Guotai Junan Securities·2024-05-05 02:02Investment Rating - The report maintains a "Buy" rating for China Galaxy Securities (601881) with a target price of 14.72 CNY, corresponding to a 2024 PE of 19.89x and a PB of 1.51x [3][4]. Core Views - The investment income decline has put pressure on performance, primarily due to a high base effect and a year-on-year drop in investment income rate by 0.29 percentage points to 0.42%. The net income from investment business decreased by 32.66% to 1.626 billion CNY, accounting for a negative 71.87% of the adjusted revenue increment [3]. - The company is expected to benefit from accelerated supply-side reforms in the industry, enhancing its professional capabilities as a leading state-owned brokerage. This could lead to unexpected growth through both organic and external development [3][4]. Financial Summary - For Q1 2024, the company reported revenue of 7.214 billion CNY and a net profit attributable to shareholders of 1.631 billion CNY, reflecting a year-on-year change of 17.06% and -27.46%, respectively. The weighted average ROE decreased by 1.06 percentage points to 1.3% [3]. - The financial asset scale increased by 17.59% year-on-year to 414.72 billion CNY, with a rising trend in stock positions during the second half of 2023, which may affect the stability of investment income rates in a volatile market [3]. Earnings Forecast - The earnings per share (EPS) forecast for 2024-2026 is set at 0.74 CNY, 0.81 CNY, and 0.87 CNY, respectively [3][4]. Market Data - The current stock price is 12.69 CNY, with a 52-week price range of 10.44-14.51 CNY and a total market capitalization of 138.758 billion CNY [4][5]. Business Model and Strategy - The company is focused on enhancing its business model through a "five-in-one" strategy, which includes the launch of the "Galaxy Tian Gong" one-stop financial service platform and the establishment of an institutional business line. The new chairman of the investment banking business brings extensive experience, which is expected to improve the company's professional capabilities [3]. Industry Context - The report highlights that the government is concentrating efforts on strengthening and optimizing large state-owned financial enterprises, which positions China Galaxy favorably within the industry as a leading state-owned brokerage [3].