Haitong Securities Co., Ltd.

THE SCOOP

Coming in through the backdoor

Haitong Securities is one of China's oldest domestic brokerages, with a history stretching back to 1988.  In July 2007, it became the first Chinese brokerage to enter the stock market under the technique commonly referred to as a "backdoor listing."  Haitong was able to skirt Chinese government regulations by merging with Shanghai Urban Agro-Business Co., Ltd., changing the name of the company to Haitong Securities and launching its initial public offering (IPO) on the Shanghai stock market.  The backdoor move was considered a necessary fundraising measure in order to compete with international firms which are entering into the securities business in China.  Haitong was unable to comply with the rule that firms have to have three consecutive years of earnings in order to become public.

Haitong serves 2 million people on the Chinese mainland through its 124 domestic branches.  The brokerage provides securities underwriting, brokerage, trading, investment advisory, research, and investment fund and asset management services to its clients.  It also provides an outlet for the sales and purchase of securities, agency of debt service and dividend distribution of securities, custody and authentication of securities, agency of registration and accounts opening and proprietary trading of securities.

Taking off

In July 2007, Haitong got approval from the China Securities Regulatory Commission to expand its company into Hong Kong, giving the company new access to the international financial world.  The new company has been started with a capital of HK$100 million and was named Haitong (Hong Kong) Financial Holdings.  In addition to the successful launch of its public stock, Haitong Securities has posted some impressive numbers for 2007.  Year-ending numbers put the company's net profits at approximately RMB 5.46 billion, an increase of almost RMB 4.8 billion from 2006.  These numbers reflect an eightfold increase in profits for Haitong and an incredible 32-fold profit for Shanghai Urban-Agro Business, the company which Haitong acquired in order to facilitate its public offering.  In 2008, however, Haitong’s gross profits fell from RMB 10.5 billion to RMB 6.6 billion.

Private placement boosts income

With Haitong's new IPO hot off the presses, the securities firm decided it would hold an additional private stock placement in November 2007 in order to raise even more funds to boost its competitive edge.  The brokerage sold off RMB 25.9 billion to institutional investors for the purpose of "expanding the capital pool and subsidizing operations."  The institutional investors were some of the Chinese financial world's biggest players, including Pacific Investment Management, Huatai Asset Management, Youngor Group, Taikang Asset Management, Jiangsu Guoxin Investment Group, CITIC Group, Shanghai Electric Power Company and China Ping An Trust & Investment.

Branching out

The results so far have seemed to hint at a rosy future for Haitong Securities.  However, if the firm wants to stay competitive with domestic competitors like chief rival CITIC Securities, it must expand its business beyond the shores of mainland China.  The firm gained permission from the China Securities Regulatory Commission to do just that in January 2008 when it was approved to invest overseas on behalf of its clients under the rules of the Qualified Domestic Institutional Investor scheme (QDII).  In August 2007, Fortis Haitong Investment Management was also granted approval to launch products under QDII.  Even though the expansion marks the beginning of an important growth strategy for Haitong, the firm is not alone among domestic competitors who have also received QDII approval.  Firms who have been approved include China International Capital Corporation, CITIC Securities, China Merchants Securities, Guotai Junan Securities, Orient Securities, Everbright Securities and Huatai Securities.

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Haitong Securities Co., Ltd.


17-20/F Jiangzhong Plaza
No. 98 Huaihai Middle Road
Shanghai 200021
Phone: +86-21-5359-4566
Fax: +86-21-5385-8536
www.htsec.com

STATS


  • Employer Type: Public
  • Stock Symbol: 600837
  • Stock Exchange: SSE
  • President: Mingshan Li
  • 2008 Employees: 3,786

Major Office Locations

  • Shanghai, China

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