Chinese Brokerages Post 23.5% Average H1 Net Profit Growth; Major IPOs Expected to Drive H2 Momentum
nashnova research
China's 150 brokerages grew average net profit 23.5% year-on-year in the first half, led by brokerage and advisory fees; Citi sees roughly 36% upside for H-share broker stocks — but delivery hinges on whether mega-IPOs materialize in the second half.
How much did brokerages earn in H1?
Securities Association of China data: 150 brokerages posted 23.5% average net-profit growth and 31% revenue growth year-on-year.
This means → the sector is still in expansion mode, with profit growing faster than revenue — a sign that costs are improving too.
The biggest contributor was brokerage commissions — fees earned from executing stock trades — which jumped 51%, fueled by active A-share turnover.
Which business line grew fastest?
Investment advisory services — research reports and wealth-management advice sold to clients — posted 57.24% net-revenue growth, the highest of any business line.
This reflects a rapid rise in demand for professional research and portfolio guidance.
In plain terms = both retail and institutional clients are increasingly willing to pay someone to help them pick stocks and read the market.
What will drive growth in H2?
Underwriting and sponsorship — the business of taking companies public and issuing bonds for a fee — is expected to ramp up significantly in the second half.
Mega-IPO deals are seen as the next growth engine, adding investment-banking revenue to brokerages' income mix.
This means → if a few blockbuster IPOs land on schedule, brokerages can diversify from "commission income that rises and falls with trading volume" toward steadier underwriting fees.
What does Citi think of the sector?
Citi forecasts roughly 11% return on equity (ROE — how much profit each dollar of net assets generates) for its covered Chinese brokerages in 2026.
That implies a price-to-book ratio above 1×, translating into average potential upside of about 36% for H-share broker stocks.
In plain terms = Citi believes these stocks are undervalued by roughly a third — provided the ROE target is met.
Where is the biggest uncertainty?
Whether ROE can be sustained after mega-IPOs land is the key test for the sector's valuation thesis in H2.
This means → if the IPO pipeline slows or the market cools, Citi's 36% upside estimate could shrink materially.
Put simply = the profit-growth story has played out for the first half; the second half depends on investment banking picking up the baton.
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