Citi: Opens 30-day positive catalyst watch on CICC (03908), expects Q3 net profit to rise 120% to 150%

Citi issued a research report stating that CICC (03908) delivered strong Q3 results, and it has opened a 30-day positive catalyst watch on the H-shares, expecting Q3 profit of approximately RMB 5.0-5.5 billion, up about 120%-150% year-on-year, beating market expectations of about RMB 3.2 billion. CICC H-shares are Citi's top pick among Chinese brokers. The bank noted that the strong profit was mainly driven by mark-to-market gains on CXMT Corporation (688825.SH) (a RMB 1 billion stake, IPO price of RMB 8.66 per share versus RMB 55 per share at end-Q3 2026), strong investment banking revenue, and a low base in Q3 2025. Although CICC's A-share issuance may create short-term selling pressure (the issue price implied by the share swap ratio represents a roughly 7% discount to CICC's current A-share price), the new shares allotted to CHINA CINDA Group and CHINA ORIENTAL carry a 3-year lock-up period, while the remaining new shares represent only 19%/28% of CICC's post-acquisition total A-share capital/free float, which appears relatively easy to absorb. The bank believes that the outperforming Q3 results, together with a possible increase in the dividend payout ratio in 2026, a current price equivalent to 0.7x 2026 forecast P/B, and a return on equity in the low double-digit percentage range, make the valuation attractive.