CGS(SH:601881) Xinda Securities·2024-04-30 09:00Investment Rating - The investment rating for China Galaxy (601881) is "Buy" [1] Core Views - The report highlights that the investment banking and asset management sectors have shown significant growth, while proprietary trading performance has been under pressure due to a decline in investment income [2] - The company has increased its leverage ratio and asset scale significantly, with total assets reaching 768.85 billion RMB, a 15.9% increase from the beginning of the year [2] - Management expenses have slightly decreased, but the expense ratio has increased due to a rise in employee numbers [2] - The company is expected to benefit from regulatory support for innovation and consolidation in the brokerage industry, with projected net profits for 2024-2026 estimated at 8.45 billion, 9.73 billion, and 10.74 billion RMB respectively [2] Financial Performance Summary - In Q1 2023, the company reported revenue and net profit of 7.214 billion and 1.631 billion RMB, respectively, representing a year-on-year decline of 17.06% and 27.46% [1] - The adjusted revenue for Q1 2024 was 4.08 billion RMB, down 21.2% year-on-year, with specific business segments showing varied performance: brokerage (-9.8%), investment banking (+65.2%), asset management (+7.3%), credit (-16.9%), and proprietary trading (-32.5%) [2] - The company's return on equity (ROE) for Q1 2023 was 1.30%, a decrease of 1.06 percentage points year-on-year [1] Financial Projections - The total revenue projections for the upcoming years are as follows: 35.97 billion RMB in 2024, 38.81 billion RMB in 2025, and 41.52 billion RMB in 2026, with respective growth rates of 6.91%, 7.91%, and 6.98% [3] - The projected net profit for 2023 is 7.88 billion RMB, with a slight increase to 8.45 billion RMB in 2024, and further growth to 9.73 billion RMB in 2025 and 10.74 billion RMB in 2026 [3] - The report anticipates a net profit margin of 24% in 2024, increasing to 25% in 2025 and 26% in 2026 [4]