Huatai Securities' performance was a "tale of two halves," with Q4 revenue and net profit both experiencing significant year-over-year and quarter-over-quarter declines. IPO income showed a "pulse-like" increase, but the equity reserve projects stood at zero.

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Produced by: Sina Finance Listed Company Research Institute
Author: Turing

On the evening of March 26, Huatai Securities released its annual report for 2025. The company achieved revenue exceeding 5 billion yuan for the year, with net profit attributable to shareholders growing over 40% year-on-year to 2.108 billion yuan.

Beneath the impressive financial data, Huatai Securities’ performance was “strong at the beginning and weak at the end.” In the first three quarters of 2025, the company’s revenue and net profit both experienced significant year-on-year growth; however, in the fourth quarter, the company’s revenue and net profit both saw significant declines compared to both year-on-year and quarter-on-quarter. The specific reason is that the self-operated business revenue of Huatai Securities saw a significant drop in the fourth quarter of 2025, heavily influenced by market conditions. The revenue from Huatai Securities’ self-investment and brokerage business accounts for more than 65% of total revenue, showing a clear dependence on market conditions.

In terms of business segments, Huatai Securities’ investment banking revenue surged, especially after completing an IPO project. However, the overall proportion of investment banking revenue remains small, and as of now, the number of equity reserve projects is zero, indicating pressure on the company’s future equity investment banking revenue.

Significant Year-on-Year and Quarter-on-Quarter Decline in Q4 Revenue and Net Profit

In 2025, the A-share market overall rebounded, with major indices of the A-share market experiencing substantial increases, with the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index rising by 18.41%, 29.87%, and 49.57%, respectively, with multiple indices hitting new highs; market activity significantly improved, with the average daily trading volume of stock funds reaching 1.98 trillion yuan, a year-on-year increase of 67%. The securities industry showed a comprehensive rebound, with several core indicators significantly improving.

In this general upward trend, the performance of securities firms improved across the board. Huatai Securities was no exception, achieving revenue of 5.068 billion yuan in 2025, a year-on-year increase of 31.11%; net profit attributable to shareholders was 2.108 billion yuan, a year-on-year increase of 41.92%; return on equity was 9.11%, up 2.3 percentage points from the previous year, achieving a historical high in operating performance.

However, the performance rhythm of Huatai Securities exhibited a concerning “strong start and weak finish.” In the first, second, and third quarters of 2025, Huatai Securities’ quarterly revenue was 1.431 billion yuan, 1.376 billion yuan, and 1.616 billion yuan, representing year-on-year increases of 72.02%, 21.79%, and 137.09%, respectively; net profit attributable to shareholders was 525 million yuan, 510 million yuan, and 848 million yuan, with year-on-year increases of 87.79%, 17.41%, and 97.61%, respectively.

However, in the fourth quarter of 2025, Huatai Securities’ revenue and net profit experienced significant declines both year-on-year and quarter-on-quarter. In Q4 2025, Huatai Securities achieved revenue of 645 million yuan, a year-on-year decrease of 47.22% and a quarter-on-quarter decline of 60.08%; net profit attributable to shareholders was 225 million yuan, a year-on-year decrease of 34.22% and a quarter-on-quarter decrease of 73.47%.

Huatai Securities did not disclose the underlying reasons for the significant decline in revenue and net profit in the fourth quarter in its annual report. By analyzing the annual report and the detailed accounting items from the third quarterly report, it is known that the self-operated income saw a significant decline in Q4 2025.

Using the formula “self-operated business income = investment net income + net income from fair value changes - investment income from joint ventures and associates,” Huatai Securities’ self-operated business income for the first, second, third, and fourth quarters of 2025 was 566 million yuan, 516 million yuan, 897 million yuan, and 127 million yuan, respectively. In the fourth quarter of 2024, Huatai Securities’ self-operated business income was 451 million yuan.

Source: Annual Report

In 2025, Huatai Securities’ self-operated business (as per annual report disclosure) income was 1.549 billion yuan, and brokerage business income was 1.755 billion yuan, with a combined total of 3.304 billion yuan, accounting for 65.19% of total revenue during the period. Due to the evident dependence of these two business segments on market conditions, when market fluctuations occur, the overall performance of the company will also experience significant volatility.

