Hunan Finance and Securities Absorbs Dazhihui Trading Suspended, Multiple Brokerage Mergers Underway, Where Has Industry Consolidation Reached?

AI · Brokerage Mergers and Acquisitions Run Parallel with Dual Main Lines: Where Is the Survival Space for Small and Medium-Sized Brokers?

Currently, the securities industry’s mergers and restructuring are entering a heated phase, with brokerages updating their merger “progress bars” one after another.

On the evening of March 15, Xiangcai Securities (600095.SH) and Dazhihui (601519.SH) both announced that due to the need to update relevant data, the Shanghai Stock Exchange suspended review of the share swap merger between Xiangcai Securities and Dazhihui. In late October last year, the transaction application was accepted, but later Dazhihui was sued by a natural person shareholder for procedural violations, causing twists and turns in the process. However, the plaintiff eventually withdrew the lawsuit.

Now, this transaction has been paused. Both Xiangcai Securities and Dazhihui stated that the suspension of review will not have a significant adverse impact on the transaction.

In addition, several other brokerage mergers are currently underway, including “Dongwu Securities + Donghai Securities,” and “CICC + Dongxing Securities + Cinda Securities.”

Regarding the current pattern of mergers in the securities industry, some non-bank analysts from brokerages say that the trend is gradually showing a dual main line: “Top-tier firms strengthening alliances to create first-class investment banks” and “Local state-owned assets leading regional integration to develop domestic leaders,” both running concurrently.

Recently, the “14th Five-Year Plan” explicitly proposed to optimize the financial institution system, promote various financial institutions to focus on their core businesses, improve governance, develop in a differentiated manner, support large state-owned financial institutions to enhance comprehensive service levels, strictly regulate access standards and supervision requirements for small and medium-sized financial institutions, and cultivate first-class investment banks and investment institutions.

Xiangcai’s Merger with Dazhihui Suspended

According to the Shanghai Stock Exchange’s official website, on March 14, the review status of Xiangcai Securities’ merger with Dazhihui was changed to “Suspended (Financial report update).”

Xiangcai Securities disclosed that the valuation data in the submitted transaction application documents had expired and needed to be updated and resubmitted. Additionally, the audited financial data in the restructuring report will expire at the end of this month, and work on updating financial data is underway.

In response, Xiangcai Securities said that the suspension of review will not have a significant adverse effect on the transaction. The company and relevant intermediaries are actively working on updating valuation data, financial data, and application documents, and will submit the updated application materials to the exchange as soon as possible, requesting the review to be resumed promptly.

In mid-March 2025, due to plans for major asset restructuring, Xiangcai Securities and Dazhihui both suspended trading. Six months later, the merger plan was announced. Dazhihui disclosed in late October last year that the share swap merger with Xiangcai Securities had been accepted by the Shanghai Stock Exchange.

The restructuring plan shows that Xiangcai Securities’ share swap price is 7.51 yuan per share, and Dazhihui’s is 9.53 yuan per share, with a swap ratio of 1:1.27. Xiangcai Securities plans to issue a total of 2.282 billion shares, raising no more than 8 billion yuan in supporting funds. After the swap, Xiangcai Securities’ total share capital will increase to 5.141 billion shares.

However, shortly after the transaction was accepted, Dazhihui was suddenly sued. On November 12 last year, the company disclosed that individual Wang Gongwei filed a lawsuit seeking to revoke the shareholder approval for the merger with Xiangcai Securities.

In the lawsuit, Wang Gongwei argued that Dazhihui and Xiangcai Securities are related parties, and the transaction is a related-party transaction. Dazhihui did not follow proper auditing or valuation procedures. However, Dazhihui insisted that the procedures were legal and compliant, the shareholder meeting resolutions were valid, and it disclosed opinions from three institutions, including Yuekai Securities, on the merger.

At that time, the market was highly concerned about whether this lawsuit would impact the restructuring. Three days later, on November 15, Dazhihui announced that the plaintiff, Wang Gongwei, had filed a withdrawal application, which was approved.

Although the legal issue was resolved, Dazhihui still faces pressure from losses.

The earnings forecast shows that Dazhihui expects a net profit attributable to parent company shareholders of a loss between 34 million and 50 million yuan in 2025, with a non-recurring profit loss of 69 million to 85 million yuan. The company explained that in 2025, some of its business revenues increased compared to the previous year, and it continued to promote cost reduction and efficiency improvements, resulting in significant cost savings. However, revenue growth was not enough to cover costs.

Compared to this, Dazhihui’s losses are expected to narrow. For the full year 2024, the company reported a net loss attributable to parent of 201 million yuan and a non-recurring loss of 200 million yuan.

