Huatai Securities Co., Ltd. has disclosed its 2025 annual report, showing that the company's overall revenue and net profit attributable to shareholders grew at a slower pace compared to the industry average.
Following the merger of Guotai Junan and Haitong Securities, the A-share securities sector has evolved into a competitive landscape dominated by two giants alongside several strong players. Although Huatai Securities maintained its third position in terms of revenue and net profit, the gap with industry leaders CITIC Securities and the merged Guotai Haitong entity has widened significantly.
Moreover, several of Huatai Securities' business segments showed signs of lagging. In 2025, the company's proprietary business revenue declined despite a buoyant market, raising questions about the investment capabilities of a major securities firm. Particularly notable was the net fee income from its asset management business, which plummeted 56% year-on-year. Although net fee income from investment banking surged significantly, the number of A-share IPO projects in its pipeline has fallen behind the top-tier firms, sparking concerns about a potential decline in its equity underwriting operations.
The company's overall performance notably underperformed the sector. In 2025, Huatai Securities reported operating revenue of RMB 35.81 billion, a year-on-year increase of 6.83%, and net profit attributable to shareholders of RMB 16.383 billion, up 6.72%. By the end of the reporting period, total assets exceeded RMB 10 trillion for the first time, reaching RMB 10.77348 trillion, a 32.31% increase from the start of the year. Net assets attributable to shareholders stood at RMB 206.939 billion, up 7.96%.
The year 2025 was a strong period for securities firms, yet Huatai's revenue growth of 6.83% and net profit growth of 6.72% lagged behind the industry average. According to recently released data from the Securities Association of China, 150 securities companies achieved unaudited operating revenue of RMB 541.171 billion in 2025, a 20% increase from RMB 451.169 billion in 2024. Net profit for the sector reached RMB 219.439 billion, up 31% from RMB 167.257 billion in the previous year.
The data indicates that Huatai Securities' overall performance in 2025 significantly trailed the industry. Furthermore, its revenue and net profit were substantially lower than those of the top two firms. CITIC Securities and Guotai Haitong reported revenues of RMB 74.854 billion and RMB 63.107 billion, respectively, far exceeding Huatai's RMB 35.81 billion. Their net profits attributable to shareholders were RMB 30.076 billion and RMB 27.809 billion, also significantly higher than Huatai's RMB 16.383 billion.
The proprietary investment business most clearly highlighted Huatai's weaker performance relative to peers. Despite the strong market conditions in 2025, the company's proprietary business revenue unexpectedly decreased. The A-share market experienced a broad recovery last year, with major indices posting substantial gains: the Shanghai Composite Index rose 18.41%, the Shenzhen Component Index increased 29.87%, and the ChiNext Index jumped 49.57%, with several indices hitting new highs. Market activity rebounded sharply, with average daily stock and fund trading volume reaching RMB 1.98 trillion, up 67% year-on-year. The bond market showed high volatility, with the CSI Aggregate Bond Index rising 0.57%.
By March 31, 2026, 25 A-share companies focused purely on securities business had disclosed their 2025 annual reports. Combined proprietary business income for these firms, calculated as net investment income plus net gains from changes in fair value minus investment income from associates and joint ventures, totaled RMB 184.795 billion, a 32% year-on-year increase.
In contrast, Huatai Securities reported proprietary business income of RMB 13.829 billion for 2025, a decline of 4.63%, markedly diverging from the industry trend. The other four firms among the top five by revenue—CITIC Securities, Guotai Haitong, GF Securities, and China International Capital Corp. (CICC)—reported proprietary business income of RMB 38.604 billion, RMB 25.404 billion, RMB 12.378 billion, and RMB 14.201 billion, representing year-on-year growth rates of 46.53%, 72.01%, 59.64%, and 40.32%, respectively.
While peers, especially leading securities firms, enjoyed substantial profits, Huatai Securities struggled to achieve even modest gains, raising doubts about its investment proficiency.
A breakdown reveals that Huatai's net investment income fell against the trend to RMB 20.194 billion in 2025, down 6.64% from RMB 21.716 billion in 2024. This decline was partly due to the significant gain from the sale of AssetMark in 2024, but derivative financial instruments also had a major impact in 2025.
In 2024 (restated data), Huatai recorded investment income of RMB 2.25 billion from derivative financial tools. This figure dropped sharply to a loss of RMB 16.7 billion in 2025, meaning the disposal of these instruments resulted in an actual loss of RMB 16.7 billion for the year.
Additionally, as of the end of 2025, the loss from fair value changes on Huatai's derivative financial instruments was RMB 5.297 billion, compared to an unrealized loss of RMB 988 million at the end of 2024.
