OCBC Investment Research
Date of Report: 21 August 2025

CITIC Securities: Riding the Wave of China’s Capital Market Boom – Robust Growth, Strategic Leadership, and ESG Excellence

Introduction: Strong Momentum for CITIC Securities in 2025

CITIC Securities (CITICS), one of China’s leading investment banks, is set to benefit from robust capital market activity and industry tailwinds. Backed by its diversified business model, strong financial results, and proactive ESG initiatives, CITICS is well-positioned for continued growth and leadership as China’s financial sector consolidates and evolves.

Investment Thesis: A Diversified Powerhouse in China’s Capital Markets

CITICS operates across a wide range of financial services, including brokerage, underwriting, prime brokerage, equity derivatives, fixed income, currencies and commodities, asset management, and investment banking. This diversity provides revenue stability and positions the company advantageously for further industry consolidation.

Key Financial Highlights and Forecasts

• Robust Subsidiary Performance: China Asset Management Co. (ChinaAMC), 62.2% owned by CITICS, reported a 6% year-on-year (YoY) net profit increase and a 16% YoY rise in operating revenue in 1H25.
• Assets Under Management (AUM): ChinaAMC’s parent-level AUM surged to CNY2,851.2 billion as of 30 June 2025, a 32% YoY increase.
• Strong Topline Growth: CITICS’ FY25 revenue is forecasted to rise by 17% to CNY74.6 billion, with PATMI (Profit After Tax and Minority Interests) expected to grow 18% to CNY25.7 billion. Revenue expansion is anticipated to be broad-based across underwriting, brokerage, and asset management, with interest and investment income increasing at a slower pace.

Industry Tailwinds: Market Activity and Regulatory Support

• Trading Volume Growth: The average daily turnover (ADT) for stocks and ETFs reached CNY1.26 trillion in 2Q25, marking a 52% YoY increase (despite a 15% QoQ decline).
• Surge in IPO Underwriting: A-share IPO underwriting value jumped 135% YoY and 27% QoQ to CNY21 billion in 2Q25. Refinancing and H-share IPOs also saw YoY increases.
• Policy Tailwinds: The China Securities Regulatory Commission (CSRC) unveiled an action plan in May 2025 to foster the high-quality development of mutual funds and index investing, linking performance evaluations to benchmarks—an initiative expected to benefit brokerage sectors as mutual funds rebalance portfolios.

Valuation and Peer Comparison

CITIC Securities’ fair value is estimated at CNY42.40, pegged to 22.8x FY26 EPS, incorporating an ESG premium. The company maintains a BUY rating given its solid growth outlook and market positioning.

CITIC Securities: Company Overview and Segment Breakdown

CITIC Securities stands as China’s largest investment bank, serving corporates, financial institutions, governments, and individuals. The company’s breadth is underpinned by its market leadership in brokerage, underwriting, asset management, margin financing, securities lending, and direct investments. Key milestones include its 2003 Shanghai Stock Exchange listing, the acquisition of 100% of CLSA and CITIC Wantong Securities in 2013, and a controlling stake in China AMC.

ESG Initiatives: Governance, Data Security, and Responsible Investment Leadership

CITICS has shown significant improvements in governance, excelling in data security practices and responsible investment initiatives:

• Governance practices are now average relative to global peers, with no flagged concerns regarding auditor independence.
• Comprehensive business ethics training for all employees.
• Leading data security measures, including external IT audits and cybersecurity training, position CITICS ahead of peers in risk mitigation.
• Advanced staff management, including confidential grievance channels, addresses potential attrition risks. However, no employee stock option plan was observed.
• Robust ESG-focused due diligence in investment activities, though engagement with investee companies on sustainability could improve.

Key Catalysts for CITIC Securities

• Above-forecast ADT and higher commission rates industry-wide.
• Potential relaxation of capital rules, easing capital pressure.
• Stronger-than-expected fee-based business performance.
• Increased profit contributions from subsidiaries.

Risks to Monitor

• Underperformance in the A-share market affecting earnings and sentiment.
• Slower Chinese economic growth impacting social wealth and market performance.
• Tighter regulations on margin financing or delays in capital market reforms.
• Rising competition from new broker licenses and internet finance entrants.
• Execution risk in overseas acquisitions and potential need for recapitalisation to sustain balance sheet growth.

Detailed Financial Statement and Ratios

Conclusion: Outlook and Recommendation

CITIC Securities stands out as a best-in-class play on China’s capital market expansion, with a strong and diversified franchise, robust earnings growth, and industry-leading ESG and risk management practices. The company’s fair value estimate and peer comparisons underscore its compelling investment case for 2025 and beyond. The stock is rated BUY, with expected total returns well above the industry benchmark.