CISI FIN released a research report stating that wealth management and institutional services are unleashing growth momentum, expressing optimism about HTSC's (06886) ability to create long-term performance advantages through technology-enabled full-license business operations. The firm expects the company's net profit attributable to shareholders to reach RMB 13.837 billion and RMB 15.497 billion in 2025-2026 respectively, initiating coverage with an "Overweight" rating.
HTSC released its 2025 interim report, achieving operating revenue and net profit attributable to shareholders of RMB 16.219 billion and RMB 7.549 billion respectively during the reporting period, representing year-on-year growth of +31.0% and +42.2%. In Q2, the company achieved operating revenue and net profit attributable to shareholders of RMB 7.987 billion and RMB 3.907 billion respectively. The weighted average ROE increased by +1.12pct year-on-year to 4.3%, while the operating leverage ratio (excluding client funds) increased by +6.0% from the beginning of the year to 3.48 times.
CISI FIN's main viewpoints are as follows:
**Steady Growth in Capital-Related Business Revenue**
On the revenue side, in the first half of 2025, the company achieved fee-based and capital-related business revenues of RMB 5.964 billion and RMB 9.722 billion respectively. On the cost side, management expenses increased by +0.8% year-on-year to RMB 7.262 billion, with the management expense ratio decreasing by -12.63pct year-on-year to 45.7%. Credit impairment losses of RMB 0.01 billion were provisioned.
**Investment Banking Profitability Recovery, Brokerage Business Continues Upward Trend**
For fee-based businesses, net revenues from brokerage, investment banking, and asset management were RMB 3.754 billion, RMB 1.168 billion, and RMB 0.893 billion respectively. The brokerage business benefited from increased trading activity, driving significant growth in securities trading agency revenue. The fund advisory business scale increased by +16.4% from the beginning of the year, jointly promoting brokerage business chain strategy and cross-border synergy. Main underwriting amount increased by +150.7% year-on-year, with IPO main underwriting scale ranking second in the industry. Bond underwriting leveraged full-license advantages to achieve a +24.3% year-on-year increase in main underwriting amount, demonstrating comprehensive investment banking strength.
The asset management business actively promotes the construction of a comprehensive investment research system. Huatai Asset Management's AUM increased by +23.9% year-on-year. The participated fund companies Southern Fund and Huatai-PineBridge's public fund business managed assets increased by +4.9% and +5.7% respectively from the beginning of the year, consolidating their leading position in public funds.
**Synergy Between Interest Cost Optimization and Investment Income Release**
For capital-related businesses, net interest income and investment income were RMB 2.037 billion and RMB 7.685 billion respectively, representing year-on-year growth of +186.6% and +52.1%. Interest performance was outstanding, with the core driver being the decline in interest-bearing debt costs, leading to reduced interest expenses. The investment side benefited from income release from the disposal of trading financial assets, driving investment income to surge +122.2% year-on-year.
In the first half of 2025, the company accelerated its balance sheet expansion, with financial assets increasing by +20.6% from the beginning of the year to RMB 434.059 billion. Among these, growth in bond investment scale drove trading financial assets and other debt investments to increase by +19.0% and +112.0% year-on-year respectively. Non-trading equity instrument investments significantly increased from the beginning of the year to RMB 7.394 billion, generating approximately RMB 0.148 billion in dividend income, further driving investment business revenue growth. OTC derivatives business activity improved, with revenue swaps and OTC options business outstanding scales increasing by +11.2% and +7.7% respectively from the beginning of the year, diversifying revenue sources.