Damo: Reiterates CICC's (03908) “Overweight” Rating Target Price of HK$28.9

The Zhitong Finance App learned that Morgan Stanley released a research report saying that CICC (03908) has announced the details of the share exchange and merger. The implied net market ratio of the share exchange ratio (based on the third quarter of 2025) includes: 1.8 times that of CICC (601995.SH) A shares, 1.8 times (including a 26% premium) of Dongxing Securities (601198.SH), and 3.1 times that of Cinda Securities (601059.SH). The “gain” rating for CICC H shares was reiterated to reflect the upward space and limited dilution effect of the synergy. The target price was HK$28.9.

Damo estimates that the net asset dilution per share will be very limited, around 9%, and no additional financing plans have been announced. Management is confident of synergy and rapid integration. Net capital is expected to double after the merger, supporting more client-driven equity business and investment opportunities. CICC's capital leverage ratio may rise from 12% to 20% after the merger; the net stable capital ratio is also expected to increase, thereby saving some bond financing costs.

Damo also pointed out that CICC's wealth management business will also benefit significantly, and the number of customers is expected to increase by 51% to 14.7 million. After the merger, the number of branches is expected to increase by 78% to 436, significantly strengthening CICC's presence in key regions such as Fujian, Zhejiang and Guangdong. Management is confident that CICC will expand its leading wealth management business to a wider customer base, thereby increasing revenue.