Key takeaway

CAITONG SECURITIES achieved revenue of RMB6.92bn (+10.1%) and net profit attributable to shareholders of the parent company of RMB2.63bn (+12.5%) in 2025, delivering steady growth. In 1Q26, performance accelerated sharply, with revenue of RMB1.65bn (+54.4%) and net profit attributable to shareholders of the parent company of RMB620mn (+113.0%) , primarily driven by a 1082% YoY surge in investment business. The company expanded its balance sheet steadily, with slight increases in operating and investment leverage. Its brokerage and credit businesses benefited from active market trading and grew rapidly, while profit contributions from joint-stock subsidiaries remained stable. The investment banking and asset management businesses were under pressure in 2025, while asset management revenue turned positive YoY in 1Q26.

Event

On April 24, CAITONG SECURITIES released its 2025 annual report and 1Q26 report.

Quick Take

In 2025, it achieved operating revenue of RMB6.92bn, up 10.1% YoY, and net profit attributable to shareholders of the parent company of RMB2.63bn, up 12.5% YoY. In 1Q26, it achieved operating revenue of RMB1.65bn, up 54.4% YoY, and net profit attributable to shareholders of the parent company of RMB620mn, up 113.0% YoY.

Investment business performance was outstanding in 1Q26. In 2025, the company's brokerage, investment banking, asset management, net interest, and investment (including foreign exchange) revenues were RMB1.87bn, RMB430mn, RMB1.32bn, RMB710mn, and RMB1.97bn, respectively, with YoY changes of +32%, -18%, -15%, +16%, and +31%, contributing 27%, 6.2%, 19%, 10%, and 29% of total revenue. In 1Q26, revenues from the above businesses were RMB530mn, RMB100mn, RMB300mn, RMB220mn, and RMB280mn, respectively, with YoY changes of +27%, -6.6%, +13%, +55%, and +1082%, contributing 33%, 6.2%, 19%, 14%, and 18% of total revenue.

Asset scale expanded steadily, and the investment return rate surged YoY in 1Q26 from a low base. Total assets reached RMB161.4bn at end-2025, up 11.7% YoY, with an operating leverage of 3.36x, up 0.15x YoY. At end-1Q26, total assets were RMB177.4bn, up 9.9% from the beginning of the year, with an operating leverage of 3.44x, up 0.07x from the beginning of the year. In terms of investment, the investment asset scale was RMB75.7bn at end-2025, up 14.2% YoY, with an investment leverage of 2.00x, up 0.18x YoY. At end-1Q26, the investment asset scale was RMB78.1bn, up 3.2% from the beginning of the year, with an investment leverage of 2.02x, up 0.02x from the beginning of the year. The estimated investment return for 2025 is 2.77%, up 0.56 pcts YoY; the annualized investment return for 1Q26 is 1.48%, up 1.33 pcts YoY. In private equity and alternative investments, Caitong Capital's active management scale reached RMB44.9bn at end-2025, up 70% YoY; Caitong Innovation's cumulative subscribed investment amount was RMB5.468bn. Active market trading drove rapid growth in brokerage and securities credit businesses. In 2025, the average daily stock and fund trading volume on the A-share market was RMB2,080.5bn, up 70.2% YoY; in 1Q26, trading activity further increased, with the average daily stock and fund trading volume reaching RMB3,147.2bn, up 77.3% YoY, strongly supporting the company's brokerage business growth. In the credit business, the company's margin financing balance at end-2025 and end-1Q26 was RMB27.9bn and RMB28.2bn, respectively, up 32.3% and 33.4% YoY.

Earnings forecast and valuation: We estimate the company's total operating revenue for 2026-2028 will be RMB8.035bn/RMB8.507bn/RMB9.005bn, with YoY growth of +16.1%/+5.9%/+5.9%, and net profit attributable to shareholders of the parent company of RMB2.990bn/RMB3.100bn/RMB3.211bn, with EPS of RMB0.64/RMB0.67/RMB0.69 per share. As of May 12, 2026, the dynamic P/E ratios are 13.68x/13.20x/12.74x. We maintain a "Buy" rating.

Risks

Risks include capital market volatility, downward pressure on fee rates, and slower-than-expected gains in market share. First, capital market volatility risk. Capital markets are influenced by a range of complex factors, including macroeconomic conditions, monetary policy adjustments, and changes in the international environment. Prices of assets such as equities and bonds may experience significant fluctuations, which could in turn affect the value of investment portfolios. Second, fee rate downside risk. As market competition intensifies and industry dynamics evolve, fee rates for related businesses may continue to decline, putting pressure on profit margins. Third, risk of market share gains falling short of expectations. In a highly competitive market environment, despite the company’s efforts to expand its business, factors such as competitors’ strategies or limitations in the company’s products or services may prevent market share from reaching expected levels, thereby affecting profitability and long-term growth prospects.