CITIC Securities Co., Ltd.(SH:600030)2025-10-27 00:52Summary of Key Points from the Conference Call Industry Overview - The focus of the 15th Five-Year Plan (FYP) in China is on technology self-reliance and innovation, which is expected to drive productivity gains in the capital markets [6][6][6] - The capital markets are anticipated to play a crucial role in supporting innovation by providing necessary funds and creating a market-oriented environment for risk and reward [6][6][6] Company Insights - A share brokers have experienced increased volatility in stock prices over the past two months as investors await catalysts to understand earnings trends post the broad-based rerating since September 2024 [2][2][2] - The market is currently pricing in a high level of Average Daily Turnover (ADT) at approximately Rmb1.6 trillion, which is expected to benefit broker earnings [2][2][2] - Fundraising activity is projected to increase, although the current IPO volume remains modest, with 9M25 at Rmb67 billion compared to 9M24 at Rmb48 billion [2][2][2] - The normalization of the IPO pace by regulators is expected to take time, which may delay the translation of deal pipelines into IPO volume [2][2][2] - China International Capital Corporation (CICC) and CITIC Securities are highlighted as companies likely to gain market share due to their strong client base and underwriting capabilities [2][2][2] Financial Metrics - The year-to-date IPO volume has increased from 2024 but remains low in absolute terms [7][7][7] - The IPO pipeline count for major brokers indicates that Guotai Haitong leads with 20 total IPOs, followed by CITIC Securities with 18 [9][9][9] Valuation and Risks - The valuation methodology for China International Capital Corp. Ltd. (3908.HK) includes a Price-to-Book (P/B) ratio analysis with a base case of 0.88x and a return on equity (ROE) of 9.4% [11][12][12] - Upside risks include faster macro recovery and stronger-than-expected growth in IPO and follow-on financing, while downside risks involve slower macro recovery and stagnant cross-border business due to offshore market volatility [12][12][12] Analyst Ratings - The industry view for China Financials is rated as Attractive, indicating expected performance above the market benchmark over the next 12-18 months [3][3][3] - Specific stock ratings include Overweight for CICC and CITIC Securities, while other companies like China Merchants Securities are rated Underweight [65][65][65] Additional Insights - The capital market services, including underwriting and M&A advisory, are expected to create more divergence in earnings and share prices among A share brokers moving forward [6][6][6] - The experience from the previous cycle (2020-2022) suggests that regulators will remain focused on deal quality, which may benefit leading underwriters [6][6][6]