Zhi Tong Cai Jing·2025-06-11 07:57Core Viewpoint - The report from Minsheng Securities suggests focusing on high-quality brokerage firms with leading advantages across multiple business lines during the performance recovery phase, particularly highlighting firms like CITIC Securities, Huatai Securities, and China Galaxy Securities [1] Group 1: Market Overview - Since the beginning of 2025, the A-share brokerage sector has maintained volatility, significantly underperforming the broader market, with the brokerage index down 9.2% year-to-date, lagging behind the CSI 300 index by approximately 7.6 percentage points [1] - The brokerage sector has exhibited three phases of performance: 1) January to mid-March 2025 saw a peak followed by a retreat; 2) mid-March to mid-April experienced deep adjustments; 3) since mid-April, policy support has led to a recovery in valuations, although the sector remains in a volatile range [1] Group 2: Financial Performance - In Q1 2025, the total revenue of 43 listed brokerages reached 126.1 billion yuan, reflecting a year-on-year increase of 19.0%, while net profit attributable to shareholders surged by 78.7% to 51.9 billion yuan, marking five consecutive quarters of sequential recovery [2] - The revenue breakdown for Q1 2025 shows that proprietary trading and brokerage income accounted for over half of total revenue, with proprietary trading revenue at 48.5 billion yuan, up 44.8% year-on-year [2] Group 3: Profitability Metrics - The net profit margin for Q1 2025 rose to a near-term high of 41.2%, with return on equity (ROE) increasing by 3.15 percentage points year-on-year to 7.75% [3] - The improvement in profitability is attributed to a recovery in market conditions and enhanced earnings capabilities of securities firms [3] Group 4: Business Segments - Proprietary trading revenue for listed brokerages in Q1 2025 was 48.5 billion yuan, up 50.3% year-on-year, maintaining a high level despite a slight decline from previous quarters [4] - Brokerage income in Q1 2025 reached 33 billion yuan, reflecting a year-on-year increase of 43.1%, supported by high trading volumes in the market [5] - Investment banking revenue showed a decline, with IPO and follow-on underwriting volumes at 15 billion yuan and 131.7 billion yuan, respectively, while bond underwriting decreased by 20.0% [5] Group 5: Industry Outlook - The ongoing recovery in performance and the potential for mergers and acquisitions are expected to continue as key themes in the industry, with valuations remaining at low levels, highlighting the investment value [6] - The net asset scale of brokerages is anticipated to grow, driven by performance improvements and ongoing restructuring efforts within the industry [6]