CICC (3908.HK): Initial Review: Strong Investment Performance Offset Weak Investment Banking; Capital
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Goldman Sachs' initial review of CICC's 2Q26 results attributes the beat to proprietary investment income of Rmb6.0bn (up 54% yoy, 43% qoq, and 32% above GS estimates) and operating expenses 18% below forecast, more than offsetting investment banking revenue of Rmb1.4bn (54% below GS) and brokerage revenue of Rmb2.1bn (11% below). Asset management revenue of Rmb932mn beat by 8%, and net interest income of Rmb99mn far exceeded GS's Rmb10mn as margin financing balances jumped 77% yoy to Rmb80bn; total assets grew 42% yoy. The cost-income ratio fell to 43.8% (GS: 50.9%), annualized ROE rose to 13.9% (1Q26: 11.2%; 2Q25: 7.8%), and active leverage increased from 5.4x to 6.0x. Results validate the bank's 2H26 sector themes of active capital markets, strong trading opportunities, and improving capital efficiency. CICC's tri-party restructuring won approval from the SSE's M&A restructuring committee on August 27, 2026, shifting investor focus to post-deal capital deployment and ROE recovery. Goldman maintains Buy on the H-shares (3908.HK) with a 12-month target of HK$34.32, implying 50.0% upside from HK$22.88 (11x 2027E P/E), and Neutral on the A-shares (601995.SS) at Rmb51.53, 48.5% above the current Rmb34.71 (18x 2027E P/E).