兴业证券：泛自营业务推动业绩回升

Investment Rating - The report maintains a "Buy" rating for Xingye Securities (601377 SH) with a target price of CNY 8 25 [3][5] Core Views - Xingye Securities' performance rebounded in Q3 2024 with a net profit of CNY 378 million turning from loss to profit [1] - The company's total assets stood at CNY 277 7 billion in Q3 2024 down 4 5% YoY while weighted average ROE increased by 4 16 percentage points to 2 64% [1] - Investment business showed significant recovery with investment net income (including fair value) reaching CNY 2 222 billion in the first three quarters up 165% YoY [1] - Light asset businesses such as brokerage and investment banking were impacted by market downturns with Q3 brokerage net income down 28% YoY and investment banking net income down 7% YoY [1] - The company is expected to benefit from policy support for capital market revitalization with projected net profits of CNY 2 35 billion and CNY 2 98 billion for 2024 and 2025 respectively [5] Business Performance Summary Heavy Asset Business - Investment net income (including fair value) reached CNY 2 222 billion in the first three quarters of 2024 up 165% YoY with Q3 contributing CNY 1 033 billion [1] - Interest net income in Q3 was CNY 284 million down 34% YoY while the first three quarters saw a 38 5% decline to CNY 879 million [1] - Margin financing balance at the end of September 2024 was CNY 1 4401 trillion down 9 5% YoY [1] Light Asset Business - Q3 brokerage net income was CNY 387 million down 28% YoY due to a 16% decline in daily market trading volume [1] - Asset management net income in Q3 was CNY 40 million flat YoY with non monetary fund sizes of Xingquan Fund and Southern Fund at CNY 279 2 billion and CNY 695 9 billion respectively [1] - Investment banking net income in Q3 was CNY 179 million down 7% YoY with total equity underwriting of CNY 233 million down 84% YoY [1] Financial Forecasts - Revenue is expected to grow by 7 1% in 2024 and 18 1% in 2025 reaching CNY 13 44 billion [2][7] - Net profit attributable to shareholders is projected to increase by 19 4% in 2024 and 27 2% in 2025 reaching CNY 2 981 billion [2][7] - EPS is forecasted to be CNY 0 27 in 2024 and CNY 0 35 in 2025 [2][7] - The company's P/E ratio is expected to be 25 16x in 2024 and 19 78x in 2025 [2][7] Market Assumptions - Daily market trading volume is expected to increase by 5% in 2024 and 10% in 2025 [6] - Margin financing balance is projected to reach CNY 1 7006 trillion in 2024 and CNY 1 7628 trillion in 2025 [6] - Equity financing volume is expected to decline by 50% in 2024 but rebound by 12% in 2025 [6] - The CSI 300 index is forecasted to yield 15% in 2024 and 20% in 2025 [6] Peer Comparison - Xingye Securities' 2024E P/B ratio of 1 06x is lower than peers such as Orient Securities (1 36x) and Founder Securities (1 23x) [8] - The company's 2024E ROE of 3 9% is below that of Zhejiang Securities (6 4%) but higher than Soochow Securities (2 3%) [8] Valuation - The report values Xingye Securities at 1 2x P/B for 2025 based on its historical valuation range of 1 3x P/B since 2019 [5]