Huatai Securities Asset Management's net income drops 56% year-on-year. Market enthusiasm remains strong, but investment net profit declines against the trend. Losses from disposal of derivative financial instruments amount to 16.7 billion yuan.

Topic: Listed Brokerage Firms’ 2025 Annual Reports Disclosure! Big Showdowns in Revenue Across Businesses

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Produced by: Sina Finance Listed Companies Research Institute

Author: Turing

Recently, Huatai Securities released its 2025 annual report. The company’s overall revenue growth and attributable net profit growth both lagged the industry.

After Guotai Haitong completed an absorption merger, A-share brokerages showed a competitive landscape of “two strong leaders and multiple strong challengers.” Although Huatai Securities still ranked third in both revenue and net profit, the gap versus CICC and Guotai Haitong is very significant.

In addition, multiple of Huatai Securities’ segment businesses show a trend of falling behind. In 2025, under a hot market, Huatai Securities’ proprietary business revenue declined; as a large brokerage, its investment performance has been called into question. In particular, the asset management business fee net income fell sharply year over year by 56%. Although the company’s investment banking business fee net income increased significantly, the number of newly reserved A-share IPO projects has already widened the gap from the top tier—whether this marks the start of a decline in the company’s equity investment banking business is worth watching.

**　　Overall performance clearly lags the industry Although the market is hot, proprietary income is down against the trend**

In 2025, Huatai Securities achieved operating revenue of 35.81 billion yuan, up 6.83%; attributable net profit was 16.38B yuan, up 6.72%. By the end of the reporting period, total assets first broke the 1 trillion yuan mark, reaching 1,077.348 billion yuan, up 32.31% from the beginning of the year; net assets attributable to shareholders of the parent company were 206.94B yuan, up 7.96%.

2025 was a big year for brokerages. Huatai Securities’ revenue growth of 6.83% and attributable net profit growth of 6.72% both lagged the industry.

According to data recently released by the CEFI, securities companies’ unaudited financial statements show that 150 securities companies achieved operating revenue of 541.17B yuan in fiscal year 2025, up 20% year over year from 219.44B yuan in 2024; net profit for 2025 was 167.26B yuan, up 31% year over year from 74.85B yuan in 2024.

From the data, it can be seen that Huatai Securities’ overall performance in 2025 seriously lagged the industry. Moreover, the company’s revenue and net profit are significantly lower than “the two leaders.” In 2025, CICC and Guotai Haitong had revenue of 63.11B yuan and 30.08B yuan, respectively—significantly higher than Huatai Securities’ 35.81 billion yuan. Their attributable net profits were 27.81B yuan and 16.38B yuan, respectively—also significantly higher than Huatai Securities’ 19.8k yuan.

The business that most clearly reflects Huatai Securities’ weaker performance compared with peers should be its proprietary investment business. In 2025, when the market was hot, Huatai Securities’ proprietary investment business revenue actually declined against the trend.

As the A-share market overall rebounded in 2025, major A-share market indices generally surged sharply. The Shanghai Composite Index, the Shenzhen Component Index, and the ChiNext Index rose 18.41%, 29.87%, and 49.57%, respectively. Multiple indices hit new highs. Market activity rebounded significantly, with daily average stock and fund trading value reaching 1.98 trillion yuan, up 67%. The securities industry showed an across-the-board rebound, with several key indicators improving markedly. The bond market overall displayed a high-volatility, range-trading pattern, with the CSI All Bond Index rising 0.57%.

As of March 31, 2026, 25 pure securities business companies in A-shares had disclosed their 2025 annual reports. On a combined basis, they achieved proprietary business revenue (calculated according to “proprietary business revenue = investment net gains + net gains from changes in fair value - investment income from investments in associates and joint ventures,” the same applies below) of 184.8B yuan, up 32%.