Xiangcai Securities, on the other hand, showed significant growth. It was disclosed that the company expects to achieve a net profit attributable to parent of 400 million to 550 million yuan in 2025, a year-on-year increase of 266.41% to 403.81%. The company stated that during the reporting period, its wholly owned subsidiaries, Xiangcai Securities’ brokerage, credit, investment advisory, and wealth management and proprietary trading businesses, saw significant growth, driving the company’s net profit sharply higher.

Multiple Brokerage Mergers in Progress

Including the above transaction, several other mergers in the securities industry are ongoing.

Earlier this month, the industry saw its first merger case for 2026. On March 2, Dongwu Securities announced that it was planning to acquire control of Donghai Securities through issuing A-shares. The announcement showed that on the previous day (March 1), Dongwu Securities signed a letter of intent with Changzhou Investment Group, the controlling shareholder of Donghai Securities.

On the evening of March 13, the relevant transaction plan was announced. It disclosed that Dongwu Securities intends to purchase approximately 1.554 billion shares of Donghai Securities, accounting for 83.77% of the total, at an issuance price of 9.46 yuan per share.

After the transaction, Dongwu Securities will become the controlling shareholder of Donghai Securities, with the same controlling shareholder and actual controller, both being Suzhou International Development Group.

On Monday (March 16), both companies’ stocks resumed trading, with mixed performance: Dongwu Securities fell 7.1%, while Donghai Securities rose 8.61%.

Not only regional brokerages are consolidating, but also brokerages under the same major shareholder are accelerating integration. A notable example is “CICC + Cinda + Dongxing.”

In late November last year, CICC announced that it was planning a major asset restructuring, involving share swaps to acquire Dongxing Securities and Cinda Securities, with all three parties having signed relevant agreements.

From the shareholder background, all three companies involved are “Hui Jin” system brokerages. As of the end of September last year, Central Huijin held 1.936 billion shares of CICC, accounting for 40.11%, making it the controlling shareholder; Central Huijin also indirectly held shares in Cinda Securities and Dongxing Securities through China Cinda and Oriental Asset Management, with holdings of 78.67% and 45%, respectively.

This “triple-in-one” integration is progressing rapidly. In late December, CICC issued over 20 announcements, including plans for share swaps to acquire Dongxing Securities and Cinda Securities.

The plan shows that CICC’s A-share exchange price is 36.91 yuan per share, while Dongxing and Cinda’s prices are 16.14 yuan and 19.15 yuan per share, respectively; the exchange ratios are 1:0.4373 for Dongxing and 1:0.5188 for Cinda.

Based on these figures, CICC plans to issue approximately 3.096 billion A-shares. After the swap, Central Huijin’s direct holdings in CICC will remain at 1.936 billion shares, continuing as the controlling shareholder and actual controller.

Dual Main Lines Drive Broker Mergers and Accelerate

In recent years, the brokerage industry has entered a fierce phase of mergers and restructuring. In 2025, Guolian Minsheng, Guotai Haitong appeared on the A-share market, and approvals were granted for “Western + Guorong,” and “Guoxin + Wanhe,” among others… The wave of mergers is gaining momentum.

Regarding the current situation of mergers and restructuring in the securities industry, Zhao Ran, Chief of Non-Banking and Fintech at CITIC Construction Investment, said that overall, the industry’s merger trend is gradually showing a dual main line: “Top-tier firms strengthening alliances to build first-class investment banks” and “Local state-owned assets leading regional integration to develop domestic champions,” both running concurrently.

He cited examples: on the large-scale integration end, Guotai Junan’s merger with Haitong Securities, and CICC’s announced absorption of Dongxing Securities and Cinda Securities, all representing large-scale consolidations of major comprehensive brokerages; on the regional integration end, local government-led financial resource consolidations such as Dongwu Securities’ planned acquisition of Donghai Securities, Western Securities’ acquisition of Guorong Securities, and Guoxin Securities’ acquisition of Wanhe Securities.

Meanwhile, the driving forces behind industry mergers are also changing. Zhao Ran observed that previously, the logic for broker mergers was mainly policy-driven to mitigate regulatory risks. Now, this round of mergers is a two-way resonance between market entities’ proactive choices and policy guidance.

He explained that on one hand, the decline in fee rates for light-capital brokerage businesses and the rising capital thresholds for heavy-capital businesses have squeezed profit margins for small and medium-sized brokers. Without accelerated consolidation, it will be difficult for leading brokerages to enhance their competitive advantages. On the other hand, since the “New Nine Regulations,” a series of policies have supported brokerages in strengthening and optimizing through mergers and restructuring, providing institutional guarantees for such activities.

(This article is from Yicai)