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CGS (06881.HK)'s business is highly sensitive to A-share turnover as the group still relies heavily on its brokerage operation, Daiwa stated in its report. The segment contributed 76% of the operating revenue of the group last year and 112% of pre-tax profit. As such, the group has the highest profit sensitivity to A-share daily turnover among peers.
Daiwa commented that CGS' brokerage business did not set clear strategy, as compared to HTSC (06886.HK) and CITIC SEC (06030.HK). Daiwa forecast CGS' market share of brokerage to keep fading.
Daiwa downgraded CGS to Hold from Outperform with target price slashed to $4.4 from $8.
AAStocks Financial News
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