Glonghui, Feb. 8 | DBS published a research report saying that Haitong Securities's diverse products used to be an advantage, but increased market and credit risk in its offshore brokerage business and financial leasing entities are dragging down the Group's profit prospects. The bank believes that privatizing its offshore brokerage business is the right step to strengthen regulation and rationalize the investment portfolio, but it is cautious about possible further asset depreciation in the near future. The bank lowered the Group's earnings estimates for FY2023 and FY24 by 90% and 71%, respectively, to reflect investment losses, credit impairment and weak expense revenue performance. The bank believes that in the process of rationalizing the portfolio, the group said it may continue to be unsatisfactory. However, as China's economy stabilizes and the US cuts interest rates, the A-share market may rebound at the end of the year and push capital back to China. At that time, potential favorable factors for the policy may emerge to support the recovery of fees for brokerage firms and public funds. The bank further lowered the target price of Haitong Securities from HK$5.5 to HK$3.7, maintaining the “hold” rating.