Source: Wind

Meanwhile, Huatai Securities’ proprietary business revenue in 2025 was 13.83B yuan, down 4.63% year over year, severely diverging from the industry development trend. And among the top five brokerages by revenue, the other four—CICC, Guotai Haitong, GF Securities, and CICC (China International Capital Corporation)—their proprietary business revenues in 2025 were 38.6B yuan, 25.4B yuan, 12.38B yuan, and 14.2B yuan, respectively, with year-over-year growth of 46.53%, 72.01%, 59.64%, and 40.32%, respectively.

When peers, especially leading brokerages, are “taking big bites,” Huatai Securities even finds it difficult to “get a bit of soup.” Does this indicate the company’s investment level is poor?

Looking at sub-items, Huatai Securities’ 2025 investment net gains fell against the trend. The data was 20.19B yuan, down 6.64% year over year from 21.72B yuan in 2024.

Huatai Securities’ investment net gains declined. Aside from the impact of the large gains generated from selling AssetMark in 2024, the effect of financial derivatives in 2025 also played a major role.

In 2024 (restated data), Huatai Securities’ investment income from financial derivatives was 2.25 billion yuan; it then sharply dropped to -16.7 billion yuan in 2025. In other words, because Huatai Securities disposed of financial derivatives, it “truly incurred a loss” of 16.7 billion yuan in 2025.

Source: Annual report

As of the end of 2025, Huatai Securities’ losses from changes in fair value of financial derivatives were 5.3B yuan, which is more severe than the unrealized loss of 988M yuan at the end of 2024.

Source: Annual report

Research holds that securities companies’ financial derivatives encompass a wide range of types. In essence, they are financial contracts whose value depends on one or more underlying assets. These instruments are mainly used for purposes such as risk management, arbitrage, and speculation. The most original function of financial derivatives is hedging risk— even if there is “loss,” the main goal is to ensure that the company’s overall investment income keeps growing or does not result in losses.

For example, Fangzheng Securities, in its announcement of the reply to the exchange’s 2024 annual report inquiry letter, stated: In 2024, the total of investment losses and losses from changes in fair value recognized from financial derivatives was 1.48B yuan, of which: investment losses were 1B yuan, and losses from changes in fair value were 0.472 billion yuan. The main reasons for the losses on financial derivatives were that the company hedged spot investment risks, by holding futures short positions such as stock index futures shorts and treasury bond futures shorts.

At the same time, the market-making business also requires brokerages to provide customers with risk-hedging services. In this process, the company itself holds a large number of derivative positions. The changes in the fair value of these positions will generate huge unrealized gains or losses in the accounting books as the market fluctuates.

Although Huatai Securities’ financial derivatives delivered a “huge loss,” it still ensured that the company’s overall investment net income remained above 20 billion yuan, and that overall proprietary business revenue was still 472M yuan, but its growth rate lagged the industry.

**　　Net fee income from the asset management business fell sharply by 56% year over year**

In 2025, Huatai Securities’ asset management business net fee income was 13.83B yuan, down 56.64% year over year.

The decline in the company’s self-managed business income was mainly related to the sale of AssetMark in 2024. But what deserves attention is that AssetMark contributed about 1.8B yuan of revenue in 2023—so why did Huatai Securities sell it?

AssetMark is a leading U.S. turnkey asset management platform (TAMP). It mainly provides asset management services for independent investment advisors. Since Huatai acquired AssetMark in 2016, the platform has been an important source of income for Huatai International’s business. At the time of acquisition, this move was seen as an important breakthrough for the internationalization of Chinese brokerages.

But after a few years, Huatai Securities sold AssetMark. Although it obtained considerable investment gains, its international business revenue and asset management business revenue were affected.

Even more interesting is that in February of this year, Huatai Securities completed the issuance of HKD-denominated convertible bonds worth 10 billion Hong Kong dollars. The net proceeds are planned to be used to support the development of overseas business, as well as to supplement other working capital. Selling an important internationalized business platform like AssetMark, and then raising more than 10 billion Hong Kong dollars in Hong Kong shares to develop overseas business—Huatai Securities’ capital operations are quite intriguing.

