HTSC's interim performance meeting raised an "optimistic" voice: The continued market activity is expected to have a positive impact on the brokerage's operating performance

As one of the leading securities firms among the "Three Central One Hu" group, Huatai Securities' performance in the first half of the year has been a point of concern. Although their industry ranking has slightly declined following the completion of the acquisition of Guotai Junan and Haitong, it is undeniable that, whether in specific business areas or overall operations, Huatai Securities remains a "strong player" in the industry.

In this communication, Huatai Securities' Executive Director, CEO, and Executive Committee Chairman Zhou Yi, Executive Committee member and Board Secretary Zhang Hui, Chief Financial Officer Jiao Xiaoning, and Independent Non-Executive Directors Wang Jianwen and Peng Bing participated in the meeting and answered questions from investors.

The management responded to questions regarding the sustainability of high growth in the second half of the year, how to build a first-class international investment bank, whether there are any merger and acquisition plans in the future, and the factors behind the growth in the company's net profit margin.

Can high-speed growth be maintained in the second half of the year?

Regarding whether high-speed growth can continue in the second half of 2025, Zhou Yi, Executive Director, CEO, and Executive Committee Chairman of Huatai Securities, stated that this year is an important year for Huatai Securities to comprehensively promote internationalization and digital intelligence development. The strategic goal of building a first-class investment bank will be firmly anchored, fully seizing new development opportunities in policies and markets, deepening the "dual-wheel drive" development strategy of wealth management and institutional services empowered by technology, and continuing to maintain a steady and progressive development pace to consolidate and enhance operational performance, core business competitiveness, and digital financial development capabilities to maintain a leading position in the industry.

Zhou Yi also revealed that in the future, Huatai Securities will focus on customer value and strive to promote innovation in business and service models. In terms of corporate client services, they will actively seize the strategic opportunity of Chinese enterprises continuing to "go global," further enhancing the comprehensive service level and project execution efficiency across multiple domestic and international markets and products, and continue to strengthen their leading market position.

Secondly, deepen international layout and continuously extend financial services along the global value chain. They will accelerate the expansion of the global customer service network, continuously expand the coverage of quality assets, more deeply integrate into international markets, and firmly promote the integrated layout of domestic and foreign talent reserves and infrastructure construction.

Thirdly, embrace technological transformation and achieve new breakthroughs in more key intelligent scenarios. They will deepen the "All in AI" strategy and continue to enhance the effectiveness of AI applications in key areas such as intelligent investment research, intelligent investment advisory, and intelligent investment banking.

What impact does market activity have on performance?

Zhou Yi also mentioned that since the third quarter, market trading volume has remained active, which is expected to have a positive impact on the company's subsequent operating performance.

He stated that Huatai Securities will actively seize the new round of policy and market development opportunities, relying on the "dual-wheel drive" development strategy to fully promote the quality and efficiency improvement of core businesses such as wealth management, institutional services, and investment management, while further deepening the pace of internationalization and digital intelligence development, consolidating and enhancing the company's comprehensive strength and leading advantages, and firmly building a first-class investment bank.

As for whether the company has the possibility of acquiring smaller securities firms, he stated that there are other significant matters that have not been disclosed.

Why Did the Profit Margin Increase?

Regarding the question of why the gross profit margin has improved, Chief Financial Officer Jiao Xiaoning stated that the Ministry of Finance issued the "Implementation Q&A on Accounting Treatment Related to Standard Warehouse Receipts" on July 8 of this year, which further specified the accounting treatment for the buying and selling of standard warehouse receipt transactions. Based on this, the company required changes to the accounting policies for related businesses and adjusted the corresponding operating revenue and operating costs. This accounting treatment reduced the company's operating revenue but did not affect net profit, resulting in an increase in the company's net profit margin.

As for the reason why cash flow dropped to 140%, Executive Committee member and Board Secretary Zhang Hui stated that the growth in the scale of other debt investments and other equity instrument investments in the first half of 2025 led to an increase in cash outflows for investment payments, which is the main reason for the cash outflow from investment activities.

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