China Galaxy Securities has released its annual report for 2025. The company reported operating revenue of 28.302 billion yuan, an increase of 24.34% year-on-year, and net profit attributable to shareholders of 12.520 billion yuan, up 24.81% compared to the previous year. The strong performance in 2025 raises the question: was it driven by structural improvements in the business generating alpha returns, or was it primarily a result of beta gains from the market recovery?
An analysis of the business structure reveals that China Galaxy Securities exhibits a significant reliance on market conditions. Combined revenue from brokerage and proprietary trading businesses accounted for more than 75% of total operating revenue—a higher proportion than that of some regional small and medium-sized securities firms. In contrast, net fee income from investment banking represented only 3% of total revenue, with particularly weak competitiveness in IPO underwriting. Although the scale of bond underwriting is substantial, the company's bond underwriting quality rating was downgraded from Class A to Class C.
Revenue from market-dependent businesses exceeded 75% in 2025. The A-share market experienced a notable bull run during the year: the Shanghai Composite Index reached a ten-year high, while both total and average daily trading volumes increased significantly. The balance of margin lending across the market rose to 2.5407 trillion yuan, up 36.3% from the end of the previous year.
China Galaxy Securities was no exception to this trend. Its operating revenue grew by 24.34% to 28.302 billion yuan, while net profit attributable to shareholders increased by 24.81% to 12.520 billion yuan. This growth was achieved against the backdrop of favorable market conditions, reflecting the company's high dependence on market performance.
According to the annual report, the net revenue and proportion of each business segment in 2025 were as follows: net brokerage fee income was 8.846 billion yuan, accounting for approximately 31% of total operating revenue; proprietary trading revenue, calculated as the sum of investment net income and net gains from changes in fair value minus investment income from associates and joint ventures, amounted to 13.116 billion yuan, representing 46% of total revenue; net investment banking fee income was 830 million yuan, or 3% of the total; and net asset management fee income stood at 517 million yuan, making up 2%.
Combining the two segments that are highly dependent on market conditions—brokerage (31%) and proprietary trading (46%)—China Galaxy Securities derived 77% of its revenue from businesses that "rely on market trends."
This 77% proportion is even higher than that of some regional securities firms, such as Guohai Securities. In 2025, Guohai Securities reported operating revenue of 3.455 billion yuan, with wealth management business, including brokerage, contributing 1.666 billion yuan, or 48.23% of total revenue. Sales, trading, and investment business revenue amounted to 614 million yuan, accounting for 17.76%. Together, these two segments represented only 66% of total revenue.
In comparison, businesses that reflect differentiated and specialized capabilities—asset management and investment banking—contributed only 3% and 2%, respectively, to China Galaxy Securities' revenue in 2025, totaling approximately 5%.
Proprietary trading was the largest source of revenue for China Galaxy Securities in 2025, accounting for 46% of the total. Full-year net income from proprietary investments reached 13.1 billion yuan, an increase of 14% year-on-year. However, this segment also exhibited the most significant quarterly volatility: net proprietary investment income in the fourth quarter was only 1.035 billion yuan, a decline of about 78% compared to the previous quarter.
The reliance of proprietary trading on market conditions exposes the company's profitability to substantial market risk. A downturn in the market could lead to a sharp decline in performance.
IPO underwriting business remains weak, while bond underwriting is large but inefficient. In 2025, net investment banking fee income at China Galaxy Securities was 830 million yuan, up 36.82% year-on-year. In terms of scale, this amount ranks low among leading securities firms and represents only 3% of the company's total revenue.
Breaking down the investment banking business further, China Galaxy Securities completed one IPO project and seven refinancing deals in 2025, with equity underwriting volume reaching 8.697 billion yuan, ranking 12th in the industry. While this may suggest a mid-to-upper tier position in equity underwriting, IPO-related income constitutes the majority of equity underwriting and sponsorship revenue.
In 2025, the company's sole A-share IPO project was for Chaoyan Co., Ltd., generating underwriting and sponsorship fees of 30 million yuan. This amount is significantly lower than that of top-tier securities firms and ranks 30th among all securities companies, according to Wind data.
As of March 31, 2026, China Galaxy Securities had two A-share IPO projects in the pipeline, based on exchange acceptance criteria and excluding terminated or completed projects, also ranking 30th in the industry.
