With the completion of the third quarter report disclosure, the performance of many brokerages has increased significantly year-on-year. Overall, in the first three quarters, 50 listed brokerages or main listed entities achieved revenue of 387.488 billion yuan, and a total of 110.301 billion yuan in net income attributable to the parent company.

Against this backdrop, brokerage stocks in Hong Kong and mainland China have once again become active. In the Hong Kong stock market, China Galaxy, CITIC Securities, and China Merchants Securities rose by over 5%, while Shenyin Wanguo, GF Securities, Guolian Securities, and Oriental Securities rose by over 4%.

In the A-share market, Harbin Hatou Investment, First Capital, and Tianfeng Securities hit the limit up, Dongbei Securities rose by 8.76%, Changjiang Securities rose by 7.76%, Sealand Securities rose by 6.09%, Dongxing Securities, Caitong Securities, and CITIC Securities rose by over 3%.

Institutional analysis points out that with the implementation of a series of capital market policies on September 24th, under the favorable policy environment, investment sentiment has improved, market trading activity has significantly boosted, benefiting brokerage firms' brokerage, asset management, margin financing, and other core businesses, thereby enhancing brokerage firms' profit capabilities.

The growth rate of performance of many brokerage firms exceeded 100%.

As the most direct beneficiaries of the stock market's rise, the brokerage sector has shown positive changes in the third quarter.

In terms of net income, Citic Securities ranked first, achieving a net income attributable to the parent company's shareholders of 16.799 billion yuan in the first three quarters; in addition, Huatai Securities also achieved a profit of billions, with a net income attributable to the parent company's shareholders of 12.521 billion yuan in the first three quarters.

Following closely are GTJA (9.523 billion yuan), China Merchants Securities (7.15 billion yuan), China Galaxy Securities (6.964 billion yuan), GF Sec (6.764 billion yuan), East Money Information (6.042 billion yuan), Guosen Securities (4.879 billion yuan), CSC, Ltd. (4.297 billion yuan), and others.

In terms of revenue, Citic Securities, Huatai Securities, and GTJA rank in the top three, achieving revenues of 46.142 billion yuan, 31.424 billion yuan, and 29.001 billion yuan in the first three quarters, with year-on-year growth of 0.73%, 15.40%, and 7.29% respectively.

Among them, China Galaxy Securities, GF Sec, CSC, Ltd., China Merchants Securities, Swhy, Orient, China International Capital Corporation, Haitong Sec, Guosen Securities, and Zheshang have revenues exceeding billions.

However, some companies are facing significant performance pressure, such as Haitong Sec, which reported a net loss of 0.659 billion yuan in the first three quarters. The company attributed this mainly to a decrease in net fee and commission income, as well as investment income.

Tianfeng Securities, which has seen multiple daily limit up movements, also reported a loss of 0.536 billion yuan in the first three quarters, with a net loss of 0.548 billion yuan attributable to shareholders of the listed company after deducting non-recurring gains and losses, resulting in a basic loss per share of 0.06 yuan/share.

Thanks to their proprietary business, many small and medium-sized brokerage firms have achieved profit growth.

According to the third quarter report, East Money Information achieved a total investment income and fair value change income of 2.406 billion yuan in the first three quarters, a year-on-year increase of 49.26%. The company pointed out that the increase was due to the increase in income from the securities' proprietary fixed income business.

China Securities Co., Ltd. saw a significant increase in investment income and fair value change income, with the consolidated income statement in the third quarter report showing a total revenue of 21.83 billion yuan from proprietary business from January to September, a year-on-year increase of 33.95%.

China Merchants Securities stated that the main reason for the significant increase in net income attributable to shareholders in the third quarter was the impact of increased revenue from proprietary business; Sealand Securities stated that benefiting from the improvement in the market, the company's third-quarter sales, trading and investment, retail wealth and other business revenues showed stable growth.

Performance and valuation are expected to rise together.

Since the beginning of this year, the brokerage industry has continuously received policy dividends.

On September 20, the China Securities Regulatory Commission issued the revised "Regulations on the Calculation Standards for Risk Control Indicators of Securities Companies", further improving the risk control indicator system of securities companies, promoting securities companies to implement comprehensive risk management requirements, enhancing the quality and efficiency of serving the real economy, promoting high-quality development of securities companies, and will take effect on January 1, 2025.

It is worth noting that the new regulations optimize the calculation standards for risk control indicators of securities companies in stock investment and market-making businesses, supporting compliant and stable quality brokerage firms to moderately improve capital efficiency.

On the date, the central bank announced the establishment of the 'securities, funds, insurance companies exchange convenience,' and started accepting applications from qualified securities, funds, and insurance companies, which further enriched the policy of the bullish brokerage sector. Industry insiders pointed out that the economic recovery expectations and active capital market policies in the second half of the year will promote incremental funds entering the market, activate the capital market, and consequently boost the fundamentals and valuation of brokerages.

In addition, significant progress has been made in corporate mergers and acquisitions cases, becoming an important factor attracting investors' attention and market funds to the brokerage sector.

Gtja and Haitong Sec resumed trading, and their stock prices soared. In addition to these two leading announcements, the acquisition of Wanhe Securities by Guosen Securities, Zheshang Securities taking a controlling stake in Guodu Securities, and the planned acquisition of Guorong Securities by West Securities are also driving the wave of consolidation in the brokerage sector.

Looking ahead, Hualong Securities stated that the recent surge in market turnover, top brokerages participating in the exchange convenience scheme are expected to obtain lower-cost investment funds to buy equity assets, and the influx of incremental funds will also boost the capital market, creating a virtuous cycle, benefiting the brokerage's performance in the fourth quarter. At the same time, the Ministry of Finance's policy on additional issuance of national bonds is expected to materialize. Under the premise of policy outperforming expectations, brokerage performance and valuation are expected to rise simultaneously, and regulatory policy catalysts will be long-term beneficial to the valuation improvement of listed brokerages.

Zhonghang Securities also pointed out that with continuous policy and liquidity support, the confidence in the current capital market is expected to further strengthen, providing substantial benefits to brokerages' brokerage, wealth management, investment, and other business areas. Currently, clear regulatory encouragement for industry consolidation, driven by the trend of policy promoting high-quality development of the securities industry, mergers and acquisitions are an effective means for brokerages to achieve extensional growth. Brokerage mergers and acquisitions contribute to enhancing the overall competitiveness of the industry, optimizing resource allocation, and promoting healthy market development. Industry consolidation also helps to increase industry concentration and generate economies of scale.

It is expected that the pace of mergers and acquisitions in the industry will continue to accelerate. It is recommended to focus on potential merger and acquisition targets such as gtja, Guolian Securities, Zheshang Securities, as well as leading brokerages like Citic Sec, HTSC, and so on.