**　　A-share IPO underwriting sponsorship reserve projects have fallen to the second tier behind the top tier: Professional quality determines market competitiveness**

In 2025, Huatai Securities’ net fee income from investment banking business was 3.1B yuan, up 47.8% year over year.

Huatai Securities’ 2025 annual report shows that in the investment banking segment, Huatai Securities ranked first in the industry in both the number of review-and-approval passes for restructuring projects it served as an independent financial advisor, and the number of registrations approved by the China Securities Regulatory Commission. In the international business segment, its number of Hong Kong IPO underwriting and sponsorship projects ranked third in the market.

Judging from the statements that net fee income from investment banking increased substantially year over year and that many sub-projects ranked among the best, Huatai Securities appears to have strong competitiveness in investment banking.

However, the number of its A-share IPO sponsorship reserve projects (the “invisible grain and fodder” of investment banking reserves) is already far behind Guotai Haitong, CICC, CICC (China International Capital Corporation), and China Securities Investment (CICC—China Securities Investment?). Within the industry, it is located in the second tier.

Because the revenue from underwriting and sponsoring a single A-share IPO is very significant, the number of reserved A-share IPO projects and the number of issuances determine how much revenue the equity underwriting business generates, and also determine the height of overall investment banking business income (the upper limit). Therefore, the number of A-share IPO reserve projects determines an investment bank’s future development potential, and this is even more true for top-tier investment banks.

As of March 31, 2026, Guotai Haitong, CICC, China Securities Investment (China Securities Investment?), and CICC (China International Capital Corporation) ranked in the top four in terms of A-share IPO reserve numbers (using the exchange acceptance standard, excluding issued and terminated projects): belonging to the first tier (≥20 projects). The counts were 42, 37, 28, and 25, respectively.

Although Huatai Securities’ number of A-share IPO reserve projects ranked fifth, the figure of 15 projects already places it in the second tier (10 ≤ number < 20). It has 27 fewer projects than Guotai Haitong, 22 fewer than CICC, 13 fewer than China Securities Investment (China Securities Investment?), and 10 fewer than CICC (China International Capital Corporation).

According to Huatai Securities’ 2025 annual report, the company disclosed three cases of regulatory penalties, and all of them came from the investment banking business.

In January 2025, Huatai United received a warning letter issued by the Zhejiang Securities Regulatory Bureau: because, in the entrusted management work for bond issuers of relevant companies, it failed to effectively supervise how the issuers’ funds from raised capital accounts were managed and used, and it failed to diligently and responsibly perform its continuous supervision duties for raised funds.

In June 2025, Huatai United Securities received a written warning from the Shenzhen Stock Exchange: because, in its sponsorship work for Jiangsu Changjing Technology Co., Ltd., it failed to conduct adequate investigation into issues such as whether the provision for impairment losses on goodwill at the end of 2022 was sufficiently determined, and whether internal controls related to distribution revenue were noncompliant, and it also issued an investigation opinion that was not prudent, among other problems.

In December 2025, Huatai United Securities received a warning letter issued by the Anhui Securities Regulatory Bureau: because, in the project involving the issuance of shares and payment of cash to acquire assets and the raising of supporting funds, as well as related-party transactions, for Anhui Fuhuang Steel Structure (rights protection) Co., Ltd., there were issues such as failing to maintain sufficient professional prudence regarding cross-period recognition of revenue of the target company, and failing to fully verify the substance of transactions between the target company and some distribution-type customers.

All three penalties are aimed squarely at the investment banking business. This reflects that under the background of comprehensive registration-based regulation, regulators have tightened accountability for investment banks’ “gatekeeper” responsibilities. As an industry-leading investment bank, the problems exposed during project execution by Huatai United Securities are worth being wary of. In a regulatory environment where “filing means assuming responsibility,” the professional quality of investment banking will directly determine its market competitiveness.