading volumes that will directly benefit the brokerage and margin financing businesses. The introduction of new swap convenience tools is expected to enhance net profit elasticity [1]. - The profit forecasts for 2024, 2025, and 2026 have been adjusted to 149 billion CNY, 195 billion CNY, and 218 billion CNY, respectively, with expected year-on-year growth rates of 16.5%, 31.6%, and 11.7% [1].