Shenwan Hongyuan Securities·2026-02-03 13:12Investment Rating - The report rates the securities industry as "Overweight," indicating that the industry is expected to outperform the overall market [7]. Core Insights - The report highlights opportunities for brokerages driven by wealth expansion and international business growth, particularly focusing on firms like Huatai Securities and GF Securities, which are actively increasing their international presence [1]. - The report notes that while short-term refinancing may pressure stock prices, the medium-term outlook for return on equity (ROE) is expected to recover or improve, suggesting a potential rebound in price-to-book (PB) ratios [1]. - The report emphasizes the increasing focus on international business by major brokerages, which is anticipated to contribute positively to their performance and ROE in the medium term [1]. Summary by Sections Huatai Securities - On February 3, 2026, Huatai Securities announced a plan to issue HKD 10 billion zero-coupon convertible bonds due in 2027, with a net fundraising target of HKD 9.925 billion. The initial conversion price is set at HKD 19.70, representing a premium of 6.78% over the closing price [1]. - The dilution effect on book value per share (BPS) is projected to decrease from CNY 19.07 to CNY 18.99, a dilution ratio of 0.41%, while ROE is expected to decrease from 6.41% to 6.27% [1]. GF Securities - On January 7, 2026, GF Securities announced plans to issue over HKD 60 billion in new H shares and convertible bonds, with a share placement of HKD 39.75 billion and a convertible bond issuance of HKD 21.5 billion [1]. - The initial conversion price for the bonds is set at HKD 19.82, with a dilution effect of approximately 19.2% on H shares and 4.3% on total equity [1]. Market Dynamics - The report indicates that the refinancing activities of brokerages may exert short-term pressure on stock prices, but the impact is expected to dissipate quickly, with Huatai Securities' A shares likely to perform better than H shares in the short term [1]. - The report also notes that major brokerages are enhancing their international business capabilities, which is expected to significantly contribute to their performance and ROE [1]. Investment Recommendations - The report suggests focusing on three investment themes: 1. Strong comprehensive capabilities of leading institutions such as Guotai Junan and CITIC Securities 2. Brokerages with significant earnings elasticity like Huatai Securities and招商证券 3. Companies with strong international business competitiveness, recommending China Galaxy [1]. Valuation Overview - The report provides a valuation overview of major listed brokerages, indicating their current prices, PB ratios, and projected net profit growth for 2025 and 2026, highlighting the relative performance of each brokerage [2].