China Galaxy 2025 Annual Report: "Relying on Market Conditions" Revenue Account for Over 75% IPO Sponsorship Business Weak Bond Underwriting "Large but Not Strong"

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Produced by: Research Institute of Listed Companies

Author: Turing

Recently, China Galaxy released its annual report. In 2025, the company achieved operating revenue of RMB 28.3B, up 24.34% year over year; its net profit attributable to shareholders was RMB 12.52B, up 24.81% year over year. With the strong surge in performance in 2025, was the α benefit driven by optimization of its business structure, or was it a β market cycle created by the market rebound?

From the perspective of business structure, China Galaxy clearly shows a “living off market行情” feature: the combined revenue from its brokerage business and its proprietary business accounts for more than 75% of total revenue, higher than some regional mid-to-small brokerages. Meanwhile, the net fee income from its investment banking business accounts for only 3% of total revenue, and its equity underwriting and sponsorship income is limited—especially its IPO business, whose competitiveness is very weak. Although its bond underwriting business is large in scale, the professional quality rating for its bond underwriting practice fell from Class A to Class C.

“Revenue from living off market行情” exceeds 75%

In 2025, the A-share market saw a distinctly strong bull market round: the Shanghai Composite Index hit a ten-year high, and both full-year A-share trading value and average daily trading value rose significantly. The nationwide margin trading and securities lending (financing and securities lending) balance was RMB 28.3B, up 36.3% from the end of the prior year.

China Galaxy was no exception. In 2025, it achieved operating revenue of RMB 283.02 billion, up 24.34% year over year; net profit attributable to shareholders was RMB 12.52B, up 24.81% year over year.

China Galaxy’s growth in performance was achieved amid the broader market upturn, because its business structure is highly dependent on market conditions.

The annual report shows that in 2025, China Galaxy’s net income and proportions by business segment were as follows: net brokerage fee income was RMB 8.85B, representing about 31% of total revenue; proprietary business income (calculated according to the formula “proprietary business income = investment net gains + net gains from fair value changes – investment gains in associates and joint ventures”) was RMB 13.12B, accounting for 46%; net investment banking fee income was RMB 0.83 billion, accounting for 3%; and net asset management fee income was RMB 0.517 billion, accounting for 2%.

When the two major businesses that highly depend on market conditions—brokerage (31%) and proprietary business (46%)—are added together, China Galaxy’s “living off market行情” business revenue share reaches 77%.

A 77% share is even higher than that of some regional brokerages—for example, Guohai Securities. In 2025, Guohai Securities achieved operating revenue of RMB 517M. Its wealth management business (including brokerage) generated revenue of RMB 3.45B, accounting for 48.23% of total revenue; revenue from sales, trading, and investment was RMB 0.614 billion, accounting for 17.76%. Combined, the two add up to only 66%.

As for asset management and investment banking businesses that can better reflect differentiated and specialized features, China Galaxy’s revenue shares in 2025 were only 3% and 2%, respectively, totaling only around 5%.

The proprietary business is China Galaxy’s largest source of revenue in 2025, with a share as high as 46%. Full-year proprietary investment net income was RMB 13.1 billion, up 14% year over year. However, the quarterly volatility of the proprietary business is also the most pronounced: in the fourth quarter, proprietary investment net income was only RMB 1.67B, dropping about 78% quarter over quarter.

The proprietary business’s dependence on market conditions means the company’s profitability faces a large market risk exposure. Once the market turns, the performance will face the risk of a significant decline.

Weak IPO sponsorship business “Big but not strong” bond underwriting

In 2025, China Galaxy’s net investment banking fee income was RMB 0.83 billion, up 36.82% year over year. In terms of scale, investment banking income of RMB 0.83 billion ranked toward the back among top-tier brokerages, accounting for only 3% of the company’s total revenue.

Breaking down the investment banking business further, in 2025 China Galaxy completed 1 IPO project and 7 refinancing projects. The equity underwriting scale was RMB 614M, ranking 12th in the industry. From this description, investors may think China Galaxy’s equity underwriting ranks in the upper-middle tier. But within equity underwriting and sponsorship income, IPO revenue is the main component.

In 2025, China Galaxy completed its 1 A-share IPO project—Chaoyan Industrial Shares IPO project—and obtained underwriting and sponsorship income of RMB 0.3 billion. An underwriting and sponsorship income of RMB 8.7B is not even a single-digit fraction of what top-tier brokerages generate; it ranked 30th among all brokerages (data source: Wind).

As of March 31, 2026, China Galaxy’s A-share IPO reserve projects numbered 2 (based on the exchange’s acceptance criteria, excluding projects that were terminated and those already issued), and again ranked 30th in the industry.

China Galaxy’s bond underwriting scale is larger. According to Wind statistics, in 2025 the company’s bond underwriting scale was RMB 30M, up 37.3% year over year, ranking 6th in the industry. Among them, the underwriting scale for local government bonds was RMB 30M.

