Haitong Securities sees earnings surge 8.5 times

PUBLISHED : Friday, 27 July, 2007, 12:00am
UPDATED : Friday, 27 July, 2007, 12:00am

Haitong Securities, the second-largest listed mainland brokerage, said first-half profit surged 8.5 times as it earned more trading fees amid the surging stock market.

Net profit rose to 2.04 billion yuan for the first six months this year from 214 million yuan a year earlier while revenue jump to 4.75 billion yuan from 1.14 billion yuan.

About 61 per cent of its revenue came from stock trading fees, up noticeably from about 46 per cent one year earlier.

Mainland brokerages have been reporting robust first-half earnings, partly because the market was sluggish a year ago, giving a low base for comparison.

The market has been on a bull run ever since the government lifted a share-sale ban in mid-2006, prompting investors to channel their savings into stocks. The benchmark CSI 300 Index surged 110.83 per cent this year despite a dip in late May when the government tripled the stamp duty.

More than 50 mainland brokerages have announced half-year earnings so far, with Guotai Junan Securities leading the pack.

Guotai Junan's net profit grew almost fourfold to 3.9 billion yuan, followed by GF Securities' 11 times surge to 3.14 billion yuan and Shenyin Wanguo's almost fourfold gain to 2.98 billion yuan.

The lifting of the ban also enabled companies to raise funds through initial public offerings, giving brokerages another revenue stream.

Haitong Securities took part in six initial public offerings in the A-share market so far this year, including Bank of Communications and Liuzhou Iron & Steel, raising a total proceeds of US$1.25 billion, according to Thomson Financial.

That helped the company book 155 million yuan from underwriting securities, almost double that of 78.5 million yuan a year earlier.

Haitong also handled 10 corporate bond sales worth a combined US$207 million, for companies such as Shanghai World Expo Land and China Guodian (Group) Corp, Thomson Financial data show.

Haitong Securities' profit margin was 73.82 per cent in the first half, or 21.5 per cent higher than the same period a year earlier.

The brokerage announced this month that it might sell one billion new shares at a minimum of 13.15 yuan each to boost capital.

Haitong won regulatory approval for a backdoor listing last month. Its stock is still trading under the shell company's name, Shanghai Urban Agro-Business. A name change is due at the end of July.

In its first cross-border move, Haitong also won approval recently to set up a unit in Hong Kong.

The firm plans to appoint the former general manager of its investment banking department to head the Hong Kong unit.

Haitong's shares rose to the 10 per cent daily limit yesterday, closing at 52.11 yuan. Its value has gained more than sixfold this year.

Meanwhile, Northeast Securities said it won approval to take over Shenzhen-listed Liulu Industrial, making it the second brokerage to complete a backdoor listing.

Bullish results

A runaway stock rally has sent earnings of mainland brokerages skyrocketing

Guotai Junan leads the pack with the most in first-half profit of: 3.9b yuan

In the first half, Haitong's revenue from trading fees rose from 46pc to 61%