The “Pulse-like” Rise in IPO Income: Zero Equity Investment Banking Reserve Projects

In terms of business segments, Huatai Securities achieved growth in all businesses in 2025 except for futures trading. Among them, investment banking revenue grew by 77.4% to 170 million yuan, marking the largest increase.

One reason for the substantial growth in Huatai Securities’ investment banking revenue is the completion of the Hengxin Life ChiNext IPO project, which had underwriting and sponsorship fees as high as 84.0835 million yuan. Just this one project brought nearly 100 million yuan as a “small target” to Huatai Securities, highlighting the importance of IPO projects to the revenue of brokerage investment banks.

However, it is worth noting that Huatai Securities does not have IPO projects issued every year. In 2023 and 2024, Huatai Securities did not have any IPO projects sponsored for issuance and listing for two consecutive years.

Source: Wind

From the issuance of the Jingsong Intelligent IPO project in May 2022 to the issuance of the Hengxin Life IPO in March 2025, Huatai Securities has withdrawn from four IPO projects during this period, namely Anhui Taida New Materials Co., Ltd., Tor Microelectronics Co., Ltd., Weiben Intelligent Electromechanical (Shanghai) Co., Ltd., and Anhui Defu Turning System Co., Ltd.

More concerning is that Huatai Securities currently has zero reserve IPO projects (based on exchange acceptance standards, excluding already issued and terminated projects), which means that the company’s future IPO sponsorship and underwriting income will face pressure, and the overall revenue of the investment banking sector is also at risk of decline.

Not only is the number of IPO reserve projects zero, but Huatai Securities also has zero reserve projects for private placements, rights issues, and convertible bonds in equity investment banking. The “invisible grain” for investment banking business lies in reserve projects, and without current reserves, future equity investment banking income will face a substantial risk of decline, leading to a repeat of the embarrassing situation of “having no rice to cook."

As a regional small and medium-sized brokerage, Huatai Securities faces not only the “hunger” of large investment banks like CITIC Securities and Guotai Junan in its Anhui region but also direct and fierce competition from Guoyuan Securities within the province. In the context of the increasingly evident Matthew Effect, it may be difficult to break through.

Despite the growth in investment banking revenue, investment banking still accounts for a low proportion of Huatai Securities’ overall revenue, approximately 3.35% in 2025.

Compliance and Internal Control Risks

If performance fluctuations are market risks, then compliance and internal control are the “lifeline” concerning Huatai Securities.

In September 2025, the Sichuan Securities Regulatory Bureau issued a warning letter to Huatai Securities’ Chengdu Dongda Road Securities Business Department. This business department not only failed to conduct assessments of employees’ integrity in accordance with regulations but more seriously, employee Tian Ke was found to have engaged in “promoting false financial products to clients for improper benefits, causing significant losses to clients.”

The business department is the “capillary” of brokerage firms and also a high-risk area. “Promoting false products” is not only a violation of regulations but also reflects Huatai Securities’ shortcomings in controlling its branches. Clients entrust their trust to the brokerage firm, only to be met with false products and significant losses, which has caused considerable harm to Huatai Securities’ brand reputation.

Earlier, in January 2025, the Anhui Securities Regulatory Bureau had already issued a warning letter to Huatai Securities, directly pointing out two major issues: first, in the private fund custody business: failure to enforce regulations strictly, lack of thorough contract review, inadequate information disclosure review, and even committing the basic error of “not issuing a custodian report in the fund’s periodic report.” Second, in employee management, failure to effectively regulate the professional behavior of individual staff, reflecting inadequate compliance management within the company.

In the section on “Significant Litigation and Arbitration Matters” of the annual report, the plaintiff Jiangsu Yuning Private Fund Management Co., Ltd. sued Huatai Securities, demanding that it bear joint liability for losses related to the “Huatai Securities - Sunshine City Group Purchase Tail Payment Asset-Backed Special Plan,” with an amount involved as high as 300 million yuan and corresponding interest.

Although the company stated in the annual report that “the probability of being identified as having joint liability as a manager is relatively low, and it has not made provisions for expected losses on this case,” regardless of the final outcome, this significant lawsuit will place considerable pressure on the company’s reputation and potential finances.

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Editor: Company Watch