Open-source Securities: Expansion of IPO combined with star projects getting approved. Investment bank lines may become a new catalyst for securities companies.

Open sourced securities released a research report stating that undervaluation, low allocation, and continuous profit exceeding expectations are key factors in the top securities firms. Marginally speaking, the funding pressure in the second quarter is expected to be relieved, and the expansion of IPOs combined with star projects getting approval are expected to directly catalyze high growth in securities firms' investment banking and investment chains. The profitability of securities firms continues to exceed expectations, emphasizing the continuous improvement of the ROE of securities firms under the three major medium- to long-term narratives: wealth management under deposit migration, overseas expansion under cross-border demand, and investment empowerment under the wave of technology. Continually emphasizing opportunities for the top securities firms. Securities: Significant expansion in IPOs in the second quarter, investment banking chain is expected to become a new catalyst for the securities sector (1) The average daily AUM of mutual funds was 3.69 trillion yuan last week, an increase of 4.5% month-on-month; the accumulated daily AUM of mutual funds this year is 3.2 trillion yuan, an increase of 96.90% year-on-year. The China Association of Mutual Funds disclosed the public offering fund data for April, showing that from the AUM perspective, the active equity fund (stocks + hybrid - stock ETFs, the same below), stock ETFs, bond funds, FOFs, and QDIIs in April increased by 9%, 1%, 5%, 6%, and 9% respectively. The IPO scale has shown a significant increase, and star projects have concentrated on attending meetings. The total financing scale of A-share IPOs in April-May reached 32.3 billion yuan, an increase of 25% compared to the overall 25.9 billion yuan in the first quarter; on May 27th, domestic storage chip leader Longxin Technology applied for listing on the Sci-Tech Innovation Board with a proposed financing of 29.5 billion yuan, becoming the second-largest IPO in the history of the Sci-Tech Innovation Board. Securities: The IPO expansion in the second quarter is accelerating, benefiting the entire securities industry chain, and star projects attending meetings are expected to become a new catalyst for the securities sector. Securities firms' performance in the second quarter is expected to continue to perform well, and it is recommended: the top securities firms with investment banking, overseas, and wealth management capabilities, CITIC SEC (600030.SH), Huatai (601688.SH), and CICC (03908) are preferred; followed by GF SEC (000776.SZ), Guotai Haitong (601211.SH), and Hithink RoyalFlush Information Network (300033.SZ), which are recommended for fully benefiting from the increase in trading volume. Insurance: The growth rate of insurance premiums from January to April has slowed compared to the first quarter, and the funding pressure has become an important factor suppressing valuations (1) On May 27th, the China Banking and Insurance Regulatory Commission released monthly insurance premium data, showing that the original premium income of life insurance companies and property insurance companies increased by 6.3% and 2.2% year-on-year respectively from January to April, slowing down from the previous 7.3% and 2.8% in the first three months. Among them, the original premium income of property insurance companies for car insurance in January-April decreased less than in the previous three months. (2) Under the pressure of funding, the valuation of the insurance sector continues to fall. Currently, the valuation level has dropped to a lower level. In the second quarter, liabilities are expected to continue to grow high in quality, and the net profit growth rate is expected to improve significantly compared to the first quarter. The long-term logic of stable interest rate differentials between the high-quality growth of the liability side brought about by deposit migration and the stable long-term interest rates does not change. It is recommended to focus on undervalued targets with high-quality growth of liabilities, pay attention to catalyzing the asset side and the liability side, and recommend Ping An Insurance (601318.SH) and China Pacific Insurance (601601.SH).