A must-read: "The Leader of the Securities Industry" CITIC Securities releases its semi-annual report

On August 28th, CITIC Securities, known as the "top brokerage firm," disclosed its 2024 interim report.

During the reporting period, the brokerage firm achieved a revenue of RMB 30.183 billion and a net profit attributable to the parent company of RMB 10.57 billion, maintaining its leading position in the brokerage industry in terms of operating performance.

However, influenced by the overall market environment, this brokerage giant's main business segments, including investment banking, wealth management, institutional stock brokerage, financial markets, asset management, custody, equity investment, and sell-side research, all faced certain pressures.

"As the saying goes, a single leaf can reveal the coming of autumn." The interim report of the leading brokerage firm is a must-read for investors interested in the securities industry.

Investment Business Leading the Way

The interim report disclosed the revenue changes of CITIC Securities' main businesses as follows:

• Revenue from securities investment business reached RMB 13.404 billion, a year-on-year increase of 31.25%.
• Revenue from brokerage business reached RMB 7.695 billion, a year-on-year decrease of 2.85%.
• Revenue from asset management business reached RMB 4.919 billion, a year-on-year decrease of 8.26%.
• Revenue from securities underwriting business reached RMB 1.723 billion, a year-on-year decrease of 54.62%.

It is evident that the securities investment business not only became the core business with counter-cyclical growth but also achieved an operating profit margin as high as 75.7%, ranking first among all the mentioned businesses.

Following closely is the asset management business, with a profit margin of 40.3%.

Investment Banking Business Performing Steadily

Investment banking business has always been the crown jewel of the securities industry. How did CITIC Securities perform in this area in the first half of the year?

According to the interim report: CITIC Securities completed 4 IPO projects in the first half of 2024, compared to a total of 22 projects in the same period last year.

Considering that the A-share market usually only has an issuance speed of 1-3 companies per week (including the STAR Market) during the same period, CITIC Securities' performance in investment banking is considered normal.

The completion of refinancing projects is more impressive, with 24 projects completed in the first half of this year compared to 44 projects in the first half of 2023, showing a relatively small decrease.

Overall, CITIC Securities underwrote a total of RMB 31.896 billion in A-share primary offerings in the first half of this year (cash and asset classes), with a market share of 18.44%, ranking first in the market.

In other words, the "top brokerage firm" maintains its dominant position as the "big brother" in the investment banking business.

Wealth Management with Precise Strategies

Since 2018, CITIC Securities has significantly expanded its wealth management business, leading the transformation wave of the entire brokerage industry.

In the latest interim report, the description of the progress of this brokerage giant's wealth management business seems to be carefully crafted. The key points are as follows:

• Precision customer management and upgrading the overall talent development strategy for investment consultants.
• Supporting investors' demands for single product and portfolio allocation.
• The latest cumulative number of clients reached 14.7 million, with custodied client assets maintaining a scale of RMB 10 trillion.

Comparing this to the same paragraph in the 2023 annual report: "As of the end of the reporting period, the cumulative number of clients reached 14.2 million; custodied client assets maintained a scale of RMB 10 trillion, a 4% year-on-year increase; the scale of non-monetary market public funds held was RMB 190.2 billion, ranking first in the industry." This means that CITIC Securities added 500,000 new clients in the first half of the year, but the holding scale of non-money market funds was not disclosed accordingly.

Furthermore, the brokerage revealed that in the first half of 2024, the sales volume and revenue of overseas wealth management products continued to maintain stable growth.

Asset Management Management Fees Exceeding 1 Billion RMB

It was found that although the equity market performed poorly in the first half of the year, CITIC Securities' asset management business showed strong performance.

The semi-annual report disclosed that the company's asset management scale totaled RMB 1.46 trillion, including collective asset management plans, single asset management plans, and special asset management plans, with scales of RMB 357.143 billion, 839.842 billion, and 259.371 billion respectively.

It is worth noting that the above-mentioned asset management business generated management fee income of 1.074 billion RMB in the first half of the year, compared to 1.122 billion RMB in the same period last year.

Looking at another set of data: during the reporting period, CITIC Securities' asset management company achieved a net profit of 290 million RMB with 307 employees. Meanwhile, the equity investment-focused CITIC Securities Investment Company and Jinshi Investment recorded net profits of -708 million RMB and -147 million RMB respectively during the same period.

Truly a tale of "two worlds" between the primary and secondary markets.

To a certain extent, the asset management business is a key business for this "top brokerage" to maintain competitiveness.

The semi-annual report also revealed that in the future, CITIC Securities will actively promote the application for public fund license for CITIC Securities' asset management, establish a distinctive regional business layout, increase investment in the Hong Kong platform, and promote the internationalization process