2024-04-28 02:32Investment Rating - The report maintains a "Buy" rating for Huatai Securities, with a target price indicating a potential upside of 38% from the current price [7][32]. Core Views - The report emphasizes that the valuation drag factors for Huatai Securities have been largely eliminated, and the company is expected to benefit from a favorable regulatory environment that encourages leading securities firms to enhance their investment banking capabilities [4][9]. - Huatai Securities has shown strong financial performance, ranking second in the industry for both revenue and net profit as of 2023, with a significant year-on-year growth [32][33]. - The company is expected to achieve a return on equity (ROE) that surpasses that of its peers, supported by a solid business foundation and effective management strategies [4][32]. Summary by Sections Stock Performance - As of April 25, 2024, Huatai Securities' closing price was 13.31 CNY, with a one-year high of 18.54 CNY and a low of 12.92 CNY. The price-to-book (PB) ratio stands at 0.7, indicating potential undervaluation [2]. Financial Data - As of December 31, 2023, the company's net asset per share was 19.74 CNY, with a debt-to-asset ratio of 79.88%. The total share capital is 9,029 million shares, with 7,281 million shares in circulation [3]. Revenue and Profit Forecast - The projected total revenue for Huatai Securities is expected to grow from 36,578 million CNY in 2023 to 40,451 million CNY by 2026, with a compound annual growth rate (CAGR) of 5.7%. The net profit attributable to shareholders is forecasted to increase from 12,751 million CNY in 2023 to 14,554 million CNY in 2026, reflecting a CAGR of 13.2% [4][32]. Investment Analysis - The report highlights that Huatai Securities has a robust project reserve in equity financing, ranking fifth in the industry with 18 ongoing projects, including six IPOs. The company is well-positioned to maintain resilience in its investment banking operations despite a tightening IPO environment [7][8]. - The wealth management business is expected to benefit from a high retail client base and favorable regulatory policies, with market share projected to remain stable [7][8]. - The report also notes that the company plans to sell AssetMark, which is expected to generate approximately 17.93 billion USD (about 127.4 billion CNY) in cash, enhancing its capital position [37].