China Aviation Securities: Major restructuring plans released by CICC, Dongxing Securities, and Cinda Securities to help speed up the construction of first-class investment banks

The Zhitong Finance App learned that China Aviation Securities released a research report saying that under the trend of policies promoting high-quality development in the securities industry, mergers and acquisitions are an effective means for brokerage firms to achieve epitaxial development. Brokers' mergers, acquisitions and restructuring have a positive effect on enhancing the overall competitiveness of the industry, optimizing resource allocation, and promoting healthy market development. At the same time, industry integration helps increase industry concentration and form a scale effect. It is recommended to focus on potential mergers and acquisitions that may win the bid and leading brokerage firms.

The main views of China Aviation Securities are as follows:

Incidents:

On December 17, CICC (601995.SH), Dongxing Securities (601198.SH), and Cinda Securities (601059.SH) issued major asset restructuring plans. The specific implementation method for this transaction was for CICC to absorb and merge Dongxing Securities and Cinda Securities. As the surviving entity, CICC has an exchange price of 36.91 yuan/share, the share exchange price of the merged Fangdongxing Securities exchange price is 16.14 yuan/share, and the share exchange price of Cinda Securities is 19.15 yuan/share. The exchange ratios for A-shares of Dongxing Securities, Cinda Securities and CICC were 1:0.4373 and 1:0.5188, respectively. The number of A-shares issued by CICC for this share exchange was 3,096,016,826 shares.

Accelerate the construction of first-class investment banks

In this restructuring, CICC will absorb and merge Dongxing Securities and Cinda Securities by issuing A shares to all A-share exchange shareholders of Dongxing Securities and issuing A shares to all A-share exchange shareholders of Cinda Securities. This restructuring involves both A+H listed companies absorbing and merging two A-share listed companies at the same time. Previously, the three brokerage firms suspended trading on November 20 and resumed trading on December 18. CICC said that through this restructuring, after the merger, the company will enhance its ability to integrate resources, exert scale effects, strengthen customer coverage, regional layout and resource collaboration, and make better use of capital to support important strategic layouts and key business development, enhance industry competitiveness and market leadership, and accelerate the achievement of the strategic goal of building a first-class investment bank with international competitiveness.

Increased scale after merger

After the transaction is completed, according to static data estimates for the first three quarters of 2025, after the merger, CICC's revenue will be about 27.4 billion yuan, the number of business outlets will increase from 245 to 436, and the number of retail customers will increase from 9.72 million to more than 14 million. This transaction will help CICC enhance its comprehensive strength, achieve complementary advantages, optimize its business layout, and effectively enhance the company's core competitiveness in terms of capital strength, customer base, and comprehensive services.

Merger enhances comprehensive strength and enhances profitability

This merger is an integration of Huijin (Central Huijin Investment Co., Ltd.) brokerage licenses. After the merger is completed, CICC will strongly complement the differentiated advantages of Dongxing Securities and Cinda Securities in terms of network coverage, customer base and capital strength with its leading expertise in integrated investment banking, professional investment, cross-border business and wealth management. Through the combination of the advantages of both parties, CICC will further deepen the integration of customer resources and the transformation of comprehensive services, and provide comprehensive and high-quality comprehensive financial solutions for a wider range of customer groups, thus achieving multi-dimensional and multi-level business collaboration and unlocking greater strategic value. Looking further, the merger will directly enhance CICC's capital strength and ability to integrate customer resources, and consolidate its leading position in the industry. “Scale effect+business collaboration” will become the company's core growth engine, drive performance growth, optimize revenue structure, raise profit levels, and enhance its ability to serve national strategies.

Risk warning: Mergers, acquisitions and restructuring have fallen short of expectations, industry reforms have fallen short of expectations, and capital markets have fluctuated greatly.