Shenwan Hongyuan Securities·2025-08-24 09:12Investment Rating - The report rates the industry as "Overweight," indicating a positive outlook for the sector's performance compared to the overall market [3]. Core Insights - The China Securities Regulatory Commission (CSRC) has released a decision to amend the "Securities Company Classification Supervision Regulations," marking a significant transformation in the industry's classification evaluation system [3]. - The revised regulations aim to enhance governance, correct industry positioning, and promote high-quality development by emphasizing risk management, compliance, and business performance [4]. - The new framework encourages differentiated development for small and medium-sized institutions and aims to protect investor rights through stricter penalties for major violations [4][6]. Summary by Sections Section 1: Regulatory Changes - The new regulations replace the previous classification system with a focus on risk management, compliance, and business development, encouraging firms to support the real economy [4]. - The removal of the total revenue bonus and the increase in net asset return bonuses are designed to promote high-quality growth and innovation in the sector [4][6]. Section 2: Industry Development - The report highlights that the average Return on Equity (ROE) for listed securities firms in 2024 is projected to be 6.21%, below the ten-year average of 8.55%, indicating a need for transformation [6]. - The new regulations are expected to stimulate the vitality of small and medium-sized firms by providing more opportunities for scoring in niche business areas [6]. Section 3: Investment Recommendations - The report suggests three main investment lines: 1. Strong comprehensive capabilities of leading firms such as GF Securities, Guotai Junan, and CITIC Securities [7]. 2. Firms with significant earnings elasticity like Dongfang Securities and Orient Securities [7]. 3. Companies with strong international business competitiveness, including China Galaxy and CICC [7].