Core Themes - The report identifies five core themes for Chinese brokerage stocks this year, including the initiation of re-leveraging to drive return on equity (ROE) expansion, wealth management benefiting from family asset reallocation, growth in investment banking supported by the recovery of onshore markets and strong offshore momentum, offshore expansion enhancing operational leverage and ROE, and ongoing industry consolidation [1] Industry Performance - The average increase in H-shares for brokerages last year was 33%, outperforming the Chinese market, yet stock prices lagged behind earnings upgrades despite strong trading volumes and market performance [1] - Valuation improved from a price-to-book ratio of 0.74 at the end of the previous year to 0.87 at the end of last year, but remains below historical bull market levels [1] - ROE is expected to be around 9% and 10% for last year and this year, respectively, approaching the 11% level seen in 2021 [1] Earnings Projections - Major listed Chinese brokerages are projected to see earnings rise by 46% last year and 15% this year, with Haitong Securities, CICC, and GF Securities expected to outperform the industry due to favorable industry conditions and re-leveraging support [2] - The average daily trading volume in A-shares is forecasted to be RMB 1.8 trillion this year, indicating a year-on-year increase of 5%, leading to a 5% rise in brokerage revenue [2] - Underwriting fees are expected to increase by 16% supported by both onshore and offshore IPOs, while wealth management revenue is projected to rise by 9% due to the expansion of securities asset management scale [2] Cost and Efficiency - Net interest income is anticipated to rise by 27% due to increased financing balances and lower financing costs, while trading income is expected to increase by 8% despite a high base [2] - Cost-saving potential is considered limited, and cost efficiency is deemed important during bull markets, although regulatory authorities maintain a cautious stance on brokerage equity financing [2] - The report favors brokerages with strong capital positions, particularly Haitong Securities, CICC, and GF Securities H-shares, due to their favorable growth prospects and potential for ROE upside [2]