CGS(SH:601881) Changjiang Securities·2024-05-07 08:32Investment Rating - The report maintains a "Buy" rating for the company [7]. Core Insights - The company's Q1 performance was under pressure due to market fluctuations, with proprietary and interest income being the main drag. However, the brokerage business is recovering, and investment banking and asset management revenues are expected to continue growing under new management and strategy [5][6][7]. - The company benefits from policies favoring strong firms and mergers, positioning it well for future growth [7]. Summary by Sections Financial Performance - In Q1, the company achieved operating revenue of 7.21 billion yuan, down 17.1% year-on-year, and a net profit attributable to shareholders of 1.63 billion yuan, down 27.5% year-on-year. The weighted average return on equity (ROE) decreased by 1.06 percentage points to 1.3% [5][6]. - Revenue breakdown: brokerage income was 1.26 billion yuan (-9.8%), investment banking income was 90 million yuan (+65.1%), asset management income was 110 million yuan (+7.3%), interest income was 930 million yuan (-16.9%), and proprietary trading income was 1.63 billion yuan (-32.7%) [6]. Market Conditions - The market showed signs of recovery in Q1, with average daily trading volume in the two markets increasing by 1.9% year-on-year to 895.4 billion yuan. The company's brokerage income performance was weaker than the market, but client trading funds increased significantly [6][7]. Business Growth - Investment banking and asset management revenues grew against the trend, with investment banking income increasing by 65.1% and asset management income by 7.3%. The bond underwriting scale rose by 4.3% to 84.37 billion yuan, while there were no equity issuance projects in Q1 [6][7]. - The company's financial asset scale reached 414.7 billion yuan at the end of Q1, an increase of 18.1% from the beginning of the year, indicating a recovery in asset expansion speed [6][7]. Future Projections - The company is expected to achieve net profits of 7.68 billion yuan and 9.00 billion yuan in 2024 and 2025, respectively, with corresponding price-to-earnings (PE) ratios of 17.7 and 15.1, and price-to-book (PB) ratios of 0.92 and 0.85 [7].