The scale of bond underwriting at China Galaxy Securities is relatively larger. According to Wind statistics, the company's bond underwriting volume in 2025 was 682.575 billion yuan, an increase of 37.3% year-on-year, ranking 6th in the industry. Local government bond underwriting accounted for 433.331 billion yuan of this total.
However, leading in scale does not necessarily translate to leading profitability. Underwriting fees for local government bonds are extremely low, sometimes as little as a few ten-thousandths of a percent. The profit contribution from such business is far lower than that of corporate bonds, enterprise bonds, and other more market-driven products, not to mention A-share IPOs, which typically yield fees in the range of a few percent.
Moreover, the quality of China Galaxy Securities' bond underwriting is questionable. At the end of 2025, the Securities Association of China released its "2025 Securities Company Bond Business Practice Quality Evaluation Results," which rated China Galaxy Securities as Class C, the lowest category.
In comparison, the company's bond underwriting quality was rated Class A in 2022, and Class B in both 2023 and 2024.
Notably, there are suspicions that China Galaxy Securities may be expanding its bond underwriting scale by sacrificing price. In July 2025, the National Association of Financial Market Institutional Investors launched self-regulatory investigations into six lead underwriters, including China Galaxy Securities, GF Securities, and Industrial Bank. This action followed market attention to the underwriting fees bid by these firms for China Guangfa Bank's 2025-2026 Tier 2 capital bond project.
According to China Guangfa Bank's announcement, the estimated service fees, including tax, bid by China Galaxy Securities, GF Securities, Industrial Bank, Guotai Junan Securities, China Securities, and CITIC Securities were 700 yuan, 1,050 yuan, 700 yuan, 4,998 yuan, 35,000 yuan, and 21,000 yuan, respectively. A fee of 700 yuan—less than the daily wage of many China Galaxy Securities employees—suggests possible underpricing to secure volume.
Is compliance and risk control a weak link? Despite impressive financial data, issues in compliance and internal controls identified in 2025 cannot be overlooked.
In January 2025, China Galaxy Securities received a rectification order from the Beijing Regulatory Bureau of the China Securities Regulatory Commission. The bureau pointed out that the company had insufficient controls over circumventing regulations in margin trading, facilitating improper trading activities for clients. Additionally, the company participated in "private placement + securities lending" arbitrage as an actual investor, constituting disguised improper trading behavior in violation of减持 regulations.
On October 27, 2025, the company's Shanghai Huangpu District Mengzi Road Securities Branch received a warning letter from the Shanghai Regulatory Bureau. The bureau found that the branch failed to strictly standardize employee conduct, with个别 staff providing clients with promotional materials not officially approved by China Galaxy Securities and promoting expected returns during the distribution of financial products.
The distribution of financial products has been a persistent issue for China Galaxy Securities. On November 30, 2023, the company received a warning letter from the Beijing Regulatory Bureau regarding three major problems in its private fund-related business: imprudent product准入 during distribution, inadequate performance of custodial duties, and non-standard management of branches. The company was required to rectify these issues and improve its systems.
On December 12, 2024, the Jiangsu Regulatory Bureau issued a warning to Shi Min, an employee at a China Galaxy Securities branch, for using improper statements to mislead clients during the promotion of a private fund. The incident was recorded in the securities and futures market integrity archive.
According to the 2025 annual report, the scale of financial products distributed by China Galaxy Securities reached 251.948 billion yuan, an increase of 19.3% year-on-year. Behind this substantial distribution scale, questions remain about whether issues such as lax product准入, non-standard employee recommendations, and inadequate post-investment management persist. These represent systemic risks that both company management and regulators must address.
Beyond the information disclosed in the annual report, the company's sponsors have also faced penalties related to investment banking activities. In December 2025, China Galaxy Securities sponsors Yuan Zhiwei and Wang Bin were subject to regulatory interviews by the Shenzhen Stock Exchange for inadequate performance in the IPO project of Wuhan Yuanfeng Automotive Electronic Control System Co., Ltd.
An investigation revealed irregularities in the company's dealings with important clients, accounting treatment of rebates in 2020, and internal controls related to revenue recognition. The sponsors failed to adequately address these issues during their due diligence, resulting in inaccurate verification opinions. Additionally, there were deficiencies in procedures such as confirmation letters and on-site visits during the sponsorship process.
China Galaxy Securities already has very few A-share IPO projects, with some years generating zero underwriting and sponsorship income. Despite this, issues such as failure to fulfill duties diligently in sponsorship activities have still emerged.
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