<Result first take> CITIC Securities (6030 HK, BUY) – Resilient 1H results, in-line with expectation
What’s new
- CITIC announced 1H attributable profit of Rmb11.2bn, representing 47%/48% of our/cons. FY22F net profit, in line with expectation
- The mild 1H earnings decline at 8% y-o-y was primarily due to (1) retreat in investment income (-17% y-o-y) and softened fee and commission income (-3% y-o-y)
- Similar to other brokers under coverage, 2Q earnings improved q-o-q by 14%, while was down by 15% y-o-y due to high base last year
- The four key operating segments remained relatively stable in 1H, registering either single-digit growth or decline y-o-y
- CITIC maintained its leading position in investment banking with 10% y-o-y growth in revenue, and possessed 22% market share in A-share equity financing
Our view
- CITIC’s result was more resilient than most peers thanks to its much less volatile investment income
- Its 2Q earnings of Rmb6.0b was indeed the highest among past four quarters, demonstrating good earnings momentum
- Expect CITIC to be the primary beneficiary from the recent rebound in A-share equity fundraising during Jul-Aug, and we expect the trend to continue as A-share market has stabilized
- As such, CITIC is well on track to achieve our FY22F earnings forecast of Rmb23.6b, growing slightly by 2.2% y-o-y
- Valuation is considered attractive after correcting by 19% YTD in share price and trading at near 5-year low of 0.74x FY23F P/BV, maintain BUY rating with TP at HK$24.50
