Goldman Sachs: CITIC Securities (06030)'s second-quarter profit was driven by investment income, and the target price was raised to HK$33.51

The Zhitong Finance App learned that Goldman Sachs released a research report stating that it will raise the target price of CITIC Securities (06030) from HK$33.46 to HK$33.51, and the target price for A shares (600030.SH) from RMB 44.64 to RMB 44.72. The company's second-quarter revenue and net profit were 26.5 billion yuan and 13.4 billion yuan respectively, up 74% and 82% year over year, which is roughly in line with initial results. During the period, brokerage business commission revenue was RMB 4.9 billion, investment bank revenue was RMB 1.8 billion, asset management revenue was RMB 3.7 billion, and investment income was RMB 15.5 billion, which was 19% higher than the bank's forecast, and net interest income of 700 million yuan. The cost-revenue ratio was 35.3%, slightly higher than the bank's estimate of 34%. The annualized return on shareholders' equity for the second quarter was 15.3%, up 6 percentage points year-on-year and 2.8 percentage points quarter-on-quarter. This is roughly in line with expectations, with an active leverage ratio of 5.1 times.

Overall, Goldman Sachs believes that this performance is in line with the bank's recent views on the industry, which is that Chinese brokerage firms will continue to benefit from strong capital market activity, record average daily A-share turnover, enthusiastic Hong Kong IPO financing, and improved capital utilization efficiency. At the same time, the bank maintains its original view that medium-term profit and upward valuation space will increasingly rely on increased shareholders' return on equity (ROE) through balance sheet expansion and international capital allocation, rather than simply on the popularity of cyclical market transactions.