SCS(SH:601555)2024-05-07 12:00Investment Rating - The report maintains an "Outperform" rating for Soochow Securities with a target price of Rmb 8.61 [1][3][17]. Core Insights - Soochow Securities, a regional brokerage, excels in bond underwriting and benefits from a robust risk control system and comprehensive business expansion, particularly in the Yangtze River Delta development [3][17]. - In 2023, the company achieved a revenue of Rmb 11.28 billion, a year-on-year increase of 7.6%, and a net profit attributable to shareholders of Rmb 2 billion, up 15.4% year-on-year [3][17]. - The company's investment profit (including fair value) surged by 267.4% year-on-year to Rmb 2.35 billion in 2023, indicating strong performance driven by proprietary trading [20][21]. Financial Performance Summary - For 2023, Soochow Securities reported: - Revenue: Rmb 11.28 billion, up 7.6% YoY - Net Profit: Rmb 2 billion, up 15.4% YoY - EPS: Rmb 0.40, ROE: 5.2%, up 0.5 percentage points YoY - Q4 2023 revenue: Rmb 3.24 billion, up 83.5% YoY; NPAtS: Rmb 260 million, down 48.7% YoY [3][17]. - For Q1 2024: - Revenue: Rmb 2.23 billion, down 1.3% YoY - Net Profit: Rmb 460 million, down 21.8% YoY - EPS: Rmb 0.09, ROE: 1.14%, down 0.37 percentage points YoY [3][17]. Brokerage and Investment Banking Performance - Brokerage income faced pressure in 2023, with a total market average daily trading volume of Rmb 962.5 billion, down 4.0% YoY [18]. - The company's brokerage income for 2023 was Rmb 1.64 billion, down 9.9% YoY, while Q1 2024 brokerage income was Rmb 370 million, down 6.8% YoY [18]. - Investment banking income for 2023 was Rmb 1.08 billion, down 4.3% YoY, with a notable decline in equity underwriting volume by 38.3% YoY, while bond underwriting volume increased by 12.4% YoY [19]. Asset Management and Proprietary Trading - Asset management income in 2023 was Rmb 110 million, down 45.0% YoY, but saw a significant increase in Q1 2024 to Rmb 40 million, up 64.0% YoY [20]. - The total scale of asset management business reached Rmb 61.39 billion by the end of 2023, with active management scale at Rmb 53.91 billion [20]. - Proprietary trading was a key driver of overall performance growth in 2023, with investment profit reaching Rmb 2.35 billion [20]. Earnings Forecast - The forecast for EPS from 2024 to 2026 is Rmb 0.40, Rmb 0.42, and Rmb 0.46 respectively, with BVPS projected at Rmb 8.61, Rmb 9.08, and Rmb 9.56 [21].