GF Securities has released a research report stating that against the backdrop of recent expansion in trading volumes and margin trading balances breaking through 2 trillion yuan, 2C securities IT business has demonstrated exceptional resilience, with valuation recovery potential possibly twice that of the securities sector. The firm recommends focusing on fintech companies with "bull market amplifier" effects, including Flush (300033.SZ), Compass (300803.SZ), East Money (300059.SZ), Wealth Trend (688318.SH), Great Wisdom (601519.SH), and Jiu Fang Zhi Tou Holdings (09636).

GF Securities' main viewpoints are as follows:

**Market Opportunities for 2C Securities IT**

Securities IT companies are primarily divided into 2C and 2B categories, with the former mainly serving retail users and the latter primarily selling and upgrading system products to securities firms. Against the current backdrop of expanding trading volumes and surging margin trading balances, 2C securities IT companies may outperform 2B fintech firms in capturing early-stage momentum.

Reviewing historical securities sector rallies, mainstream 2C securities IT returns have typically been approximately double those of securities indices. Considering the existing foundation of the current securities market rally, 2C securities IT companies have yet to reach historical valuation multiples.

**Business Composition of 2C Fintech**

In an environment where securities firms are generally rising, focus areas vary among companies. 2C securities IT operations primarily encompass four categories: traditional brokerage services, account opening traffic advertising, value-added telecommunications services, and investment advisory services. The latter two often overlap, with investment advisory services typically included within value-added services, collectively forming three elastic business categories. Fund distribution services, though important for C-end users in recent years, may show less elasticity due to declining fee rates.

Based on the three elastic business categories:

**First, Hidden Account Opening Foundation May Generate Next Wave of High Advertising Revenue Growth**

Following index corrections and securities firm leadership, account openings often become the next significant trend. Historical analysis of securities rallies and leading securities IT MAU data reveals certain correlations. Around National Day 2024, new securities account openings reached relatively high levels, providing substantial performance momentum for 2C securities IT businesses, with advertising and traffic businesses of Flush and Great Wisdom showing significant year-over-year growth. Currently, margin trading balances continue growing with accelerating expansion, maintaining high growth after breaking through 2 trillion yuan, potentially indicating accelerated capital market entry.

**Second, Value-Added Services Contributing Period Elasticity**

Overall ARPU for 2C value-added telecommunications services maintains a declining trend, partially influenced by AI rollouts potentially accelerating the fee reduction rate. Price declines may drive volume increases, as evidenced by October 2024 MAU quarter-over-quarter growth of 68.2%, 78.8%, and 34.5% for Flush, Great Wisdom, and TongDaXin respectively, with year-over-year growth of 66.6%, 46.2%, and 41.9%.

**Third, Brokerage Business**

Using East Money as a baseline to track the relationship between brokerage business and market trading volumes, commission and fee income growth rates and market trading volume growth rates typically converge to 1x over the long term.

**Elasticity Analysis Based on Three Business Categories**

Analyzing three significant historical bull markets - April 2015, December 2020, and October 2024 - examining margin trading balances, market trading volumes, and 2C financial IT MAU elasticity and averages, most 2C securities IT companies' current valuations have not yet reached near-term averages for the aforementioned elastic businesses. Additionally, continued expansion of margin trading balances, market trading volumes, and MAU is expected to accompany incremental market capital inflows, potentially driving further upward exploration of 2C securities IT valuations.

**Risk Warnings**

Uncertain industry policy change risks, AI concept-related risks, macroeconomic environment risks, among others.