Stock Analysis & Valuation Haitong Securities Co., Ltd. (6837.HK)

• Previous Close: HK$6.45
• Sector Valuation Confidence Level: High

Valuation method	Value, HK$	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Haitong Securities Co., Ltd. is a leading Chinese securities firm headquartered in Shanghai, operating as a comprehensive financial services provider across Mainland China, Hong Kong, and Europe. Founded in 1988, the company has grown into one of China's most prominent capital markets players with diversified business segments including Wealth Management, Investment Banking, Asset Management, Trading and Institution services, Finance Lease, and other financial services. Haitong serves individual, corporate, and institutional clients through securities and futures brokering, investment consulting, margin financing, capital markets underwriting, merger and acquisition advisory, asset management, and prime brokerage services. As China's financial markets continue to liberalize and evolve, Haitong Securities plays a critical role in connecting Chinese enterprises with global capital while providing domestic investors access to international investment opportunities. The company's extensive service portfolio and geographic reach position it as a key intermediary in China's rapidly growing financial services sector.

Investment Summary

Haitong Securities presents a mixed investment case with both attractive qualities and significant risks. The company benefits from its scale and comprehensive service offerings in China's growing capital markets, with a market capitalization of approximately HKD 129 billion and revenue of HKD 22.4 billion in FY2023. However, investors should note the relatively low net income margin of 4.5% and concerning leverage with total debt of HKD 302 billion against cash of HKD 251 billion. The beta of 0.429 suggests lower volatility than the broader market, which may appeal to risk-averse investors in the financial sector. The dividend yield, while present, must be weighed against the company's high debt levels and modest profitability metrics. Regulatory changes in China's financial sector and economic conditions affecting capital markets activity represent ongoing risks to performance.

Competitive Analysis

Haitong Securities operates in a highly competitive Chinese financial services market where scale, regulatory relationships, and service breadth are critical competitive advantages. The company benefits from its early-mover status as one of China's first securities firms, established in 1988, which has allowed it to build extensive client relationships and regulatory expertise. Its comprehensive service portfolio across wealth management, investment banking, asset management, and trading provides cross-selling opportunities and revenue diversification that smaller competitors cannot match. Haitong's international presence, particularly in Hong Kong and Europe, differentiates it from domestic-focused peers and positions it to capitalize on China's financial market internationalization. However, the company faces intense competition from larger state-owned competitors with stronger government connections and better funding costs, as well as more agile fintech-enabled newcomers. Haitong's competitive positioning is further challenged by its relatively high leverage compared to some peers, which could constrain strategic flexibility during market downturns. The company's scale provides cost advantages in technology and compliance, but execution risk remains in maintaining profitability across its diverse business segments amid regulatory changes and market volatility.

Major Competitors

• CITIC Securities Company Limited (6030.HK): CITIC Securities is China's largest securities firm by assets and revenue, providing Haitong with its most significant competition. The company benefits from its affiliation with CITIC Group, one of China's largest state-owned conglomerates, giving it superior access to capital and government relationships. CITIC dominates investment banking market share in China and has stronger international capabilities than Haitong. However, its size can sometimes lead to less agility than smaller competitors, and its state ownership may create inefficiencies that Haitong could potentially exploit.
• China International Capital Corporation Limited (2611.HK): CICC is renowned for its elite investment banking franchise, particularly in high-value M&A and equity capital markets transactions. The company maintains superior relationships with China's largest SOEs and blue-chip private companies, often beating Haitong for premium mandates. CICC also has stronger research capabilities and international recognition. However, CICC has historically been more focused on institutional and corporate clients versus Haitong's broader retail presence, and its smaller balance sheet limits some capital-intensive businesses where Haitong competes.
• GF Securities Co., Ltd. (1776.HK): GF Securities is a major competitor with particularly strong retail brokerage and wealth management operations, especially in Southern China where it has deep roots. The company has been aggressive in digital transformation and fintech adoption, potentially giving it an edge in serving retail investors. GF maintains a slightly more conservative balance sheet than Haitong with lower leverage. However, its international presence is less developed than Haitong's, and it lacks Haitong's European foothold.
• TAI PING SECURITIES (HONG KONG) CO. LTD. (6811.HK): Tai Ping Securities provides competition particularly in Hong Kong and cross-border services, though it is significantly smaller than Haitong. The firm focuses on brokerage and placement services with particular strength in connecting mainland Chinese investors with Hong Kong markets. Its smaller size allows for more specialized service in niche areas but limits its ability to compete on large capital markets transactions or provide the full suite of services that Haitong offers.
• HuaTai Securities Co., Ltd. (6656.HK): HuaTai Securities is a growing competitor with strong momentum in investment banking and fixed income. The company has been gaining market share in recent years through aggressive pricing and talent acquisition. HuaTai has developed particular expertise in technology and healthcare sectors, areas of strategic focus in China. However, it lacks Haitong's scale and international footprint, and its rapid expansion has sometimes come at the expense of profitability discipline.