UBS CSC Financial (601066): Investing and Brokerage Businesses Drive Q2 Results
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UBS keeps Sell on CSC Financial (601066) with a 12-month target of RMB20.30 on a P/B-ROE basis; at RMB25.43 (August 18, 2026) the stock trades near 1.5x 12/26E book value. Second-quarter results were driven by investing and brokerage. 1H26 net investment income rose 74% YoY, implying RMB4.6bn in 2Q (+71%/+32% YoY/QoQ), as the STAR 50, ChiNext and CSI 300 rallied 76%/36%/12%. 1H brokerage net revenue gained 51%, but 2Q's 66% YoY rise lagged a 1.3x jump in A-share average daily turnover, evidence of persistent fee-rate pressure; financial product sales rose 56% YoY. Investment banking fell 34% YoY in 2Q, with A-share IPO market share down roughly 39pp to about 1% (UBS estimate) despite industry IPO proceeds of RMB45bn (+1.1x YoY); Hong Kong share was 5.5%. Own-brand AUM grew 29%, beating the industry's 17%. Earnings quality improved: recurring ROE rose 3.4pp to 8.4%, adjusted leverage reached about 4.7x, and the interim DPS of RMB0.29 implies a ~32% payout. UBS forecasts 12/26E net profit of RMB12.204bn (EPS RMB1.57, above consensus RMB1.46); CXMT and YMTC stakes plus 35 A-share and 26 Hong Kong IPO mandates offer support.