First Shanghai | [Company Research] China International Capital Corporation (3908, Buy): Strong Performance Recovery, Dual Drivers of Internationalization and Mergers & Acquisitions

Higher-than-expected profit growth, significant earnings recovery

The company’s 2025 annual report performance was outstanding. Full-year operating revenue reached 28.48 billion yuan, up +33.5% year-on-year; net profit attributable to shareholders was as high as 9.79 billion yuan, up sharply +71.9% year-on-year. Profit growth significantly outpaced revenue growth, demonstrating strong operating leverage. In Q4 2025, revenue and profit were 7.22/3.22 billion yuan, respectively, down -2.7% and up +44.1% quarter-on-quarter. As of end-2025, the company’s total assets reached 782.83 billion yuan, up +14% from the end of the previous year. Of this, the scale of financial assets increased 16% year-on-year to 530 billion yuan; equity-class and debt-class assets increased by +25%/+7%, respectively. This was mainly driven by notable growth in the derivatives business and credit-class assets. In 2025, the company’s leverage ratio rebounded to 5.3x. Full-year ROE increased by +3.7 pct year-on-year to 9.4%. The company’s cash flow position was excellent: net cash flow from operating activities increased +69.7% year-on-year to 71.08 billion yuan, reflecting high-quality profitability.

Investment banking and proprietary businesses driven by dual engines, wealth management transformation deepens

The company’s core business segments coordinated and exerted strong efforts, with robust momentum for growth. 1) Investment banking business was particularly prominent. Revenue was 5.03 billion yuan, up a remarkable +62.5% year-on-year. The company’s rankings for Chinese enterprises’ global IPO financing scale, Hong Kong IPO underwriting scale, and China M&A market transaction scale were all #1 in the market. It successfully sponsored benchmark projects such as CATL and Seres. 2) Investment business seized market opportunities. Full-year revenue was 14.20 billion yuan, up +40.32% year-on-year. More than 100 new finger-head enterprises were added. Among them, the proportion of projects in emerging industries remained above 60%. 3) Wealth management and asset management business revenue was 6.17/1.58 billion yuan, respectively, up +44.8%/+30.8% year-on-year. At year-end, total client assets under wealth management reached 4.28 trillion yuan, and the buy-side advisory holdings scale exceeded 130 billion yuan, hitting a historical high. CICC Fund and CICC Capital’s asset management scales surpassed 270 billion yuan and 520 billion yuan, respectively, increasing +25%/+15% compared with the end of the previous year, respectively.

International business global expansion scores another win

The effectiveness of its internationalization strategy is significant; it has gradually become the core engine for the company’s performance growth. In 2025, overseas business revenue was 8.39 billion yuan, up a sharp +58% year-on-year, accounting for nearly 30% of total revenue and reaching a historical high. The company fully leveraged its unique international network advantages. As the only Chinese investment bank, it served the Ministry of Finance for offshore sovereign bond issuance for 9 consecutive years. The QFII business has maintained the #1 position in the market for 22 consecutive years. The company introduced more than 200 billion yuan of foreign investment into China throughout the year and completed approximately US$6.0 billion of Belt and Road-related transactions. To further deepen global deployment, in 2025 the company opened a branch in Dubai, becoming the first Chinese securities firm to establish a licensed branch institution in the Gulf region. Its internationalization moat continued to strengthen.

Target price HKD 21.84, Buy rating

Given the company’s strong performance in 2025, competitive advantages across all business lines are consolidated, and internationalization and M&A integration (absorbing the merger of Dongxing Securities and Cinda Securities) are underway. The long-term growth potential is expected to be unlocked. We expect the company’s attributable net profits for 2026-2028 to be 112.8/125.4/138.8 billion yuan, respectively. Considering that the company is a leading broker in the industry, with outstanding profitability and clear certainty of future growth, the target price is HKD 21.84, equivalent to 1x PB based on 2026 forecasts. The “Buy” rating is maintained.

Key risks

1. Capital market volatility risk; 2) Policy and regulatory risk; 3) Operational and reform risk; 4) M&A integration progress falling short of expectations.

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