CITIC Securities Continues to Gain Share Across Multiple Business Lines, with Derivatives and Institutional Clients as Key Growth Pillars

Overview

This report summarizes the key information from CITIC Securities’ management conference call. Morgan Stanley believes the company continues to expand its market share across trading, client coverage, margin financing and securities lending, A-share investment banking, derivatives, and other areas. Healthy balance sheet expansion and the allocation of newly raised capital are expected to support subsequent growth. The valuation uses P/B–ROE regression and probability-weighted scenarios to balance the upside from continued capital-market innovation against risks including macroeconomic and geopolitical pressures and a weaker-than-expected IPO recovery.

Core views

First, CITIC Securities has significantly increased its share of domestic securities trading. Its domestic trading volume market share reached 9.5% in 1H26, up from 8% in 2025, mainly driven by increased trading share among large institutional clients and in ETFs. This indicates that the market share growth did not arise solely from active market turnover but was also associated with an improved competitive position among key clients and product categories. Client coverage and investment product sales strengthened in tandem. The number of active clients increased by 9% from the beginning of the year, investment product sales rose 60% year over year, and related fees increased 91% year over year. Fee growth significantly exceeded sales growth, indicating an increased revenue contribution from the investment products business. Margin financing and securities lending market share also increased from 8.2% in 2025 to 8.3% in June 2026. Management stated that the company will focus on serving high-net-worth and institutional clients in the future, continuing its business strategy centered on high-value clients. In investment banking, the company currently has an A-share IPO pipeline of 58 deals with planned fundraising of more than Rmb100bn. Of the eight deals sponsored by CITIC Securities in 1H26, five received investments from the company’s proprietary PE funds, demonstrating business synergies between private equity investment and sponsored projects. The pace of the A-share IPO recovery is therefore both critical to converting the existing pipeline into revenue and an explicit upside and downside variable identified in the report. The balance sheet remains in a healthy expansion phase. Management stated that more than 60% of the recently raised Rmb16bn in capital will be allocated to the derivatives business. The primary allocation of new capital aligns with expanding derivatives demand and is expected to strengthen the company’s capacity in capital-intensive institutional businesses, although it also makes business performance more dependent on market volatility, regulatory arrangements, and institutional demand. Derivatives demand grew in 1H26 due to increased market volatility and rising demand for globally diversified allocations. The notional principal of CITIC Securities’ equity derivatives increased 13% quarter over quarter and 41% year over year to Rmb787bn, ranking first in China by scale. Despite tighter regulation of southbound equity total return swaps, management believes the regulatory focus is to reinforce the functional positioning of derivatives rather than prevent industry growth. Morgan Stanley believes derivatives currently serve primarily a risk-management function, but the importance of market access and leverage functions may also increase in the future. As domestic investors become more institutionalized, the industry’s growth potential is still expected to expand. Earnings forecasts show that EPS under Morgan Stanley ModelWare is expected to rise from Rmb2.01 in 2025 to Rmb2.65 in 2026, Rmb2.88 in 2027, and Rmb3.22 in 2028. Consensus EPS estimates for the same periods are Rmb1.96, Rmb2.65, Rmb2.94, and Rmb3.23, respectively. ModelWare net profit is expected to increase from Rmb29,037mn to Rmb39,281mn, Rmb43,624mn, and Rmb47,895mn, while ROE rises from 9.9% to 12.3%, 12.8%, and 12.9%. Over the same period, P/BV declines from 1.1x to 1.0x, 0.9x, and 0.8x, while the dividend yield increases from 2.8% to 4.5%, 5.0%, and 5.5%. Other model metrics show EBITDA of Rmb39,334mn, Rmb50,887mn, Rmb56,324mn, and Rmb61,615mn for 2025–2028, respectively; P/E of 7.3x, 8.4x, 7.5x, and 6.9x; RNOA of 8.5%, 10.7%, 11.1%, and 11.2%; and EV/EBITDA of 11.9x, 8.8x, 8.0x, and 7.4x. Together, these forecasts reflect the report’s expectations for earnings growth, improving returns, and declining forward valuation multiples. The valuation uses P/B–ROE regression and applies weights of 60% to the base case, 20% to the bull case, and 20% to the bear case, simultaneously reflecting the upside from continued capital-market innovation and the downside pressure from rising geopolitical risks. ROE under the base, bull, and bear cases is 13.3%, 16.8%, and 7.4%, respectively, corresponding to H-share P/B multiples of 1.31x, 2.20x, and 0.56x based on global peers, resulting in a final target P/B of 1.34x. On this basis, Morgan Stanley assigns a price target of HK$33.90 and maintains its Overweight rating and Attractive industry view.

Analysis framework

The report first distills the business metrics disclosed during management’s conference call, sequentially examining trading share, clients and product sales, margin financing and securities lending, the IPO pipeline, capital deployment, and derivatives scale. It then explains the growth mechanism in the context of the regulatory environment and the institutionalization of domestic investors. Earnings metrics are primarily based on Morgan Stanley ModelWare and compared with Refinitiv consensus estimates. The valuation uses P/B–ROE regression, global peer benchmarks, and probability-weighted base, bull, and bear cases.

Methodology notes

• Valuation MethodPB valuation

  P/B–ROE Regression Analysis

  The report estimates the corresponding H-share P/B under different ROE scenarios and determines a valuation range with reference to global peers, ultimately deriving a target P/B of 1.34x.

