Huatai Securities: Bullish on the valuation repair opportunity of the securities industry with a high cost-performance ratio.

Haitong Securities research report states that the net profit attributable to the parent company of listed securities firms and large securities firms increased by 62% and 56% respectively in the first 9 months before 2025. The core changes to be focused on in the third quarter report of large securities firms are as follows: 1. The expansion of total assets continues, with both financial investment and customer funds increasing. 2. Investment-driven growth with an increase in proprietary leverage. 3. Brokerage income grows with significant growth in margin financing. 4. Investment banking is warming up at a low level, and asset management remains stable. Looking ahead, the underlying logic of the capital market is changing, deepening the coordination of investment and financing, while the reshaping of asset allocation in the low interest rate era is forming a positive cycle of incremental funds. In this context, the operational environment for securities firms is improving, with enhanced performance elasticity and sustainability, presenting a good opportunity for the valuation recovery of the sector with high cost-effectiveness. Currently, the valuations of A-shares and H-shares in the sector are still at medium and low levels, and the selection of targets should focus on: 1. Hong Kong stocks with better valuations and smaller floating shares; 2. A-share leading companies with cost-effective valuations; 3. Medium-sized securities firms with unique characteristics.