EASTMONEY(SZ:300059) Guotai Junan Securities·2024-03-14 16:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of 30.97 CNY per share, corresponding to a 55x P/E for 2024 [2][3]. Core Insights - The company's net profit decline is primarily due to weak demand for equity funds among residents and pressure on fund distribution income from fee reforms. Increased investment in AI technology is expected to drive growth in wealth management and B-end financial information services [2]. - In 2023, the company's total revenue and adjusted revenue (including net income from investment business) were 11.081 billion CNY and 13.317 billion CNY, respectively, representing a year-on-year decline of 11.25% and 2.09%. The net profit attributable to the parent company was 8.193 billion CNY, down 3.71% year-on-year [2]. Financial Summary - The company's fund distribution income decreased by 16% year-on-year to 3.625 billion CNY, contributing 246% to the total decline in adjusted revenue. The demand for equity funds is low due to residents' risk aversion, with new issuance of equity funds down 28.29% to 290 billion units [2]. - Commission and fee income also fell by 8.33% to 4.967 billion CNY, contributing 159% to the adjusted revenue decline. However, investment income significantly increased to 2.236 billion CNY, up 100% year-on-year, with an investment return rate of 3.4% [2]. - The company's total operating costs increased by 3.49% to 4.329 billion CNY, leading to a decline in net profit margin by 1.04 percentage points year-on-year. The increase in costs was mainly due to a 5.65% rise in management expenses and a 15.49% rise in R&D expenses [2]. - The company has launched an AI division and is testing its self-developed "Miaoxiang" financial model, which is expected to enhance wealth management services and B-end financial information services [2]. Financial Forecast - The projected EPS for 2024, 2025, and 2026 is 0.56 CNY, 0.59 CNY, and 0.61 CNY, respectively [2]. - The company's total revenue is expected to recover slightly in 2024, with estimates of 11.742 billion CNY, followed by 12.337 billion CNY in 2025 and 12.922 billion CNY in 2026 [9].