FCSC(SZ:002797) INDUSTRIAL SECURITIES·2024-05-14 06:02Investment Rating - The report assigns a rating of "Increase Holding" for the company [1] Core Views - The company, First Entrepreneurship, reported a revenue of 2.489 billion and a net profit of 331 million for 2023, reflecting a year-on-year decrease of 4.7% and 17.5% respectively. In Q1 2024, the revenue and net profit were 673 million and 143 million, showing a year-on-year change of -2.7% and +1.6% [1] - The company's weighted average ROE decreased by 0.51 percentage points to 2.3% in 2023, while Q1 2024 remained stable year-on-year. The operating leverage for Q1 2024, excluding client funds, was 2.36 times, down 9.3% from the beginning of 2023 [1] - The performance of the company's capital business is crucial, with a rigid cost structure. In 2023, the company achieved fee income of 1.525 billion, down 14.1%, while income from capital market recovery increased by 32.3% to 831 million. In Q1 2024, the company reported fee and capital income of 381 million and 271 million, down 0.9% and 4.8% year-on-year [1] - The brokerage business showed resilience, while asset management business stood out. In 2023, net income from brokerage, investment banking, and asset management was 351 million, 190 million, and 905 million, down 8.6%, 31.8%, and 12.1% respectively. In Q1 2024, these figures were 84 million, 65 million, and 226 million, with year-on-year changes of -4.8%, +41.6%, and -1.8% [1] - Interest income declined, with bond assets being the main allocation direction. In 2023, net interest income and investment income were 79 million and 753 million, down 62.3% and up 79.3% year-on-year. As of March 2024, the amount of funds lent increased by 11% to 6.8 billion compared to the beginning of 2023 [1] - The company is viewed as a distinctive small and medium-sized brokerage, with expectations for it to leverage its unique advantages to realize profits. The forecasted net profit for 2024 and 2025 is 341 million and 407 million, representing year-on-year growth of 3.0% and 19.5% respectively. The closing price on May 10, 2024, corresponds to PB ratios of 1.58 and 1.54 [1] Summary by Sections - Revenue and Profit Forecasts: The company is projected to achieve revenues of 2.432 billion in 2024 and 2.833 billion in 2025, with net profits of 341 million and 407 million respectively [2] - Income Breakdown: The net income from fees and commissions is expected to decline to 1.467 billion in 2024, while asset management income is projected to increase to 990 million [2] - Expense Management: Operating expenses are forecasted to be 2.081 billion in 2024, with management expenses slightly decreasing to 2.048 billion [2]