Soochow Securities·2024-11-13 10:23Investment Rating - The report assigns a "Buy" rating for Guotai Junan, marking its first coverage [1]. Core Views - The company is expected to benefit from ongoing capital market reforms and a gradual economic recovery, positioning it to capitalize on market opportunities as a leading brokerage firm [4][30]. - The merger with Haitong Securities is anticipated to significantly enhance the company's overall strength and market position, with various metrics expected to rank first in the industry post-merger [3][22]. Summary by Sections 1. Q3 2024 Company Performance - In Q3 2024, Guotai Junan reported a 7% year-on-year increase in revenue to 29 billion yuan and a 10% increase in net profit to 9.5 billion yuan, with net assets growing by 0.34% to 166.4 billion yuan [2][14]. - Light asset business showed some pressure, with brokerage and asset management revenues declining by 12.73% and 8.40% respectively, while investment banking revenue fell by 32.33% [15]. - Heavy asset business performed well, with proprietary trading revenue increasing by 39% year-on-year [16]. 2. Progress of Major Asset Restructuring - On October 9, 2024, the board approved the stock swap merger with Haitong Securities at a ratio of 1:0.62, with the process progressing smoothly [3][17]. - The merger is expected to elevate the combined company's rankings in various financial metrics, with projected revenues and net profits placing it second in the industry [22][25]. - The merger will leverage the strengths of both firms, enhancing capabilities in IPOs and bond underwriting [26]. 3. Earnings Forecast and Investment Rating - The forecast for net profit from 2024 to 2026 is set at 10.8 billion, 13.7 billion, and 16.3 billion yuan respectively, with corresponding price-to-book ratios of 1.01, 0.96, and 0.91 [4][30].