Capital Securities Corporation Limited (601136.SH) recently submitted its application for a Hong Kong IPO, aiming for a dual listing on both the A-share and H-share markets. However, market observers quickly noticed a discrepancy of approximately RMB 3.2 billion between the total revenue figures disclosed in its Hong Kong IPO prospectus and its A-share annual reports for the past three years.
**1. Fast-Paced Listing Process** Founded in February 2000 and headquartered in Beijing, Capital Securities went public on the Shanghai Stock Exchange in December 2022. The company is majority-owned by Beijing State-Owned Assets Supervision and Administration Commission, with its largest shareholder, Shougang Group, holding a 56.77% stake.
Since announcing its Hong Kong IPO plan on July 25, the company has moved swiftly. On August 27, it received "principle approval" from Beijing SASAC for its H-share issuance plan. By October 16, it officially submitted its listing application to the Hong Kong Stock Exchange, with CITIC Securities, China Galaxy International, China Securities International, and BOCI acting as joint sponsors.
If successful, Capital Securities will become the 14th Chinese brokerage to achieve an "A+H" dual listing.
According to its prospectus, the company reported total revenues of RMB 25.37 billion, RMB 29.79 billion, and RMB 36.02 billion for 2022, 2023, and 2024, respectively, with a three-year compound annual growth rate (CAGR) of 19.2%. Net profits attributable to shareholders grew at a 33.2% CAGR over the same period.
**2. Data Discrepancy Explained** Investors raised concerns when comparing the Hong Kong prospectus and A-share annual reports. For instance, the prospectus showed total revenue of RMB 91.18 billion for 2022–2024, while A-share filings reported only RMB 59.33 billion—a gap of RMB 31.85 billion.
The company clarified that the difference stems from differing accounting standards: Hong Kong follows International Financial Reporting Standards (IFRS), while A-shares adhere to Chinese Accounting Standards (CAS). Under IFRS, commission and interest expenses are recorded as costs, whereas CAS deducts them from revenue, leading to higher reported revenue in the Hong Kong filings.
For example, in 2024, the prospectus showed revenue of RMB 36.02 billion, while the A-share report listed RMB 24.18 billion—a difference of RMB 11.84 billion, which aligns with the sum of commission and interest expenses under CAS.
**3. Business Structure and Market Position** Capital Securities’ revenue primarily comes from four segments: asset management, investment, investment banking, and wealth management. Asset management and investment businesses dominate, contributing 72.9% of total revenue in 2024, while wealth management’s share declined to 17.2%.
The company ranks among the top A-share brokerages in terms of return on assets (ROA) and adjusted return on equity (ROE). However, its investment banking business remains small, accounting for just 6% of revenue—a common challenge for mid-sized brokerages competing against industry giants.
**4. Conclusion** While the accounting discrepancy caused temporary confusion, it does not indicate financial misconduct. For Capital Securities, a Hong Kong listing represents more than just fundraising—it’s a step toward aligning with international regulatory standards and enhancing global competitiveness.
As the company moves forward with its dual-listing strategy, its ability to strengthen core businesses and break through investment banking bottlenecks will determine its success in an increasingly competitive brokerage landscape.
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