CICC’s preliminary 1Q26 results significantly beat expectations as Goldman reiterates a Buy rating on CICC-H

Overview

This report is Goldman’s take on the preliminary Q1 2026 results of China International Capital Corp. (3908.HK). The company guided 1Q26 attributable net profit to shareholders of RMB 3.4-3.9bn, up 65%-90% year over year, which is 27%-46% above Goldman’s expectation. The report argues that the cyclical recovery in A-share turnover, margin-financing balances, and equity financing activity supports broker earnings, but CICC’s relative outperformance likely comes more from its Hong Kong business, especially the strong growth in the Hong Kong IPO market.

Core views

Goldman reiterates a Buy rating on CICC-H. The core thesis is: first, 1Q26 earnings materially beat expectations, which should push the stock higher in the near term; second, stock appreciation may narrow the discount to the cash substitute exercise trigger point, thereby lowering the likelihood of cash substitute exercise; third, M&A integration is still progressing, and improved capital replenishment and capital usage efficiency are expected to improve ROE; fourth, the growth trajectory of Hong Kong and wealth management is key to confirming the quality of future earnings.

Analysis framework

The report compares the company’s 1Q26 earnings guidance with Goldman’s outlook and preliminary results of peer CITICS, and assesses the drivers using industry indicators such as A-share turnover, margin balance, ECM underwriting volume, and Hong Kong IPO proceeds. It also expresses the investment view through a 12-month target price, a 2027E P/E multiple, and upside potential.

Methodology notes

• Valuation methods12-month target price and 2027E P/E

  CICC-H target price is based on 11x 2027E P/E, while CICC-A target price is based on 18x 2027E P/E.

  Goldman assigns CICC-H a 12-month target price of HK$28.15 and CICC-A a 12-month target price of RMB42.26, each reflecting its implied valuation multiple assumptions on 2027 earnings.

• corporate eventsM&A integration

  M&A integration and the probability of cash substitute exercise

  The report views M&A integration as still progressing, with strong results potentially lifting the stock and narrowing the stock discount to the cash substitute exercise trigger price, thereby reducing the probability of cash substitute exercise being exercised.

• industry conditionsbroker business-volume indicators

  Trading volume, margin financing, ECM, and Hong Kong IPOs as leading indicators of broker performance.

  The report uses A-share trading volume, margin balance, equity financing scale, and Hong Kong IPO size to explain CICC’s earnings sensitivity versus peers.

Asset mapping & comparison

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

• 3908.HK

  core coverage name, CICC-H

  Strengths

  1Q26 performance significantly beat expectations; high Hong Kong contribution benefiting from strong recovery in the Hong Kong IPO market; Goldman expects ROE to continue improving as leverage rises, capital replenishment increases, and capital usage efficiency improves.

  Weaknesses

  M&A integration is still ongoing, and the market remains focused on transaction uncertainty; sustainability of earnings growth needs verification through detailed 1Q26 segment results.

  Comparison

  Compared with CITICS, whose 1Q26 net profit grew 57% year over year and was 25% above Goldman’s expectation, CICC guided growth of 65%-90% year over year and 27%-46% above Goldman’s expectation, indicating a larger outperformance.

  Risks

  Weaker Chinese capital markets than expected, OTC derivatives losses, decline in AUM and fee rates, rising cost-to-income ratio.

• 601995.SS

  same company A-share, presented as CICC-A

  Strengths

  If brokerage commissions and investment banking revenue improve, OTC derivatives and other income rise, and cost savings increase, the A-share has upside risk.

  Weaknesses

  The rating is Neutral, and target upside is lower than that of CICC-H.

  Comparison

  CICC-A target price is RMB42.26, current price RMB33.45, upside 26.3%; CICC-H target price is HK$28.15, current price HK$19.26, upside 46.2%.

  Risks

  Faces similar risks from capital market conditions, OTC derivatives, AUM and fee pressure, and capital efficiency.

Key data

• CICC 1Q26 net profit attributable to shareholders guidanceRMB 3.4-3.9bnUp 65%-90% year over year, 27%-46% above Goldman’s expectation.
• CITICS 1Q26 net profit attributable to shareholdersRMB 10.2bnUp 57% year over year, 25% above Goldman’s expectation, used for peer comparison.
• A-share stock and fund turnover1Q26 up 76% year over yearThe report sees this as one piece of evidence for improving industry conditions.
• A-share margin financing balance1Q26 up 36% year over yearMargin financing balance is about RMB 2.6tn.
• A-share equity financing volumeRMB 249bn in 1Q26The report states ECM underwriting volume was up 126% year over year.
• Hong Kong IPO financing volumeHK$110bn in 1Q26, up 489% year over yearThe report believes strong Hong Kong business may be a major source of CICC’s outperformance.
• Hong Kong business revenue contributionabout 30%This indicates a high impact of Hong Kong market recovery on overall company profitability.
• CICC-H target price and upsideHK$28.15; 46.2%Current price is HK$19.26, rating is Buy.
• CICC-A target price and upsideRMB42.26; 26.3%Current price is RMB33.45, rating is Neutral.

Impact & implications

The implications for CICC-H are tilted constructive. The 1Q26 earnings beat both strengthens expectations for an earnings recovery and may ease market concerns around M&A deal uncertainty. If the second board meeting can reduce M&A uncertainty, and subsequent detailed results confirm sustained growth in Hong Kong and wealth management, valuation may have further room to re-rate.

Risks

• Chinese capital markets may perform worse than expected.
• Losses in OTC derivatives business.
• Decline in AUM and fee rates.
• Rising cost-to-income ratio.
• M&A transaction or integration progress may disappoint.
• Growth in Hong Kong business and wealth management may fall short of expectations.

What to watch

• Whether the second shareholders’ meeting in April reduces market concerns about M&A transaction uncertainty.
• Detailed 1Q26 results, especially the growth trajectory of Hong Kong business and wealth management.
• Whether the discount of CICC-H shares relative to the cash substitute exercise trigger price continues to narrow.
• Whether A-share turnover, margin financing balance, ECM underwriting scale, and Hong Kong IPO funding levels remain at high levels.
• Whether ROE continues to rise with higher leverage in Hong Kong business, stronger capital replenishment, and improved capital efficiency.