However, leading in scale does not necessarily mean leading in profitability. The fee rates for local government bond underwriting are extremely low (some are only at the level of a few ten-thousandths). The profit contribution from this type of business is far less than that from more market-oriented products such as corporate bonds and enterprise bonds, and also far less than the level of a few percentage points of A-share IPOs.

Moreover, the quality of China Galaxy’s bond underwriting is yet to be verified. At the end of 2025, the China Association of Securities issued the 《2025 Securities Company Bond Business Practice Quality Evaluation Results》. The results show that China Galaxy was rated Class C, i.e., the worst class.

来源: Website of the CSRC Securities Association

Back in 2022, China Galaxy’s bond underwriting quality rating was still Class A; in 2023 and 2024, it was rated Class B.

Worth noting is that China Galaxy may also have a suspicion of “expanding bond underwriting scale by trading at lower prices.” In July 2025, the National Association of Financial Market Institutional Investors launched self-regulatory investigations into six lead underwriters, including Galaxy Securities and GF Securities and Industrial Bank. The reason was that the association monitored that, in the secondary capital bond projects for 2025–2026 by 广发银行, the bidding lead underwriting fees offered by the above six brokerages drew market attention.

According to Guangfa Bank’s announcement, the tax-included estimated service fees selected for China Galaxy, GF Securities, Industrial Bank, Guotai Junan, China Jianyin, and China Securities were 700 yuan, 1050 yuan, 700 yuan, 4998 yuan, 35000 yuan, and 21000 yuan respectively. At a “白菜价” of 700 yuan, it may not even match the salary of most China Galaxy employees for a day.

Is compliance risk control really a “weak plank in the barrel”?

Although its financial data look impressive, issues exposed in 2025 regarding compliance and internal controls cannot be ignored.

In January 2025, China Galaxy received an administrative regulatory measure from the Beijing branch of the China Securities Regulatory Commission requiring rectification. The Beijing branch pointed out that the company had the following problems: First, the company’s controls over cashing out by circumventing rules in margin financing and securities lending business were not strong enough, effectively providing convenience for clients to engage in improper trading activities. Second, as an actual capital contributor participating in “targeted capital increase + securities lending” arbitrage, it constituted an improper off-the-books reduction of holdings and an improper trading conduct in disguised form.

On October 27, 2025, the company’s securities business department on Mengzi Road in Huangpu District, Shanghai received a warning letter issued by the Shanghai branch of the CSRC. The Shanghai branch believed that the Mengzi Road branch in Huangpu District had the following problems: it did not strictly standardize employees’ practice conduct; and in the process of distributing financial products, some employees had situations where they transmitted to clients promotional materials and publicity expectations such as non-standard recommendation materials and projected收益率 that were not uniformly provided by Galaxy Securities Co., Ltd.

China Galaxy’s distribution of financial products is a long-standing “tough nut” problem. On November 30, 2023, China Galaxy received a warning letter from the Beijing branch of the CSRC. At that time, in its business related to private funds, it had three major issues: the distribution market-entry process was not prudent; the fulfillment of custody duties was not adequate; and branch机构 management was not standardized. It was also required to rectify and establish and improve relevant systems.

On December 12, 2024, the Jiangsu branch of the CSRC issued a warning letter to Shi Min from China Galaxy’s certain branch in selling financial products. The CSRC determined that, when recommending private funds, she used inappropriate wording that misled clients, and it was recorded in the securities and futures market integrity file.

China Galaxy’s 2025 annual report shows that the company’s outstanding balance of financial products it distributes reached RMB 2519.48 billion, up 19.3% year over year. With such a huge distribution scale behind it, are issues like weak product entry screening, noncompliant employee promotion, and missing post-investment management still present? This is a systemic risk that both the company’s management and regulators need to face squarely.

In addition to the information disclosed in the annual report, its securities sponsor representatives were fined for their practice in investment banking business. In December 2025, due to inadequate fulfillment of duties in the sponsorship of the IPO project for Wuhan Yuanfeng Automobile Electronic Control System Co., Ltd. (Yuanfeng Electronic Control), two individuals—Yuan Zhiwei and Wang Bin—received regulatory measures from the Shenzhen Stock Exchange in the form of a meeting and discussion.

Upon investigation, Wuhan Yuanfeng Automobile Electronic Control System Co., Ltd. had some performance dispute matters with important clients, accounting treatment of rebates in 2020, and internal controls related to revenue recognition, all of which were found to be noncompliant. In the course of performing duties, the sponsor representatives, first, did not give sufficient attention to these circumstances and did not prudently verify them; the verification opinions issued were inaccurate. Second, there were also some defects in confirmation letters and site-visit procedures during the course of practice.

China Galaxy’s A-share IPO projects are already few—there have even been years with zero underwriting and sponsorship income for multiple years. Yet sponsorship issues still appeared, such as lack of diligence and failure to fulfill responsibilities to the required standard.

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