Core Viewpoint - The brokerage sector is expected to benefit from the resonance of allocation power and performance elasticity, with a continued recommendation for comprehensive leading brokerages [1][2]. Summary by Sections Performance Overview - In the first three quarters of 2025, 42 listed brokerages achieved a total net profit attributable to shareholders of 169 billion yuan, representing a year-on-year increase of 62.4%. The main driver of performance improvement was the revenue increase from brokerage and proprietary trading businesses, with adjusted revenue (operating income minus other business costs) rising by 44.1% year-on-year to 416.5 billion yuan. The net profit margin attributable to shareholders increased by 4.6 percentage points year-on-year to 41% [1]. - On a quarterly basis, the adjusted revenue of listed brokerages in Q3 2025 increased by 27.2% quarter-on-quarter, while the net profit attributable to shareholders rose by 25.5% [1]. Business Segment Contributions - Analyzing the contribution of various business segments to adjusted revenue growth in the first three quarters, proprietary trading and brokerage businesses grew by 42% and 75% year-on-year, contributing 43% and 37% to net revenue growth, respectively. The improvement in proprietary trading was mainly due to the recovery of stock derivatives and equity businesses, as well as the realization of floating profits from OCI bonds [1]. - In other business areas, the investment banking sector saw a year-on-year growth of 23% due to the recovery in equity financing, while asset management business experienced a slight increase, expected to benefit from the growth in management scale [1]. Differentiation Among Brokerages - There is significant differentiation in performance growth drivers among brokerages. Large and medium-sized brokerages benefit more from proprietary trading transformations, while small and medium-sized brokerages primarily rely on brokerage business. The analysis indicates that large and medium-sized brokerages have advantages in the context of investment banking and asset management transformations, achieving positive revenue contributions, while small and medium-sized brokerages face more pressure [2]. - The transformation of proprietary trading has become a key issue in the industry, with differences in business models, transformation processes, and investment trading capabilities among brokerages leading to operational differentiation [2]. Investment Recommendations - The brokerage sector is expected to benefit from the dual drivers of allocation power (including the entry of resident funds) and performance improvement, with a positive outlook for the non-bank sector market. The continued recommendation for the brokerage sector is based on the high growth of Q3 performance and the anticipated gradual release of future performance [2].

Core Insights - In the first half of 2025, 42 listed securities firms achieved a net profit attributable to shareholders of 104 billion yuan, representing a year-on-year increase of 65.1% driven primarily by revenue growth from brokerage and proprietary trading businesses [1][2] Revenue and Profitability - Adjusted revenue (operating revenue minus other business costs) for listed securities firms increased by 35.1% year-on-year to 247.3 billion yuan, with a net profit margin rising by 7.6 percentage points to 42.1% [1] - In Q2 2025, adjusted revenue for listed securities firms increased by 16.2% quarter-on-quarter, while net profit decreased by 0.7% quarter-on-quarter due to the impact of high base effects from significant non-operating income in some firms [1] Business Segment Performance - The contribution to adjusted revenue growth from proprietary trading and brokerage businesses was 45% and 44% year-on-year, respectively, accounting for 53% and 30% of net revenue growth [2] - Investment banking business saw an 18% year-on-year growth due to a recovery in equity financing, while asset management business experienced a slight decline attributed to adjustments following the sale of Huatai Assetmark and a drop in income from some firms' private asset management businesses [2] Market Dynamics and Differentiation - There is a significant performance differentiation among securities firms, with large and medium-sized firms benefiting from proprietary trading transformations, while small firms rely more on brokerage business [3] - The transformation of proprietary trading has become a key issue in the industry, with differences in business models, transformation processes, and investment capabilities leading to operational disparities among firms [3] Investment Outlook - The securities sector is expected to benefit from a combination of increased allocation power and performance elasticity, with institutional investors increasing their allocation to equity assets due to declining fixed-income asset yields [4] - The wealth effect from long-term capital entering the market is anticipated to drive retail investor participation, alongside the generally high growth in semi-annual reports, suggesting a positive outlook for the non-bank financial sector, particularly for securities firms [4]

