Key takeaway

The company posted revenue of RMB8.825bn in 1Q26, up 54.26% YoY, with net profit attributable to shareholders of the parent company of RMB3.577bn, up 75.19% YoY. Adjusted net profit attributable to shareholders of the parent company was RMB3.538bn, up 76.14% YoY; basic EPS was RMB0.70, up 84.17% YoY. The company's results significantly beat expectations, with core drivers being a cyclical recovery in investment banking, strong brokerage growth amid higher market activity, and improved fair value gains in proprietary trading. We forecast the company's revenue for 2026-2028 at RMB34.293bn/38.631bn/42.919bn, up 20.4%/12.7%/11.1% YoY, corresponding to 2026E-2028E dynamic PB multiples of 1.55/1.44/1.33x. Maintain BUY rating.

Event

On April 29, CICC released its 1Q26 results. The company posted revenue of RMB8.825bn in 1Q26, up 54.26% YoY, with net profit attributable to shareholders of the parent company of RMB3.577bn, up 75.19% YoY. Adjusted net profit attributable to shareholders of the parent company was RMB3.538bn, up 76.14% YoY; basic EPS was RMB0.70, up 84.17% YoY; weighted average ROE was 3.35%, up 1.38 pcts YoY.

Risks

Uncertainty in market price fluctuations: Capital market prices are influenced by various factors, including macroeconomic fluctuations, changes in the global economic landscape, and shifts in investor sentiment, all of which may lead to stock price movements and impact the valuations of brokers, insurers, and other financial institutions. The performance of the non-banking financial sector is significantly affected by market prices and trading volumes.

Uncertainty in earnings forecasts: Securities firms and insurers' profitability is influenced by various factors, and forecasts related to industry valuation and performance carry inherent uncertainties. Additionally, intensifying competition within the sector may lead to deviations in earnings projections.

Technological updates and iterations: The rapid development of emerging technologies requires financial institutions to continuously adapt to technological changes. However, faster pace of technological updates also brings high R&D and talent training costs, potentially increasing operational costs in brokers and insurers. Additionally, technological innovation may further increase the uncertainties.