China's Securities Brokerage Sector Valuation Repair Logic and Investment Opportunity Assessment

The Central Economic Work Conference clearly proposed continuously deepening the comprehensive reform of capital market investment and financing, providing important policy support for the development of the securities brokerage industry. Driven by both a moderately loose liquidity environment and deepening reforms, brokerages’ fundamentals are expected to continue improving, and expectations for sector valuation repair have strengthened.

From the policy perspective, China’s capital market reform in 2025 shows the following characteristics:

1. Deepening of Comprehensive Registration System
   : As the registration system reform progresses in depth, brokerages’ investment banking business will face new growth opportunities
2. Fintech Empowerment
   : The application of AI technology in the financial services sector is accelerating, providing technical support for brokerages’ digital transformation
3. Accelerated Industry Consolidation
   : As shown in the case where China International Capital Corporation (CICC) plans to acquire Cinda Securities and Dongxing Securities, the trend of industry consolidation is obvious [1]

Based on the latest data analysis, major brokerages show the following characteristics:

:

• CITIC Securities
  : P/E 15.04x, P/B 1.51x; as an industry leader, its valuation is relatively reasonable
• Huatai Securities
  : P/E 12.93x, P/B 1.17x; its valuation level is relatively low, with room for repair
• East Money
  : P/E 28.24x, P/B 4.02x; as an internet brokerage, it enjoys a valuation premium

:

• In terms of net profit margin, East Money’s is as high as 76.95%, reflecting the advantages of its light asset business model
• In ROE performance, East Money leads with 14.97%, followed by CITIC Securities at 9.50% and Huatai Securities at 8.20%

: The implementation of the comprehensive registration system will directly benefit brokerages’ investment banking business; IPO and refinancing business volumes are expected to grow significantly. At the same time, the construction of a multi-level capital market provides a broader business space for brokerages.

: Moderate adjustments to financial regulatory policies provide development space for brokerages’ innovative businesses, especially in wealth management and asset management.

: The transformation from traditional brokerage business to wealth management has become a trend. Leading brokerages represented by Huatai Securities are actively deploying wealth management business, enhancing customer stickiness through product and service innovation.

: The application of AI technology in investment research, risk control, customer service and other links will significantly improve the operational efficiency of brokerages. East Money, as a typical representative of internet brokerages, has a first-mover advantage in digitalization.

The case where CICC plans to merge with Cinda Securities and Dongxing Securities [1] shows that industry consolidation is accelerating. This consolidation will bring:

• Scale Effect
  : Merged institutions will have stronger capital strength and business coverage capabilities
• Business Synergy
  : Business complementarity between different brokerages will produce synergy effects
• Valuation Re-rating
  : Industry consolidation will promote the improvement of the overall valuation level of the sector

Based on valuation analysis and fundamental assessment, it is recommended to focus on the following investment opportunities:

• Huatai Securities (601688.SS)
  : Currently, its P/E is only 12.93x and P/B 1.17x, significantly lower than the industry average. Its stock price rose 32.78% in 2025, showing outstanding performance, but there is still room for valuation repair

• CITIC Securities (600030.SS)
  : As an absolute industry leader, although its valuation is relatively reasonable, its comprehensive competitive advantages are obvious, and it will be the first to benefit during the policy dividend period

• East Money (300059.SZ)
  : As a leading internet brokerage, although its valuation is high, its business model is unique, and high ROE and high profit margin support the valuation premium

1. Market Volatility Risk
   : Brokerage performance is highly correlated with market conditions; attention should be paid to the impact of stock market volatility on performance

2. Policy Implementation Risk
   : The landing pace and implementation effect of reform policies may affect the business development of brokerages

3. Increased Competition Risk
   : The competitive landscape may change during the industry consolidation process

: Focus on brokerages that benefit from the policy dividends of capital market reforms, especially leading brokerages with a high proportion of investment banking business.

: Focus on brokerages that are leading in the layout of wealth management, fintech and other fields; these companies are expected to obtain excess returns in the industry transformation.

• Core Allocation
  : Leading brokerages such as Huatai Securities and CITIC Securities, accounting for 60-70%
• Flexible Allocation
  : Characteristic brokerages such as East Money, accounting for 20-30%
• Theme Allocation
  : Pay attention to industry consolidation opportunities and lay out relevant targets at the right time

Against the background of deepening investment and financing reforms in the capital market, China’s securities brokerage sector has a solid foundation for valuation repair. Three major drivers—policy dividends, business transformation, and industry consolidation—will provide sustained momentum for the development of brokerages. Currently, the overall valuation level of the sector is at a relatively low historical level; especially leading brokerages with excellent quality but valuation mismatch have good investment value.

Investors should focus on leading brokerages with low valuation and good fundamentals such as Huatai Securities, while appropriately allocating characteristic brokerages with differentiated competitive advantages such as East Money, and seize the valuation repair opportunities of the brokerage sector under the premise of risk control.

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[0] Gilin API Data - Real-time stock prices and financial data
[1] WSJ - “China’s CICC Plans Merger With Two Brokerages, Further Consolidating Financial Industry” (https://cn.wsj.com/articles/chinas-cicc-plans-merger-with-two-brokerages-0157d6a0)
[2] Bloomberg - “SEC Head Wants to Ease Rules for Small-Firm Public Offerings” (https://www.bloomberg.com/news/articles/2025-12-02/sec-chief-wants-to-boost-ipos-by-easing-rules-for-small-firms)
[3] Deloitte WSJ - “Financial Services: Quick Guide to Digital Asset, AI Regulations” (https://deloitte.wsj.com/cfo/financial-services-quick-guide-to-digital-asset-ai-regulations-a1d0e56b)