CATHAY PAC AIR Tong "debut" semi-annual report: Revealing the next steps for deep integration

The merger of Guotai Junan and Haitong Securities is the biggest event in the securities industry in 2025. The latest semi-annual report released by Guotai Haitong also touches on this important issue.

The semi-annual report was almost the "grand finale" announcement in the entire securities industry, released on the evening of August 29.

The release of the semi-annual report directly addressed three topics that have garnered significant external attention:

1. How did the performance of the first semi-annual report after the merger fare?

2. Who is leading in performance within the industry?

3. What is the direction of the "deep integration" progress for future core businesses and important subsidiaries?

Ultimately, all three topics were interpreted in this round of semi-annual reports.

Net Profit Attributable to Shareholders Surges Over 200%

The semi-annual report shows that in the first half of 2025, Guotai Haitong's operating income was 23.872 billion yuan, an increase of 77.71% year-on-year; the net profit attributable to shareholders of the parent company was 15.737 billion yuan, an increase of 213.74% year-on-year.

Delving into specific businesses reveals:

Guotai Haitong's net income from brokerage business increased by 2.655 billion yuan, an increase of 86.27%, mainly due to the year-on-year increase in stock trading volume and the expansion of the scale of securities trading business following the merger with Haitong Securities;

Net income from asset management business increased by 657 million yuan, an increase of 34.20%, mainly due to the growth in asset management and fund management scale following the merger with Haitong Securities;

Net interest income increased by 2.144 billion yuan, an increase of 205.43%, mainly due to the new leasing business from the merger with Haitong Securities, as well as increased interest income from margin financing and other debt investments;

Investment income increased by 9.664 billion yuan, an increase of 318.23%, mainly due to increased investment income from trading financial instruments;

Fair value changes and losses decreased by 5.127 billion yuan, a decrease of 241.75%, mainly due to changes in the fair value of derivative financial instruments.

Overall, the expansion of business and strength after the merger indeed made a significant contribution to Guotai Haitong's performance, while the company's proprietary investment business was notably not overly aggressive, resulting in fluctuations in investment income and changes in derivative gains and losses.

Investment Banking Business Rankings Lead Overall

Guotai Haitong summarized that: In the first half of 2025, the company's main business segments saw significant revenue growth, on one hand, the business scale expanded after the merger with Haitong Securities, and on the other hand, the company seized market opportunities to comprehensively promote the construction of retail, institutional, and corporate customer service systems, consolidating and enhancing core competitive advantages, with steady development across various businesses.

The wealth management segment's operating income was 9.772 billion yuan, an increase of 92.35% year-on-year, as the market's stock trading volume grew in the first half of the year, and the company continued to promote high-quality customer acquisition, with significant growth in product retention and asset allocation scale The investment banking division's operating income was 1.41 billion yuan, an increase of 20.47% year-on-year. The company has deeply cultivated key industries, and the investment banking main business ranking is comprehensively leading.

The institutional and trading division's operating income was 6.861 billion yuan, an increase of 55.54% year-on-year. The company has effectively seized market opportunities, enriched investment varieties, and continuously enhanced customer service capabilities.

The investment management division's operating income was 3.078 billion yuan, an increase of 44.26% year-on-year. The company has strengthened its investment research capabilities, and the scale of managed assets continues to grow.

The financing leasing division's operating income was 2.109 billion yuan, accounting for 8.83% of operating income, with an operating profit margin of 42.66%, mainly due to the consolidation of Haitong Hengxin.

It can be seen that the growth in revenue and net profit of CATHAY HUITONG has factors of selection (absorption and merger) as well as efforts (seizing market opportunities).

Who is leading in various indicators in the industry?

With the release of CATHAY HUITONG's semi-annual report, the specific performance indicators of large companies in the industry are gradually being revealed.

From the perspective of net profit indicators, in the first half of 2025, CATHAY HUITONG achieved a net profit attributable to the owners of the parent company of 15.737 billion yuan, while CITIC Securities achieved a net profit attributable to the shareholders of the parent company of 13.719 billion yuan. In terms of net profit, CATHAY HUITONG's performance leads the entire industry.

In terms of non-recurring net profit, CATHAY HUITONG's net profit includes a negative goodwill of 7.964 billion yuan generated from the absorption and merger of Haitong Securities, which is included in non-operating income. This non-recurring gain and loss has a significant impact on the group's consolidated profit, with the non-recurring net profit attributable to the parent company being 7.279 billion yuan, lower than Huatai Securities' 7.456 billion yuan and CITIC Securities' 13.571 billion yuan. In terms of non-recurring net profit indicators, CITIC Securities is leading.

