| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 30.66 | 342 |
| Intrinsic value (DCF) | 5.49 | -21 |
| Graham-Dodd Method | 3.60 | -48 |
| Graham Formula | 11.22 | 62 |
First Capital Securities Co., Ltd. (002797.SZ) is a prominent Chinese securities firm established in 1993 and headquartered in Shenzhen. As a comprehensive financial services provider, the company operates across multiple business lines including securities brokerage, investment banking, asset management, fixed-income trading, and proprietary investments. First Capital Securities serves a diverse client base with products ranging from treasury bonds and corporate bonds to private equity fund management and alternative investments. Operating within China's rapidly evolving financial markets, the company leverages its strategic location in Shenzhen—a major financial hub—to capitalize on opportunities in the Greater Bay Area. The firm's full-service model positions it to benefit from China's growing capital markets and increasing retail and institutional participation. With a market capitalization of approximately CNY 32.5 billion, First Capital Securities represents a mid-sized player in China's competitive securities industry, focusing on building sustainable growth through diversified revenue streams and strategic expansion of its financial services offerings.
First Capital Securities presents a mixed investment case with several notable strengths and risks. The company demonstrated solid profitability in FY2024 with net income of CNY 904 million on revenue of CNY 3.37 billion, translating to a healthy net margin of approximately 27%. The firm's low beta of 0.459 suggests relative stability compared to broader market volatility, which may appeal to risk-averse investors in the cyclical financial sector. However, significant concerns include high total debt of CNY 21.3 billion against cash reserves of CNY 3.32 billion, indicating substantial leverage that could pose challenges in rising interest rate environments. The modest dividend yield based on a CNY 0.064 per share payout provides limited income appeal. Investment attractiveness is heavily dependent on China's economic recovery and capital market reforms, with the company's fortunes tied to transaction volumes, IPO activity, and overall market sentiment in the Chinese securities industry.
First Capital Securities operates in China's highly competitive securities industry, where it faces intense pressure from both state-owned giants and agile regional players. The company's competitive positioning is that of a mid-tier firm with a comprehensive service offering but limited scale advantages compared to industry leaders. Its strategic location in Shenzhen provides proximity to China's innovation economy and Greater Bay Area development initiatives, offering potential growth opportunities in serving technology companies and high-net-worth individuals. The firm's diversified business model across brokerage, investment banking, and asset management provides revenue stability but may lack the specialization depth of focused competitors. First Capital's competitive advantages include its established regional presence, full-service capabilities, and experience navigating China's complex regulatory environment. However, the company faces significant challenges in competing with larger peers like CITIC Securities and Haitong Securities that benefit from superior brand recognition, larger capital bases, and stronger investment banking relationships. The firm's moderate market capitalization of CNY 32.5 billion places it at a scale disadvantage against industry leaders commanding resources several times larger. Success will depend on the company's ability to identify niche markets, maintain cost discipline, and leverage technology to enhance service efficiency while navigating China's evolving financial regulatory landscape.