Bank of America Securities: Raising the target price of China Merchants Securities (06099) to HK$17.5, strong return on technology IPOs

The Zhitong Finance App learned that Bank of America Securities released a research report saying that the net profit of China Merchants Securities (06099) for the second quarter increased 155% year-on-year, and increased 125% quarterly to 7.4 billion yuan, in line with previous profit forecasts. Investment income from technology stock IPOs during the period became the main growth driver. Revenue for the first half of the year increased 108% year over year to RMB 22 billion. Brokerage business, underwriting business, net interest income and transaction revenue all recorded strong growth. Net profit for the first half of the year surged 105% year-on-year to RMB 10.6 billion, reaching 86% of the profit for the full year of 2025. The target price was raised from HK$16.6 to HK$17.5, maintaining the “buy” rating.

According to the bank, the PE and investment subsidiaries of China Merchants Securities contributed RMB 5.9 billion in revenue in the first half of the year, accounting for about 56% of total profit, benefiting from the strong rise in technology stocks and IPO proceeds. The Group held about 0.7% of Changxin Storage (688825.SH)'s shares after listing. Based on its latest market value of about 3.8 trillion yuan, the potential investment income exceeds 10 billion yuan. Even considering liquidity discounts, Bank of America Securities still expects China Merchants Securities to record a considerable increase in trading income and net profit in the second half of the year. Bank of America Securities raised China Merchants Securities's 2026-2028 earnings forecast by 10% to 33% in response to the increase in the average daily turnover forecast of A-shares and the increase in investment income expectations for technology IPOs.