Investment Rating - The report assigns a "Buy" rating for CICC-H with a 12-month target price of HK$25.10, indicating an upside potential of 29.1% from the current price of HK$19.44 [8][10]. - For CICC-A, a "Neutral" rating is given with a 12-month target price of Rmb46.05, reflecting an upside of 27.3% from the current price of Rmb36.18 [8][10]. Core Insights - The proposed merger between CICC, Dongxing Securities, and Cinda Securities is expected to enhance CICC's capital base and leverage, improving capital utilization efficiency and boosting ROE levels [1]. - The merger is anticipated to create significant synergies across various business lines, including wealth management, investment banking, and investment, while also unlocking new opportunities in non-performing asset and restructuring sectors [1][6]. - Post-merger, CICC's financial metrics are projected to improve significantly, with revenue expected to increase by 32%, net profit by 45%, and net assets by 48%, enhancing its industry rankings [6][7]. Transaction Plan - CICC plans to absorb and merge with Dongxing Securities and Cinda Securities through the issuance of A-shares [1]. - The shareholding structure will see Central Huijin's stake diluted to 24.4%, while China Cinda AMC and China Orient AMC will hold 16.7% and 8.1%, respectively [6]. Financial Metrics - The transaction is expected to increase CICC's total assets to Rmb1,010 billion, total equity to Rmb175 billion, and net profit to Rmb9.5 billion [5][6]. - The net capital leverage ratio is projected to increase to a maximum of 20%, with a potential injection of approximately Rmb40 billion in net capital [6]. Business Synergies - The investment business is expected to contribute around 40% to revenue in 2024, with the merger enhancing its scale and efficiency [7]. - The wealth management sector will see an 80% increase in business outlets, growing from 245 to 436, and a 52% increase in retail clients [7]. - The investment banking business is expected to expand its team significantly, improving project execution capabilities and market share [7]. - The merger will also enhance CICC's capabilities in non-performing asset management and debt restructuring, transitioning to a "service + investment" model [7]. Cost Savings - The merger is expected to yield cost savings by sharing existing capabilities in IT and AI, avoiding redundant investments and improving ROE [7].

Group 1 - CICC has announced a merger with Dongxing Securities and Cinda Securities, creating an entity with combined assets exceeding 900 billion yuan (approximately US$127.8 billion) [1] - The merger will result in CICC becoming China's fourth-largest investment bank, with total assets around 930 billion yuan, following a trend of consolidation in the securities industry [4] - The transaction involves the issuance of approximately 3.1 billion new A shares at 36.91 yuan to acquire all outstanding shares of the two smaller firms [1][6] Group 2 - CICC's shares rose by 3.7% to 36.18 yuan after trading resumed, following a suspension on November 19 pending the merger announcement [2] - The merger reflects a strategic move to optimize resource allocation within China's securities industry, aligning with national strategies to support the real economy [3] - Under the merger agreement, Dongxing A-shares will convert to 0.4373 CICC shares, while Cinda shares will convert to 0.5188 CICC shares, with specific pricing terms for shareholders [6]