$ HAITONG SEC.HK$GTHT(02611.HK)

1 share of Haitong Securities can be exchanged for 0.62 shares of Guotai Junan Securities.

The A-share price of Guotai Junan Securities is 20.45 yuan, 0.62 shares of Guotai Junan Securities is 12.68 yuan, and the stock price of Haitong Securities is 12.26 yuan. Haitong A-shares need to rise by about 3% to match.

The H-share price of Guotai Junan Securities is 12.30, 0.62 shares of Guotai Junan Securities is 7.62, and the stock price of Haitong Securities is 7. Haitong H-shares need to rise by about 9% to match.

Now buying Haitong H-shares and waiting for the merger of Guotai Junan Securities and Haitong Securities offers a 9% more upside potential than directly buying Guotai Junan H-shares. This gap can be closed either by Haitong rising, Guotai falling, or both happening simultaneously.

Currently, Guotai Junan H-shares have a dynamic P/E ratio of around 6 times (assuming this year's net profit is 15 billion yuan) and a dynamic P/B ratio of around 0.6 times, which is already relatively undervalued among large brokerage stocks. The downside potential may not be significant, so buying Haitong H-shares now might be a relatively good investment choice.

Note: The above is a personal opinion. Blindly following may lead to consequences at your own risk.