Research indicates that securities companies utilize a variety of derivative instruments, which are financial contracts whose value depends on one or more underlying assets. These tools are primarily used for risk management, arbitrage, and speculation. The fundamental purpose of derivatives is to hedge risks; even if they result in "losses," the primary goal is to ensure the overall investment income grows or avoids losses.
For instance, Founder Securities explained in a response to a stock exchange inquiry regarding its 2024 annual report that the company incurred a total loss of RMB 1.475 billion from derivative financial instruments, comprising an investment loss of RMB 1.003 billion and a fair value change loss of RMB 472 million. The losses were primarily due to hedging strategies for spot investment risks, including holding short positions in stock index futures and government bond futures.
Furthermore, market-making businesses require securities firms to provide risk hedging services for clients. In this process, firms themselves hold large derivative positions, whose fair value changes can lead to significant unrealized gains or losses due to market fluctuations.
Although the substantial loss on derivatives helped maintain Huatai's net investment income above RMB 20 billion and total proprietary business income at RMB 13.829 billion, the growth rate still lagged behind the industry.
Net fee income from Huatai's asset management business plummeted 56.64% year-on-year to RMB 1.798 billion in 2025. The decline is largely attributed to the sale of AssetMark in 2024. It is noteworthy that AssetMark contributed approximately RMB 3.791 billion in revenue in 2023, raising questions about the rationale for its divestiture.
AssetMark is a leading turnkey asset management platform (TAMP) in the U.S., providing services primarily to independent investment advisors. Since its acquisition by Huatai in 2016, the platform had been a significant revenue source for Huatai's international operations and was seen as a major step in the internationalization of Chinese securities firms. However, Huatai sold AssetMark just a few years later, realizing substantial investment gains but impacting international business and asset management revenue.
Interestingly, in February 2025, Huatai completed the issuance of HKD 10 billion in convertible bonds, with net proceeds intended to support overseas business development and supplement working capital. The strategy of selling a key international platform like AssetMark and then raising HKD 10 billion in Hong Kong for overseas expansion presents a curious capital allocation approach.
Net fee income from Huatai's investment banking business surged 47.8% year-on-year to RMB 3.099 billion in 2025. The annual report highlighted that the firm ranked first in the number of approved major restructuring projects where it acted as independent financial advisor and in the number of projects registered with the China Securities Regulatory Commission (CSRC). In international business, it ranked third in the number of Hong Kong IPO sponsorship projects.
Despite the strong revenue growth and high rankings in specific segments, the number of A-share IPO projects in Huatai's pipeline—a crucial indicator of future underwriting business—has fallen significantly behind Guotai Haitong, CITIC Securities, CICC, and China Securities, placing it in the industry's second tier.
Since fees from A-share IPO underwriting are substantial, the number of pipeline projects and subsequent issuances directly determine equity underwriting revenue and set the ceiling for overall investment banking income. Therefore, the pipeline size is a key determinant of an investment bank's future growth potential, especially for leading firms.
As of March 31, 2026, Guotai Haitong, CITIC Securities, China Securities, and CICC led in A-share IPO pipeline projects (based on exchange acceptance, excluding completed or terminated projects), constituting the first tier (≥20 projects), with 42, 37, 28, and 25 projects, respectively.
Although Huatai Securities ranked fifth, its 15 pipeline projects place it in the second tier (10 ≤ projects < 20), trailing Guotai Haitong by 27 projects, CITIC Securities by 22, China Securities by 13, and CICC by 10.
Huatai's 2025 annual report disclosed three regulatory penalties, all related to its investment banking operations. In January 2025, Huatai United Securities received a warning from the Zhejiang Securities Regulatory Bureau for failures in supervising a bond issuer's dedicated fund account and inadequate ongoing oversight of fund usage. In June 2025, it received a written warning from the Shenzhen Stock Exchange for insufficient due diligence regarding goodwill impairment and internal controls related to distributor revenue during the sponsorship of Jiangsu Changjing Technology Co., Ltd. In December 2025, the Anhui Securities Regulatory Bureau issued a warning concerning the acquisition and fundraising project for Anhui Fuhuang Steel Structure Co., Ltd., citing lack of professional caution regarding revenue recognition issues and inadequate verification of transactions with certain distributor clients.
These three penalties, all targeting investment banking activities, reflect regulators' intensified focus on holding underwriters accountable as "gatekeepers" under the comprehensive registration-based system. The issues identified at Huatai United Securities, a leading investment bank, warrant attention. In an environment where responsibility begins upon application submission, the quality of an investment bank's professional practice will directly determine its market competitiveness.
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