GUOTAI HAITONG SECURITIES·2025-10-10 11:47Investment Rating - The report assigns an "Overweight" rating to the investment banking and brokerage industry [3]. Core Insights - The high growth observed in the first half of the year is primarily attributed to base effects, with an annualized return of 3.9%, which is the highest in three years but still below the average of 4.8% from 2019 to 2021. The industry is undergoing a transformation, with leading brokers moving towards global allocation and smaller brokers seeking changes in asset allocation strategies [2][3]. Summary by Sections Revenue & Yield - In the first half of 2025, listed brokers reported a net income from proprietary trading of 76.3 billion yuan (after interest expenses), accounting for 30.9% of total revenue, marking a historical high. This represents an 80% year-on-year growth, with an incremental income of 33.9 billion yuan, mainly driven by the recovery in equity trading and proprietary business [3][4]. - The profit margin for the first half of 2025 shows an annualized yield of 3.9%, continuing a recovery trend over three years (2.4%, 3.2%, 3.6% in 2022-2024), but still below the 4.8% average from 2019-2021 [3][4]. Investment Scale - The total investment scale of listed brokers reached 6.8 trillion yuan by the end of the period, with a net increase of 320.6 billion yuan since the beginning of the year, excluding the effects of mergers. The increase in investments includes a rise of 348.3 billion yuan in FVTPL assets and 102.4 billion yuan in OCI equities, while AC and OCI debts decreased by 92.9 billion yuan [3][4]. - The structure of investments shows that 64% are in fixed income, 13% in equities, and 20% in products, with significant increases in cross-border fixed income and high-dividend OCI investments [3][4]. Business Model Changes - The proprietary trading model is evolving, with leading brokers expanding globally and smaller brokers adapting their asset allocation strategies. There is a notable shift towards cross-border investments and the establishment of mixed investment departments, particularly among smaller brokers [3][4]. - The report emphasizes that proprietary trading remains a pillar of the industry, necessitating transformation in the new era. It recommends prioritizing investments in brokers with significant comprehensive advantages, such as CITIC Securities and Huatai Securities, while also suggesting attention to firms with strong equity trading flexibility, like Industrial Securities and Changjiang Securities [3][4].