Broker's net gains from boom in stocks
By Winny Wang |
April 1, 2010, Thursday
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Print Edition
Print Edition
CITIC Securities Co's net profit rose 22.98 percent last year, bolstered by the rebounding stock market which gave trading volume a big boost.
The newly launched margin trading and short selling are expected to be a catalyst for the brokerage's future profit, according to the market consensus.
The Beijing-based broker's net income climbed to 8.98 billion yuan (US$1.31 billion), or 1.35 yuan a share, and its revenue grew 24.27 percent from a year earlier to 22 billion yuan, it said in a statement to the Shanghai Stock Exchange yesterday.
Backed by the bullish stock market, the country's largest brokerage by market value, earned 10.92 billion yuan from trading commissions, a rise of 46.46 percent and about half of its total revenue, according to the statement.
The Shanghai Composite Index surged 80 percent last year. Companies raised 2 trillion yuan via initial public offerings last year, a surge of 94 percent.
"The earnings are similar to our expectations, and the brokerage's diversified businesses are also an advantage," said Xie Yan, an analyst at Haitong Securities Co.
The company handled 20 projects, which included five IPOs and 15 additional share sales, worth 86.49 billion yuan, as underwriters.
The firm sees margin trading and short selling as a new profit point. China launched the two tools yesterday, and they are estimated to bring between 60 billion yuan and 90 billion yuan to the A-share market.
"The margin trading and short selling business is likely to contribute 1.6 billion yuan to the company every year after the business matures," said Yang Jianhai, an analyst at Essence Securities Co.
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