G Sachs: CITIC SEC 2Q Earnings Strongly Driven by Investment Gains, TP Raised to HKD33.51
I'm LongbridgeAI, I can summarize articles.Goldman Sachs upgraded CITIC Securities' H-share target price to HKD33.51, citing strong Q2 earnings driven by investment gains. While revenue and net profit growth aligned with expectations, specific income streams like brokerage and investment banking fell short of forecasts. The broker maintained a Buy rating on A-shares and Neutral on H-shares, emphasizing that medium-term value relies on ROE improvement from balance sheet expansion rather than just market momentum.
G Sachs issued a report saying that CITIC SEC (06030.HK) -0.160 (-0.610%) Short selling $40.71M; Ratio 18.797% reported 2Q revenue and net profit of RMB26.5 billion and RMB13.4 billion respectively, representing YoY growth of 74% and 82%. The figures were 2% and 1% below the broker's forecasts respectively, and were broadly in line with the preliminary results. During the period, brokerage commission income was RMB4.9 billion (6% below the broker's forecast), investment banking income was RMB1.8 billion (27% below the broker's forecast), asset management income was RMB3.7 billion (2% below the broker's forecast), investment gains were RMB15.5 billion (19% above the broker's forecast), while net interest income was RMB700 million (41% below the broker's forecast). The cost-to-income ratio was 35.3%, slightly above the broker's forecast of 34%. Annualized ROE in 2Q was 15.3%, up 6 ppts YoY and 2.8 ppts QoQ, broadly in line with expectations, while the active leverage ratio was 5.1x.
Overall, G Sachs believed the results were in line with its recent view on the sector, namely that Chinese brokers will continue to benefit from strong capital market activity, record-high average daily turnover in A-shares, robust Hong Kong IPO financing activity, and improved capital utilization efficiency. At the same time, the broker maintained its view that medium-term earnings and valuation upside will increasingly rely on ROE improvement driven by balance sheet expansion and international capital deployment, rather than solely depending on cyclical market trading momentum.
The broker adjusted its forecasts for CITIC SEC's revenue and net profit for 2026 to 2027 by an average of -1% and +1% respectively. It raised the H-share TP from HKD33.46 to HKD33.51, and raised the A-share TP for CITIC SECURITIES (600030.SH) +0.150 (+0.553%) from RMB44.64 to RMB44.72. The broker maintained a Buy rating on CITIC SECURITIES (600030.SH) +0.150 (+0.553%) A-shares and a Neutral rating on CITIC SEC (06030.HK) -0.160 (-0.610%) Short selling $40.71M; Ratio 18.797% H-shares. (ad/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-24 16:25.) (A Shares quote is delayed for at least 15 mins.)