Changjiang Securities·2025-06-29 11:15Core Insights - The capital market is entering a new quality development cycle, with deepening transformation in the brokerage industry and increasing business differentiation, leading to a potential rise in industry concentration and new advantages for leading brokerages [3][6] - The report suggests focusing on changes in the market structure, particularly on undervalued leading firms, merger and acquisition themes, and high-dividend H-shares as key investment lines [3][9] Market Review Q1 2025 - The brokerage sector experienced an overall decline of 8.0% since the beginning of 2025, underperforming the CSI 300 by 6.2 percentage points [6][18] - In Q1 2025, total revenue and net profit for brokerages reached 1260.35 billion and 519.92 billion respectively, showing year-on-year growth of 24.6% and 84.1% [6][24] - The average return on equity (ROE) increased by 0.63 percentage points to 1.6%, with leading brokerages significantly outperforming the average [6][30] Outlook for 2025 - The brokerage industry is expected to continue its transformation, with a focus on the following areas: 1. Brokerage Business: The performance is closely tied to market trading activity, with Q1 2025 showing a high market heat contributing to revenue growth. However, the declining commission rates are expected to reduce trading volume elasticity [6][7] 2. Proprietary Investment: This segment has become a major revenue driver, contributing 40.5% to total revenue in Q1 2025. Leading brokerages are increasing their allocation to OCI equity investments [8][30] 3. International Business: Leading brokerages are accelerating their international expansion, with a competitive landscape emerging among top firms [8][9] Investment Recommendations - The report recommends focusing on three main investment themes: 1. Undervalued leading brokerages with high ROE and low PB ratios, specifically Huatai Securities and Guotai Junan [9] 2. Stocks related to merger and acquisition themes, particularly quality central enterprise leaders like Galaxy Securities [9] 3. High-dividend H-share brokerages as part of a high-yield strategy [9]