Citic Securities plans to issue its initial public offering prospectus next week, becoming the first mainland brokerage to float on the domestic stock market. Pending final approval of the China Securities Regulatory Commission (CSRC), Citic Securities would issue 400 million A shares to raise 2.76 billion yuan (about HK$2.58 billion), a source said yesterday. Both the offering's timing and details awaited final CSRC clearance, the source said. The long-awaited share sale would pave the way for more mainland brokerages to tap the stock markets for funds to boost their financial strength and diversify risks in the near term, analysts said. Since last year, Beijing has encouraged the public flotation of domestic financial firms, as it gradually opens its financial market to foreign players in line with its World Trade Organisation accession pledges. In previous years, manufacturers - mostly state-owned and many badly run - had dominated domestic listings. China's only domestically traded brokerage, Shenzhen-listed Xinjiang Hongyuan, went public in 1994 as an investment and trust company. Financial firms would boost the profit margin of mainland-listed stocks, said an analyst at China Southern Securities. 'Citic Securities has become the front-runner because of its strong earnings and powerful background,' he added. Citic Securities is part of the powerful China International Trust and Investment Corp (Citic), one of three mainland conglomerates allowed to branch out into different financial services sectors. The second-most profitable among more than 100 mainland brokerages in the past two years, the company's earnings nevertheless have fallen with its peers due to policy-induced sluggishness in the mainland stock markets. It booked a net profit of 630 million yuan and gross profit of 824 million yuan last year, down from the previous year's earnings of 1.48 billion yuan. Citic Securities' share offering, underwritten by Guangfa Securities, was tentatively priced at about 6.9 yuan, roughly 23 times its earnings last year, the source said. Guangfa is also seeking a domestic stock listing. Citic Securities had a strong underwriting business - a characteristic that might help its stock market performance despite market weakness, said the China Southern analyst. With domestic stocks trading at an average price-earnings ratio of about 40 and as the first brokerage to hit the market, Citic Securities should see a positive investor response, a Guotai Junan Securities analyst said.