EASTMONEY(300059)2025-03-18 05:47Summary of East Money Information (300059.SZ) Conference Call Company Overview - Company: East Money Information - Ticker: 300059.SZ - Industry: Online financial services, including brokerage, mutual fund distribution, and market data services [18][19] Key Financial Highlights - 4Q24 NPAT: Increased by 79.8% year-on-year (y-y) to RMB3.57 billion, exceeding consensus by 11% [1] - 2024 NPAT: Up 17.3% y-y to RMB9.61 billion [1] - Brokerage Fee Income: Rose by 120.6% quarter-on-quarter (q-q) and 111.0% y-y to RMB2.56 billion in 4Q24, accounting for 61% of gross income [2][7] - Net Interest Income: Increased by 82.7% q-q and 56.6% y-y to RMB875 million in 4Q24 [2] - Cost-to-Income Ratio: Improved to 24.8%, down 15.4 percentage points (ppt) q-q [2] - Return on Assets (ROA): Jumped to 4.5%, up 1.82 ppt q-q [1] - Return on Equity (ROE): Increased to 18.1%, up 7.65 ppt q-q [1] Revenue Drivers - Brokerage Income: Primarily volume-driven, with East Money gaining market share of 4.23% in 2H24, up 23 basis points (bp) half-on-half (h-h) [2] - Mutual Fund Distribution: Despite a surge in new fund sales (+247.5% q-q), non-brokerage fee revenue growth was weaker than expected, up only 21.9% q-q to RMB737 million [7] Challenges and Risks - Earnings Growth Momentum: Expected to taper off due to normalization of Average Daily Trading (ADT) and slowdown in mutual fund sales [8] - Client Asset Outflow: Customer funds for securities purchase shrank by 0.9% q-q, indicating a net outflow of RMB1 billion in 4Q24 [7] - Provision Charge: Increased to RMB43 million in 4Q24, indicating potential risks in the market [7] Valuation and Investment Strategy - Target Price: Raised to RMB19 from RMB18, applying a target PE of 25x for 2025E [1][8] - Investment Rating: Maintained at Sell/High Risk due to capped near-term upside and potential long-term growth challenges [19][20] Market Outlook - Market Cap: Approximately RMB385.64 billion (US$53.23 billion) [3] - Expected Total Return: -21.9% with a dividend yield of 0.4% [3] - Long-term Positioning: East Money is well-positioned to capture retail demand for mutual funds and gain market share in the brokerage business, despite current challenges [19][20] Conclusion East Money Information has shown strong financial performance in 2024, particularly in brokerage and interest income. However, challenges such as client asset outflows and a potential slowdown in earnings growth present risks. The investment strategy remains cautious, with a Sell rating reflecting the current market conditions and valuation concerns.