A recent research report indicates that Chinese securities firms are projected to achieve an average 9% quarter-on-quarter and 21% year-on-year net profit growth in the third quarter of 2025, supported by robust brokerage fee income growth. Equity trading revenue is expected to exceed expectations, driving overall performance.

CICC (03908) and CSC (06066) are anticipated to outperform peers, with third-quarter net profits expected to surge 258% and 116% year-on-year respectively. Despite strong fundamentals, H-shares of securities firms underperformed in September, as market concerns about Q4 2025 to H1 2026 growth and potential selling by state entities weighed on performance.

Current valuations stand at 1x forward price-to-book ratio with an average return on equity of 9%. With strong trading volume growth and earnings beating expectations, valuations are expected to have further upside potential. CICC, CITIC SEC (06030), and GF SEC (01776) are identified as preferred stocks, with strong earnings growth projected for fiscal years 2025-2026 and continued improvement in return on equity.

Earnings forecasts for Chinese brokerage stocks for 2025-2026 have been raised by 0% to 13%, with major listed Chinese securities firms expected to achieve an average 30% earnings growth during 2025-2026, with CICC anticipated to lead performance.

The forecast for daily average A-share trading volume for 2025-2026 has been increased by 14% to 18%, expected to reach RMB 1.6-1.7 trillion. Target prices for H-share brokers have been raised by an average of 4% to reflect higher earnings projections.

Ample market liquidity continues to support market uptrend. The Fourth Plenary Session, the "15th Five-Year Plan," and potential regulatory easing policies will be key catalysts worth monitoring.