The first half of 2026 proved robust for the securities sector, with industry-wide revenue climbing 32% year-on-year and net profit rising 23%, based on parent company figures. However, the performance of securities IT vendors, the upstream suppliers to brokerages, diverged sharply during this period.

Hangzhou Robam Appliances Co., Ltd. (commonly known as Hithink RoyalFlush) led the pack in both revenue and net profit, while Fortune Trend Technology recorded the lowest revenue and Winsome Technology posted the smallest net profit. Notably, Hithink RoyalFlush's H1 net profit was 2.87 times the combined earnings of the other six listed securities IT firms. In terms of growth, Hithink RoyalFlush achieved the fastest revenue expansion, whereas Hundsun Technologies saw the steepest revenue decline. Kingnet Technology swung back to profitability with the strongest profit growth, while Shanghai Dzh Limited experienced the most significant net profit contraction.

Shanghai Dzh Limited's H1 Net Profit Falls Most Sharply

According to a research report from Soochow Securities, the securities IT sector is divided into two main segments: C-end and B-end. The C-end segment serves individual investors with market data and trading software plus value-added services, with key players including Hithink RoyalFlush, Fortune Trend, and Shanghai Dzh Limited. The B-end segment provides complex core business systems such as centralized trading, asset management, and ultra-fast trading platforms to brokers and asset managers, represented by firms like Hundsun Technologies, Kingnet Technology, Vtstar Software, and Winsome Technology.

In its semi-annual report, Shanghai Dzh Limited describes itself as a leading internet financial information service provider. Leveraging years of expertise in financial data and internet technology, the company has built an integrated, intelligent platform offering news, services, and trading. Its operations focus on three pillars: securities information services, big data and data engineering, and overseas business.

During the first half of 2026, Shanghai Dzh Limited reported the largest year-on-year net profit decline among the seven listed peers, alongside the lowest R&D expense ratio. The company generated revenue of RMB 405 million, up 6.78% year-on-year, but posted a net loss attributable to shareholders of RMB 28.03 million, a sharp widening from a loss of RMB 3.47 million in the same period last year—a year-on-year plunge of 707.83%. This revenue-growth-without-profit scenario stems partly from a high base effect: the prior-year period included RMB 31.64 million in investment gains from the sale of Tianlanlan Investment. Excluding non-recurring items, the adjusted net loss narrowed slightly to RMB 30 million, down about RMB 7 million year-on-year. Still, the company has yet to escape its loss-making trend.

One contributing factor is a high expense burden. In H1 2026, Shanghai Dzh Limited's total operating expense ratio reached 70.32%. The breakdown includes selling expenses of RMB 82 million (20.26% of revenue), administrative expenses of RMB 132 million (32.66%), R&D expenses of RMB 81 million (19.94%), and financial expenses of negative RMB 10.28 million. The administrative expense ratio of 32.6% was the highest among the seven firms. The overall expense ratio of 70.32% trailed only Hundsun Technologies, staying well above the other five competitors.

Lowest R&D Investment Ratio

R&D spending at Shanghai Dzh Limited fell 4.66% year-on-year to RMB 81 million in H1 2026, representing 19.94% of total revenue—the lowest ratio among the seven companies. At a critical juncture for AI transformation, the company not only reduced R&D investment but also lagged peers in R&D intensity. Management attributed the change to lower R&D spending overall, a somewhat vague explanation. A closer look at the financials reveals that a decline in R&D personnel compensation—from RMB 81 million in H1 2025 to RMB 77 million in H1 2026—was a key driver. Whether this reflects fewer researchers or lower average pay remains unclear.

Industry analysis suggests that robust R&D serves as a vital moat for securities IT providers. Rather than being a flexible cost item, R&D investment is a strategic necessity for sustaining competitive advantage. As AI models reshape the financial IT landscape, with vendors announcing AI-driven strategies, cutting R&D could hinder the pace and depth of AI product development. While trimming R&D may temporarily boost profits, excessive reductions—especially in headcount—risk dampening core team morale.

Slow-Paced Merger Progress

In March 2025, Xiangcai Securities and Shanghai Dzh Limited first disclosed plans for a share-swap merger, under which Xiangcai would issue A-shares to absorb Shanghai Dzh Limited. On May 14, 2026, the Shanghai Stock Exchange resumed its review of the deal, shifting the status from "suspended" to "under inquiry." As of now, the merger has yet to proceed to the listing committee for approval. Compared with other brokerage consolidations—such as the absorption of Haitong Securities by Guotai Junan, MinSheng Securities by Guolian Minsheng, and the takeover of Cinda Securities and Dongxing Securities by CICC—this deal is moving at a slower pace.

This is not the first attempt at a union between Shanghai Dzh Limited and Xiangcai Securities. In 2015, the former announced plans to acquire 100% of the latter for RMB 8.5 billion, aiming to secure a brokerage license and drive transformation. However, the deal collapsed after more than a year when the company was investigated by regulators for alleged securities law violations in its disclosures. That failure caused Shanghai Dzh Limited to miss a golden window for internet brokerage transformation, at a time when East Money Information was about to embark on its meteoric rise.

A decade later, Shanghai Dzh Limited stands at a similar crossroads, but the path has reversed—from "Dazhihui acquires Xiangcai" to "Xiangcai absorbs Dazhihui." As the securities industry accelerates its M&A wave, whether this marriage completes remains uncertain. What is clear is that Shanghai Dzh Limited has suffered consecutive years of losses, and the major shareholder of Xiangcai Securities has maintained high share pledge levels for years. As of September 9, 2026, pledges due within six months by controlling shareholder Xinhu Holdings and its concert parties total 300 million shares, representing 25.96% of their holdings and 10.48% of total share capital, with corresponding financing of RMB 2.303 billion. Xinhu Holdings and its affiliate Quzhou Development together hold 1.154 billion shares, or 40.37% of Xiangcai Securities' total capital. After the latest pledge, cumulative pledged shares amount to 1.142 billion, accounting for 98.91% of their stake and 39.93% of total share capital.

From 2022 through H1 2026, Shanghai Dzh Limited has posted negative adjusted net profit for four and a half consecutive years, leaving its exit from the red uncertain. The biggest hope behind this merger is whether it can replicate the "East Money myth" and fulfill an unfinished dream from over a decade ago. But times have changed. East Money Information's rise occurred during a unique historical window, leveraging low-commission strategies to amass millions of users while benefiting from the shift in household asset allocation toward equities amid falling property and deposit rates. Today's competitive landscape is vastly different—whether in macro conditions, the internet ecosystem, or the stage of brokerage industry development—making it difficult for Shanghai Dzh Limited to contend with the likes of East Money Information.