Wealth management business becomes a "cash cow"! HTSC discloses "key figures" in its semi-annual report

On the evening of August 30th, Huatai Securities disclosed its semi-annual report, completing the semi-annual reports of the "Big Three" securities firms.

According to the semi-annual report, in the first half of 2024, Huatai Securities achieved operating income of RMB 17.441 billion, with a net profit of RMB 5.311 billion. The company plans to distribute a cash dividend of RMB 0.15 per share (tax included).

Wealth management has become the business with the highest gross profit margin for this securities giant, with overseas business also being a highlight.

Furthermore, more detailed data has been disclosed, which is very helpful for understanding the situation of this leading securities firm.

Wealth Management Business as a "Cash Cow"

Breaking down the business segments:

• Wealth management business revenue was RMB 7.286 billion, an increase of 7.12% year-on-year.
• Institutional service business revenue was RMB 1.613 billion, a decrease year-on-year mainly due to policy and market influences, resulting in a decrease in investment banking and trading business revenue.
• Investment management business revenue was RMB 0.29 billion, a decrease year-on-year mainly due to the devaluation of private equity funds and alternative investment projects.

Considering the wealth management business's gross profit margin of over 50%, this segment has effectively become the "cash cow" of Huatai Securities' revenue.

IPO Business Ranks Second in the Industry

The semi-annual report reveals that Huatai Securities' equity underwriting amount (including initial public offerings, additional offerings, rights issues, preferred shares, convertible bonds, and exchangeable bonds) was RMB 19.545 billion, ranking second in the industry.

Among them, the number of IPO sponsorship projects was 4, ranking first in the industry.

Derivatives Business Draws Attention

It is worth noting that Huatai Securities' over-the-counter derivatives trading business is quite active, as reflected in the semi-annual report.

"As of the end of the reporting period, the number of outstanding contracts for revenue swaps was 9,326, with an outstanding scale of RMB 86.906 billion; the number of outstanding contracts for over-the-counter options was 1,872, with an outstanding scale of RMB 142.545 billion. During the reporting period, the Group issued 1,707 private placement products with a total scale of RMB 11.47 billion through the China Securities Interbank Quotation System and the counter market."

Additionally, in the first half of the year, Huatai Securities reported market-making trading for 123 Sci-Tech Innovation Board stocks and provided liquidity services for 556 listed funds.

Significant Growth in Overseas Business

The semi-annual report also highlights the overseas business.

In the first half of the year, Huatai Securities' international business revenue was RMB 6.491 billion, a 67.50% year-on-year increase, mainly due to the increase in income from Huatai Financial Holdings (Hong Kong) Huatai Financial Holdings (Hong Kong) is involved in equity business, fixed income business, wealth management, fund management, and investment banking.

Management fees and employee costs have decreased

Huatai Securities also pointed out in its semi-annual report: the company's business and management fees amounted to RMB 7.201 billion, a decrease of RMB 1.429 billion compared to the previous year, a decrease of nearly 20%.

According to the information, this decrease is mainly due to the reduction in employee costs and research and development expenses.

As of the end of the reporting period, Huatai Securities' group had a total of 16,600 employees, with 11,300 employees in the parent company, a slight decrease compared to the number of employees (11,500) at the end of last year, but not by much