HTSC(601688) 东方证券·2024-12-01 06:23Investment Rating - The report initiates coverage on Huatai Securities with a Buy rating, setting a target price of 24.52 RMB for 2025 based on a 1.10x PB valuation [2][4] Core Views - Huatai Securities has achieved rapid growth through continuous mergers and acquisitions, with its wealth management business driving revenue growth, accounting for 41.78% of total revenue in H1 2024, up 4.9pct from 2019 [1] - The company maintains a leading position in wealth management, with a 6.30% market share in commission-based trading and a 37.16 trillion RMB stock and fund trading volume in 2023 [1] - Huatai's proprietary trading business shows promising prospects, with assets under management reaching 3719.04 billion RMB by the end of 2023, ranking second in the industry [1] - International business has become a significant revenue driver, contributing 37.22% of total revenue in H1 2024, up 26.5pct from 2019 [1] Financial Performance - Revenue is projected to grow from 36.578 billion RMB in 2023 to 47.754 billion RMB in 2026, with a CAGR of 13.28% [3] - Net profit attributable to shareholders is expected to increase from 12.751 billion RMB in 2023 to 15.178 billion RMB in 2026, with a CAGR of 10.64% [3] - The company's ROE is forecasted to rise from 7.28% in 2023 to 7.19% in 2026, while PB ratio is expected to decline from 0.90x in 2023 to 0.75x in 2026 [3] Wealth Management Business - Huatai's wealth management business remains a core driver, with 37.16 trillion RMB in stock and fund trading volume in 2023 and a commission rate of 0.0197% [1] - The company's digital platform, "Zhang Le Wealth Connect," has achieved 74.01 million cumulative downloads and 9.06 million average monthly active users by the end of 2023 [1] - Huatai's margin financing business has grown significantly, with a balance of 1055.54 billion RMB in H1 2024, ranking first in the industry [1] Proprietary Trading and Derivatives - Huatai's proprietary trading assets reached 3719.04 billion RMB by the end of 2023, with equity assets accounting for only 7% of the total, reflecting a conservative investment strategy [1] - The company's over-the-counter derivatives business has grown rapidly, with a total notional principal of 2577.44 billion RMB in H1 2024, up 55.14% annually since 2019 [1] - Huatai is a leading player in the Sci-Tech Innovation Board market-making business, with 123 stocks under market-making by H1 2024 [1] International Business - Huatai's international business has expanded significantly, contributing 37.22% of total revenue in H1 2024, up 26.5pct from 2019 [1] - The company has established subsidiaries in Singapore and Vietnam, and sold AssetMark in September 2024, further diversifying its international presence [1] Investment Banking - Huatai's investment banking business has shown resilience, with a 8.84% market share in equity underwriting in H1 2024, up from 3.66% in 2019 [1] - The company's bond underwriting business has grown rapidly, with a 8.83% market share in H1 2024, ranking third in the industry [1] Asset Management - Huatai's asset management business has shifted towards active management, with ABS issuance consistently ranking in the top three in the market [1] - The company's private equity arm, Huatai Zijin Investment, manages 62.18 billion RMB in assets under management as of H1 2024, ranking third in the industry [1]