CITIC Securities 1Q26 results beat expectations, but H-shares remain Neutral

Overview

This report is Goldman Sachs' review of CITIC Securities' 1Q26 results. The company reported 1Q26 revenue of about Rmb 23bn and net profit of about Rmb 10bn, up 41%/53% YoY, with overall strong performance. Key positives included record industry ADTV driving brokerage growth, investment income above expectations, asset management revenue supported by China AMC AUM growth, and a cost-to-income ratio below expectations. The main drag came from investment banking revenue falling short of Goldman Sachs' forecast, reflecting pressure on ECM and DCM market share.

Core views

Goldman Sachs' core view is that most of CITIC Securities' business lines outperformed expectations in 1Q26, but investment banking was the key weak spot. Looking ahead, market focus will center on the IPO pipeline and competitive landscape in investment banking amid tighter Hong Kong regulation, the drivers behind ROE improvement and room for leverage expansion, and cost trends that could arise from staff shortages in active markets.

Analysis framework

The report uses a combination of earnings breakdown, business-line comparisons versus Goldman Sachs' forecasts, YoY/QoQ trend analysis, and valuation multiples and target-price framework to assess the quality of 1Q26 results, earnings forecast revisions, and A/H share rating differences.

Methodology notes

• Valuation methodsP/E target multiple

  Target P/E multiple

  Goldman Sachs maintains target P/E multiples of 16x/11x for A/H shares, respectively, deriving 12-month target prices of Rmb39.96/HK$29.95 based on 2027E P/E.

• Factor analysisGS Factor Profile

  Goldman Sachs factor profile

  GS Factor Profile compares a stock against the covered market and industry peers on a percentile basis across growth, financial returns, valuation multiples, and composite factors.

• M&A frameworkM&A Rank

  M&A probability rating

  Goldman Sachs' M&A Rank measures the probability of a company becoming an acquisition target on a scale from 1 to 3; in this report, CITIC Securities has an M&A Rank of 3, indicating low probability and typically not included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 6030.HK

  Primary covered stock, H-shares

  Strengths

  Brokerage, investment income, asset management, and cost efficiency all beat expectations; target price raised to HK$29.95.

  Weaknesses

  Investment banking revenue was below expectations, and H-share upside is only 12.5%.

  Comparison

  Relative performance versus Hang Seng China Ent. is +30.7% over 12 months.

  Risks

  Weaker capital markets, declining AUM, slower investment income growth, and rising expenses.

• 600030.SS

  A-shares of the same company

  Strengths

  Rated Buy, with a target price of Rmb39.96 and implied upside of 52.3%.

  Weaknesses

  Also faces investment banking and capital market cycle risks.

  Comparison

  The target P/E multiple for A-shares is 16x, higher than the 11x for H-shares.

  Risks

  If market turnover declines or earnings forecasts are revised down, valuation and target price may come under pressure.

Key data

• 1Q26 revenueRmb 23bnUp 41% YoY, in line with the preannouncement.
• 1Q26 net profitRmb 10bnUp 53% YoY, in line with the preannouncement.
• Brokerage commission incomeRmb 4.9bnUp 48% YoY / 29% QoQ, 27% above Goldman Sachs' forecast.
• Investment banking revenueRmb 1.2bnUp 24% YoY, down 54% QoQ, 31% below Goldman Sachs' forecast.
• Investment incomeRmb 12bnUp 32% YoY / 70% QoQ, 14% above Goldman Sachs' forecast.
• Asset management revenueRmb 3.5bnUp 37% YoY / 1% QoQ, 14% above Goldman Sachs' forecast.
• Net interest incomeRmb 1bnUp 22% QoQ, 17% above Goldman Sachs' forecast.
• Cost-to-income ratio41.1%Below Goldman Sachs' forecast of 46.6%.
• 1Q26 ROE12.5%Up 4 percentage points YoY/QoQ, 2 percentage points above Goldman Sachs' forecast.
• 12-month H-share target priceHK$29.95Previously HK$28.13, rating maintained at Neutral.

Impact & implications

Strong results support Goldman Sachs' upward revision to its 2026E-2028E revenue and net profit forecasts, but the H-shares remain Neutral due to limited target-price upside. The A-shares retain a Buy rating with greater implied upside. Going forward, investors need to assess whether the high-turnover environment can persist, whether investment banking can recover, whether leverage expansion is sustainable, and whether cost efficiency can be maintained in an active market.

Risks

• Weakening capital markets could further slow revenue growth.
• Asset management AUM or fee rates may decline.
• Investment income growth may slow.
• Rising operating expenses could keep the cost-to-income ratio elevated.
• Tighter Hong Kong regulation and intensified competition may affect the IPO pipeline and investment banking market share.

What to watch

• Hong Kong's IPO pipeline and the competitive landscape in investment banking.
• The drivers of ROE improvement and room for leverage expansion.
• Whether the high-turnover environment can be sustained.
• Cost trends, especially expense pressure from potential staff shortages amid active markets.
• Whether China AMC AUM growth can continue to support asset management revenue.