Core Viewpoint - The brokerage sector is expected to benefit from the resonance of allocation power and performance elasticity, with a continued recommendation for investment in this sector [3]. Group 1: Performance Overview - In the first half of 2025, 42 listed brokerages achieved a total net profit attributable to shareholders of 104 billion yuan, representing a year-on-year increase of 65.1% [1]. - The main driver for performance improvement was the revenue increase from brokerage and proprietary trading, with adjusted revenue (operating income - other business costs) rising by 35.1% year-on-year to 247.3 billion yuan, while the net profit margin increased by 7.6 percentage points to 42.1% [1]. - In Q2 2025, adjusted revenue for listed brokerages increased by 16.2% quarter-on-quarter, while net profit decreased by 0.7% quarter-on-quarter, primarily due to the impact of a high base from significant non-operating income in some brokerages [1]. Group 2: Business Segment Contributions - In H1 2025, proprietary trading and brokerage businesses contributed significantly to adjusted revenue growth, with proprietary trading and brokerage businesses growing by 45% and 44% year-on-year, respectively, contributing 53% and 30% to net revenue growth [2]. - The investment banking business saw an 18% year-on-year increase, driven by a recovery in equity financing and high growth in Hong Kong stocks, while asset management business experienced a slight decline due to adjustments following the sale of Huatai Assetmark and a decrease in income from some brokerages' private asset management businesses [2]. - There is a notable performance differentiation among brokerages, with large and medium-sized brokerages benefiting from proprietary trading transformation, while small and medium-sized brokerages primarily rely on brokerage business [2]. Group 3: Investment Recommendations - The brokerage sector is expected to benefit from the dual drivers of allocation power (including the entry of resident funds) and performance improvement, leading to a positive outlook for the non-bank sector market [3].

Group 1: Food and Beverage - The investment suggestion emphasizes structural differentiation and growth potential, with a focus on new consumption and high growth in consumer goods, while the liquor sector is in a bottoming phase, highlighting its value for allocation [2][3] - The liquor industry is experiencing increased differentiation and rationality, with the industry still seeking a bottom in Q2 2025, and the head companies showing resilience during the off-season [2] - Beer is expected to recover as the peak season approaches, while the beverage sector is in a phase of releasing single product potential [3] Group 2: Cosmetics - The investment recommendation suggests increasing holdings in personal care and beauty sectors, focusing on companies benefiting from product innovation and new channel opportunities [6] - The demand for cosmetics remains stable, with domestic brands gaining market share, particularly in skincare and makeup categories [6] - Trends indicate accelerated product innovation and emotional consumption, with a focus on cost-effective products benefiting from supply-demand dynamics [6] Group 3: Education and Consumer Services - The high school education sector is projected to have a stable demand for the next 7-8 years, supported by policy initiatives aimed at expanding education [12] - Emotional and experiential consumption is accelerating, with traditional demands being met by new supply, particularly in the IP toy sector [12] - The tea and coffee sectors are undergoing product, channel, and technological iterations, indicating structural growth opportunities [12] Group 4: Home Appliances - The home appliance sector is witnessing a recovery led by major brands, with a focus on price competition and market consolidation [17] - New consumption trends are emerging, with high aesthetic product designs and AI integration driving innovation in the sector [17] - Investment suggestions highlight opportunities in both domestic and international markets for leading brands [17] Group 5: Agriculture and Animal Husbandry - The agricultural sector maintains a "buy" rating, with slow growth expected in livestock output and a recovery in the animal health feed sector [29] - The pet food market is experiencing robust growth, driven by domestic brands gaining market competitiveness [29] - The planting sector is expected to see rising grain prices due to reduced import volumes, with core seed varieties becoming increasingly important [30] Group 6: Internet and AI - The investment outlook for the internet sector remains positive, particularly for technology stocks, with a focus on AI-driven growth [34] - The AI narrative is expected to enhance the value of social networks, with a strong emphasis on user engagement and ecosystem development [59] - The evolution of AI capabilities is anticipated to create new demand and enhance the social network's value proposition [59] Group 7: Non-Banking Financials - The non-banking financial sector is undergoing significant transformation, with a focus on wealth management and asset management business models [73] - The recommendation is to favor leading comprehensive brokerages that demonstrate balanced business structures and strong professional capabilities [73] - The insurance sector is expected to see stable growth in new business value, with an emphasis on improving asset allocation [76] Group 8: Banking - The banking sector is projected to face revenue pressure but maintain positive net profit growth, with a stable policy environment supporting sustainable operations [79] - The expectation of increased long-term capital inflow into the banking sector is driven by regulatory changes and market dynamics [80] - Investment strategies suggest focusing on high-growth regional banks and those showing signs of loan recovery [81]