Translation in English: The securities broker sector sees another super merger!

On the evening of September 5th, the Chinese securities industry once again witnessed a landmark event! It has been reported that both Guotai Junan (601211.SH, 02611.HK) and Haitong Securities (600837.SH, 06837.HK) have issued announcements stating that they will suspend trading simultaneously to plan a significant asset reorganization.

This merger between Guotai Junan and Haitong Securities marks the largest A+H dual-market absorption merger and the largest integration case of listed brokers in the history of China's capital market.

Stimulated by this news, on September 6th, the securities sector in the A-share market experienced some unusual movements, with Tianfeng Securities and Guohai Securities recording daily limit-ups, and multiple securities stocks such as China Galaxy and Shenwan Hongyuan seeing increases.

It is worth mentioning that after the official announcement of the merger by these two industry "giants," other securities firms have also attracted widespread attention from investors.

Among them, Zhongzhou Securities (01375.HK) is also a securities firm listed in both Hong Kong and Mainland China, with its A-share ticker symbol being Zhongyuan Securities (601375.SH). The company's main business includes securities brokerage, credit business, futures business, investment banking, investment management, proprietary trading, and overseas business.

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From a performance perspective, Zhongzhou Securities' revenue and profit scale are not particularly large, but the good news is that the company has been consistently profitable, which is stronger than a large number of enterprises listed in Hong Kong.

Additionally, Zhongzhou Securities recently disclosed its interim performance for 2024. Data shows that in the first half of the year, the company achieved a revenue of 1.199 billion yuan (RMB, same below), a year-on-year increase of 14.62%; and achieved a net profit attributable to the parent company of 201 million yuan, a year-on-year increase of 20.31%.Looking at the business segments, in the first half of the year, the securities brokerage business revenue was 321 million yuan, a decrease of 8 million yuan; proprietary business revenue was 456 million yuan, an increase of 108 million yuan year-on-year, mainly due to the increase in investment business revenue for the current period; investment banking business revenue was 21 million yuan, a decrease of 2 million yuan; credit business revenue was 199 million yuan, a decrease of 8 million yuan; futures business revenue was 288 million yuan, an increase of 149 million yuan, mainly due to the increase in commodity sales revenue of the subsidiary Yu Xin Investment for the current period.

Overall, in the past two years, the domestic capital market has not performed well. Zhongzhou Securities was able to achieve profit growth in the first half of 2024, which is quite impressive, and the growth rate of profits significantly exceeded the growth rate of revenue, indicating that the company's operational efficiency in the first half of the year has improved.

However, compared to the performance, the stock performance of Zhongzhou Securities is much less impressive.

Data shows that since 2015, the stock price of Zhongzhou Securities has entered a long bear market, with a cumulative decline of 5.02% within the year, and the latest market value of the Hong Kong stock is only 4.829 billion Hong Kong dollars.

In addition, with the continuous weakness of the stock price, the trading of Zhongzhou Securities has gradually become thin, sometimes with a daily turnover of less than one million Hong Kong dollars, and there is a risk of becoming a penny stock in the long term.

The good news is that the mid-term performance of Zhongzhou Securities in 2024 is not bad. It can still achieve steady profits in the industry's downcycle, which is stronger than many peers such as Tianfeng Securities, Huaxiang Securities, and Guolian Securities.

In addition, after the sharp decline in stock price, the total market value of Zhongzhou Securities' Hong Kong stock is obviously lower than the total amount of cash and cash equivalents of 13.977 billion yuan at the end of the middle of 2024, which may indicate that the decline of Zhongzhou Securities' Hong Kong stock is excessive and there is a need for correction.