In terms of total assets ranking, CATHAY HUITONG's total assets in the semi-annual report were 1,804.619 billion yuan, an increase of 72.24% compared to the end of the previous year. CITIC Securities' latest disclosed total assets were 1,807.7 billion yuan, both far ahead of Huatai Securities and Galaxy Securities, so in terms of total assets ranking, CITIC Securities leads the entire industry.

It can be imagined that the efforts of large companies in this round of bull market will lead to a restructuring of the future brokerage industry landscape, and CATHAY HUITONG will undoubtedly be an important player in it.

Will CATHAY HUITONG's deep integration be "one policy for one matter"?

Regarding the specific progress of major asset restructuring and integration during the reporting period, CATHAY HUITONG's semi-annual report also mentioned it.

The semi-annual report mentioned that on March 14, 2025, the company completed the delivery of the equity transaction for the merger and restructuring; due to the large scope of business and wide customer base involved in this merger and restructuring, the company actively plans new strategies and new cultures in accordance with regulatory requirements, and continues to promote integration and fusion in business, management, and system platforms After the delivery date, the company elected a new board of directors, appointed the management team of the merged company, reshaped the organizational structure, completed personnel matching in a timely manner, promptly replaced licenses, and completed the name change of the stock exchange membership; successfully held the restructuring name change listing ceremony, establishment conference, etc., achieving a smooth and stable start for the company.

In terms of business integration, the company completed the inheritance of business qualifications and quotas, unified customer management standards and business norms, completed the migration of major trading investment assets, launched a new official website, new official WeChat account, and a new version of the client, and operated externally under the new name to accelerate the realization of unified customer service. In terms of management integration, the company took the lead in implementing integrated operations for compliance and risk control, updated over 600 systems, and further strengthened financial asset and liability management; launched a new office system, significantly enhancing the integration and centralization level of operational management. In terms of subsidiary integration, the company researched and demonstrated solutions to issues such as intra-industry competition and "one participation and one control" among subsidiaries, and took the lead in initiating the integration of CATHAY HAITONG Asset Management, continuously promoting comprehensive integrated development.

Actively preparing for the legal entity switch. A special task force was established to maintain close communication with regulatory agencies, systematically plan and actively prepare for the legal entity switch and customer migration, successfully completing the formulation, simulation, and full network testing of the legal entity switch plan, laying a solid foundation for subsequent trading unit switches, mass customer migrations, and comprehensive integration of the system platform. After this merger and restructuring, the merged company possesses stronger and more robust capital strength, more professional and comprehensive service capabilities, and is expected to achieve more centralized and efficient operational management, thereby continuously releasing the effectiveness of integration and continuously stimulating the company's high-quality development momentum and vitality.

Continue to deepen integration and fusion in the second half of the year

Regarding the business plan and objectives for the next reporting period, CATHAY HAITONG Securities stated that the strategies and actions to be taken to achieve the goals are that 2025 is a decisive year for the company to implement the reform and deepening enhancement action plan, and it is also the starting year for the company to complete the merger and restructuring transaction and embark on a new journey from a new starting point.

In the second half of the year, the company will focus on creating a first-class investment bank with international competitiveness and market leadership, promote integration and high-quality development, further consolidate the greatest consensus and synergy, seize favorable market opportunities, accelerate the release of merger effectiveness, and strive to achieve various annual goals and tasks.

Regarding the key tasks for the second half of the year, first, continue to deepen integration and fusion. Continuously promote business integration and management integration, successfully achieve the legal entity switch, and sequentially advance subsidiary integration. Second, adhere to customer-centric principles and comprehensively enhance systemic competitive advantages. Third, continue to deepen reforms, focus on enhancing management empowerment levels, highlight the market-oriented direction of human resource management, strengthen awareness and effectiveness evaluation of integration work, leverage strategic management and digital technology innovation-driven roles, enhance centralized coordination and collaborative sharing of operations and finance, proactively plan asset-liability operations, adhere to compliance and risk control bottom lines, and strengthen the construction of subsidiary management systems and vertical control.

Dividend of 1.5 yuan for every 10 shares

CATHAY HAITONG Securities also announced the interim dividend plan According to the authorization of the company's 2024 annual general meeting of shareholders and the resolution of the sixth meeting of the seventh board of directors, the company's mid-term profit distribution plan for 2025 is as follows:

The mid-term profit distribution of Guotai Junan for 2025 will be in the form of cash dividends. Based on the total share capital of the company after deducting the shares held in the company's repurchase special securities account on the dividend record date, a cash dividend of 1.5 yuan (including tax) will be distributed for every 10 shares to A-share and H-share shareholders.

The total amount of cash dividends proposed to be distributed is 2.627 billion yuan (including tax), accounting for 16.69% of the net profit attributable to the parent company in the consolidated caliber for the first half of 2025 (accounting for 36.09% of the net profit attributable to the parent company in the consolidated caliber after deducting non-recurring gains and losses)