• (Out-of-Vocabulary Method)

  Probability-Weighted Base, Bull, and Bear Cases

  The report assigns weights of 60%, 20%, and 20% to the base, bull, and bear cases, respectively, to balance the upside from capital-market innovation against the downside pressure from geopolitical risks.

• (Out-of-Vocabulary Method)

  Morgan Stanley ModelWare Forecasting Framework and Consensus Comparison

  The report uses ModelWare as the primary basis for financial forecasts and maps data labeled as consensus estimates to Refinitiv Estimates to compare the institution’s forecasts with market expectations.

Asset mapping & comparison

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

• CITIC Securities (6030.HK)

  The report believes the company continues to expand its market share in domestic trading, margin financing and securities lending, A-share investment banking, equity derivatives, and other areas, and maintains its Overweight rating.

  Strengths

  Increased trading share among large institutional clients and in ETFs, with growth in active clients and the investment products business; an A-share IPO pipeline of 58 deals; equity derivatives notional principal of Rmb787bn, ranking first in China; and a balance sheet that continues to expand healthily.

  Weaknesses

  Business growth and valuation are relatively sensitive to capital-market activity, the recovery of A-share IPOs, and the derivatives regulatory environment.

  Comparison

  The H-share P/B multiples in the valuation scenarios are benchmarked against global peers; the company ranks first in China by equity derivatives scale.

  Risks

  Rising macroeconomic risks, geopolitical risks, black swan events, policy errors and delayed responses, and lower-than-expected A-share IPO issuance.

Key data

• Domestic Trading Volume Market Share9.5% in 1H26It was 8% in 2025, with growth mainly driven by increased trading share among large institutional clients and in ETFs.
• Number of Active ClientsIncreased 9%Increase from the beginning of 2026.
• Investment Product SalesIncreased 60% year over yearRelated fees increased 91% year over year.
• Margin Financing and Securities Lending Market Share8.3% in June 2026It was 8.2% in 2025.
• A-share IPO Pipeline58 deals with planned fundraising of more than Rmb100bnOf the eight deals sponsored in 1H26, five received investments from the company’s proprietary PE funds.
• Recently Raised Capital and Its UseRmb16bn, with more than 60% allocated to derivativesManagement stated that the company remains in a phase of healthy balance sheet expansion.
• Equity Derivatives Notional PrincipalRmb787bnIn 1H26, it increased 13% quarter over quarter and 41% year over year, ranking first in China by scale.
• ModelWare EPSRmb2.01 / 2.65 / 2.88 / 3.22Corresponding to 2025, 2026, 2027, and 2028, respectively.
• Consensus EPSRmb1.96 / 2.65 / 2.94 / 3.23Corresponding to 2025, 2026, 2027, and 2028, respectively.
• ModelWare Net ProfitRmb29,037mn / 39,281mn / 43,624mn / 47,895mnCorresponding to 2025, 2026, 2027, and 2028, respectively.
• EBITDARmb39,334mn / 50,887mn / 56,324mn / 61,615mnCorresponding to 2025, 2026, 2027, and 2028, respectively.
• ROE9.9% / 12.3% / 12.8% / 12.9%Corresponding to 2025, 2026, 2027, and 2028, respectively.
• P/E7.3x / 8.4x / 7.5x / 6.9xCorresponding to 2025, 2026, 2027, and 2028, respectively.
• P/BV1.1x / 1.0x / 0.9x / 0.8xCorresponding to 2025, 2026, 2027, and 2028, respectively.
• RNOA8.5% / 10.7% / 11.1% / 11.2%Corresponding to 2025, 2026, 2027, and 2028, respectively.
• EV/EBITDA11.9x / 8.8x / 8.0x / 7.4xCorresponding to 2025, 2026, 2027, and 2028, respectively.
• Dividend Yield2.8% / 4.5% / 5.0% / 5.5%Corresponding to 2025, 2026, 2027, and 2028, respectively.
• Valuation Scenario WeightsBase 60% / Bull 20% / Bear 20%Used to balance the upside from capital-market innovation against geopolitical risks.
• Scenario ROEBase 13.3% / Bull 16.8% / Bear 7.4%Used for P/B–ROE regression valuation.
• Scenario H-share P/BBase 1.31x / Bull 2.20x / Bear 0.56xBased on global peers, with a target P/B of 1.34x.

Impact & implications

The report believes market share gains across multiple business lines enable CITIC Securities to benefit simultaneously from growth in institutional clients, investment product sales, the recovery of A-share projects, and expanding derivatives demand. Concentrating newly raised capital on derivatives could reinforce its existing scale leadership, but the realization of earnings and valuation remains dependent on capital-market activity, the IPO recovery, the regulatory positioning of derivatives, and the macroeconomic and geopolitical environment.

Risks

• Macroeconomic risks may be higher than expected.
• Rising geopolitical risks could depress capital-market activity and valuations.
• Black swan events or policy errors combined with delayed responses could affect the market and the company’s business performance.
• Lower-than-expected A-share IPO issuance could hinder the conversion of the investment banking pipeline into revenue.

What to watch

• Monitor whether China’s macroeconomy recovers more quickly and whether geopolitical risks decline.
• Monitor any progress in group consolidation or mergers and acquisitions among leading securities companies.
• Monitor whether A-share IPO issuance can recover more quickly.