22 October 2025 | 10:30PM HKT Equity Research CHINA BROKERS & ASSET MANAGERS Four themes emerge going into strong 3Q results season The A-share market's ADTV reached Rmb 2tn in 3Q25, +153%/+37% yoy/qoq, with the overall trading volume reaching Rmb 134tn, +161%/+51% yoy/qoq. Based on the GS strategy team views and the perspective from our coverage of the banking sector, we expect household savings will continue to flow into the capital markets. This not only implies that the robust trend in brokers' earnings ...

Investment Ratings - CICC-H: Buy [1] - FUTU: Neutral [1] - Hundsun: Buy [1] - East Money: Sell [2] Core Insights - Broker and fintech stocks have shown strong performance since May, with average returns of +27% for brokers and +9% for fintech, compared to +8% and +3% for the H/A share index [1] - Positive changes in Average Daily Trading Volume (ADTV) and turnover rates, along with growth in the Hong Kong market, are expected to drive earnings improvement [1][4] - Earnings forecasts for CICC, Hundsun, FUTU, GFS, and CITICS have been revised upwards by an average of 7% for 2025 [1][31] Summary by Sections Stock Selection Preferences - Preference for brokers with greater exposure to the Hong Kong market, such as CICC-H, while maintaining a Neutral rating on FUTU due to limited excess earnings growth [2] - For fintech, Hundsun is preferred over East Money due to fundamental factors, including recovery in non-core revenue supported by investments [2][26] Market Trends and Revisions - ADTV and turnover rates have recovered since June, primarily due to the easing of tariff shocks [4][12] - Continued increase in ETF market share is expected to impact East Money's profitability negatively [26] Earnings Forecasts - CICC's net profit forecast for 2025 has been raised by 13%, reflecting anticipated growth in Hong Kong investment banking revenue [17][22] - FUTU's earnings forecast has been slightly raised by 1% for 2025, driven by reduced customer acquisition costs [21][22] - Hundsun's net profit forecast for 2025 has been increased by 13% due to higher investment income [31] Valuation and Price Targets - CICC-H has a target price of HK$ 17.58 based on a 10x 2026E P/E [36] - FUTU's target price is set at US$ 111.79 based on an 18x 2026E P/E [36] - Hundsun's target price is Rmb 32.04, reflecting its market presence and sustainable customer relationships [46]