China Merchants Securities forecasts record 110 billion yuan half-year profit

China Merchants Securities forecast H1 net profit of as much as 110 billion yuan, a record for the Chinese brokerage, as A-share trading nearly doubled.

"The company's operating results hit a record high for the period," China Merchants Securities said in a filing, citing a stable economic environment and the stock market's upward trend. The brokerage deepened its focus on technology, green, inclusive, pension and digital finance under its strategic plan.

The company expects net profit attributable to shareholders of 100 billion yuan to 110 billion yuan for the six months ended June 30, up 93% to 112% from a year earlier. That implies second-quarter profit of 67.3 billion yuan to 77.3 billion yuan, more than double the 32.7 billion yuan earned in the first quarter. The brokerage did not disclose revenue or earnings per share figures.

The record result shows the boom in China's A-share market, where daily turnover has surged as retail investors piled in. China Merchants Securities shares closed at 20.65 yuan on July 7, up more than 50% from a March low. The stock's rally mirrors a broader surge in Chinese brokerage shares, with Guotai Haitong Securities also flagging strong half-year results.

The brokerage sector has been one of the best-performing groups in the A-share market this year, as near-doubled trading volumes boosted commission income and margin lending revenue. China Merchants Securities' second-quarter profit acceleration suggests the momentum strengthened as the year progressed. The company's strategy focuses on technology-driven finance and international expansion as key growth areas.

A potential additional catalyst is the company's 0.84% stake in ChangXin Memory Technologies, a Chinese DRAM maker. China Merchants Securities holds the position through its wholly owned subsidiaries Zhaosheng Investment and Zhaosheng Yuancheng Capital. Market estimates value CXMT at 2 trillion yuan to 3 trillion yuan after an IPO, though the timing and valuation remain uncertain.

The record profit shows that China's brokerage sector is capturing the full benefit of elevated retail trading activity. Investors will watch whether the company can sustain this momentum into the second half, with the CXMT IPO representing a potential multi-billion yuan windfall.

This article is for informational purposes only and does not constitute investment advice.