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2016 Interim Results
August 2016
(A joint stock company incorporated in the PRC with limited liability
under the Chinese corporate name 华泰证券股份有限公司and carrying
on business in Hong Kong as HTSC)
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1
Agenda
2 2
2 3
2 1
Financial overview
Business overview
Company overview
2 4 Development strategy
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2
Company overview
Financial overview
Business overview
Agenda
Development strategy
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3
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
1/2/2014 8/17/2014 4/2/2015 11/15/2015 6/30/2016
Shanghai Composite Index
Shenzhen Composite Index
Hang Seng Index
FTSE 100
S&P 500
Market Environment
Performance of key market indices1
China’s stock market continued to develop despite the volatile environment in 1H16
Sources: Securities Association of China, Wind, Zero2IPO Research
Note: 1. All indexes are rebased to the beginning level of Shanghai Composite Index
Marginal financing and securities
lending (MFSL) balance Stock trading volume
Low: 347
High: 2,273
Current:854
0
500
1,000
1,500
2,000
2,500
1/2/2014 8/2/2014 3/2/2015 10/2/2015 5/2/2016
Equity and debt issuance amount
696 812
8,945
18,372
1H15 1H16
Equity Debt(RMBbn)
(RMBbn)
443
784
1H15 1H16
Chinese M&A transaction value
(RMBbn)
0
500
1,000
1,500
2,000
2,500
01/02/14 08/02/14 03/02/15 10/02/15 05/02/16
High:2,356
Low:111
Current: 575
(RMBbn)
2016/6/30
+38.5%
+86.7%
+13.6%
(10.8%) (3.6%)
AUM of securities companies
11.9
15.0
2015 1H16
(RMBtn)
2016/6/30
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4
Business Highlights
Ranked #1 in terms of stock and fund trading
volume for 3 consecutive years and maintained
growth for 4 consecutive years
Source: Company data
Strengthening leadership Pursuing breakthrough
ZhangLe WM ranked #1 in terms of number of
active users among all apps of securities
companies
Ranked #1 in terms of number of M&A
transactions by Chinese listed companies for 5
consecutive years
Ranked #3 in terms of market value of entrusted
assets for 3 consecutive years
Ranked #3 in terms of size of the capital
intermediary business for 3 consecutive years
15 million cumulative app downloads of
ZhangLe WM
Ranked #1 in terms of balance of client deposits
AUM surpassed RMB800bn and ranked #2
among securities companies
Ranked #2 in terms of marginal financing and
securities lending (MFSL) balance
Ranked #3 in terms of equity underwriting
amount
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5
Business Performance Overview
Net profit
272,226
452,615 402,679
41,299 80,785 79,737
2014 2015 1H16
Total assets Net assets
Total assets and net assets
ROAA and ROAE1 1H16 revenue breakdown
Overall performance decreased meaningfully YoY in 1H16 but remained one of the best first half performers
1,533
6,719
2,944
1H14 1H15 1H16
(RMBmm)
Source: Company data
Note: 1. Non-annualized data, ROAA = net profit/average total assets, ROAE = net profit/average net assets
Brokerage
and wealth
management
45.4% Investment
banking
8.9%
Asset
management
12.3%
Investment
and trading
7.3%
Overseas
business
and others
2.1%
Capital
intermediary
24.1%
1.43%
4.1%
1.58%
15.3%
0.69%
3.6%
ROAA ROAE
1H14 1H15 1H16
(RMBmm)
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6
Company Overview
Financial overview
Business overview
Agenda
Development strategy
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7
5,683
21,289
11,581
1H14 1H15 1H16
Outperformed Industry in spite of Decreases in Revenue and Profit
Revenue
Operating profit and net profit
Cost-to-income ratio
Source: Company data, financial report (IFRS)
Earnings per share
66.3%
59.4%
68.1%
1H14 1H15 1H16
1,915
8,636
3,692
1,533
6,719
2,944
1H14 1H15 1H16
Operating profit Net profit
0.27
1.14
0.40
1H14 1H15 1H16
(RMBmm)
(RMBmm) (RMB)
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8
Strong Growth in Investment Banking and Asset Management Businesses against the
Headwind
Brokerage and wealth management revenue
Asset management revenue
Investment banking revenue
Investment and trading revenue
3,420
15,655
8,053
1H14 1H15 1H16
(RMBmm)
545
745
1,026
1H14 1H15 1H16
502
957
1,426
1H14 1H15 1H16
1,046
2,966
839
1H14 1H15 1H16
(RMBmm)
(RMBmm) (RMBmm)
Source: Company data, financial report (IFRS)
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Continuous Rebalancing of Revenue Mix
Source: Company data, financial report (IFRS)
Brokerage
and wealth
management
46.4% Investment
banking
9.0%
Asset
management
8.6%
Investment
and trading
15.1%
Overseas
business
and others
2.7%
Brokerage
and wealth
management
52.2%
Investment
banking
4.8%
Asset
management
6.3%
Investment
and trading
11.4%
Overseas
business
and others
5.0%
Brokerage
and wealth
management
45.4% Investment
banking
8.9%
Asset
management
12.3%
Investment
and trading
7.3%
Overseas
business
and others
2.1%
Capital
intermediary
24.1%
Capital
intermediary
20.3% Capital
intermediary
18.1%
FY2015 revenue breakdown 1H16 revenue breakdown FY2014 revenue breakdown
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134,209
1,064
52,851
175 22,061
112,582
79,737
26,189
39,782
56,725
93,203
27,744
51,456
107,580
138,051
1,048
69,374
1,053 33,192
128,367
81,529
52,208
12,494
36,707
130,038
21,791
67,432
131,945
452,615 452,615
As of 30 June 2016
Flexible and Effective Liability and Liquidity Management Supports Business Growth
Source: Company data, financial report (IFRS)
(RMBmm)
As of 31 December 2015
• Huatai Zijin Investment increased its registered capital from RMB2.35bn to
RMB4.05bn
• Huatai Futures raised its registered capital from RMB809mm to RMB1bn
• Huatai Financial Holdings (Hong Kong) obtained No Objection Letter from
CSRC with regards to capital increase of HKD7.8bn after the reporting period
During the reporting period, HTSC completed repayment as follows:
• Interests of 2 tranches of corporate bonds (RMB770.4mm with tax included)
• Principals and interests of 2 tranches of subordinated bonds (RMB10,577mm
with tax included), of which 1 tranche was completely redeemed by exercising
the issuer redemption option at the end of the first year
• Interests of 3 tranches of subordinated bonds (RMB1,634mm with tax included)
Total assets
Other assets
Financial assets
available for sale
Cash and bank balances
Financial assets at fair
value through profit or loss
Financial assets held
under resale agreements
Margin accounts
receivable
Cash held on behalf of
brokerage clients
Net assets
Account payable to
brokerage clients
Financial assets sold
under repurchase
agreements
Short-term debt
instruments issued
Long-term bonds
Other debt
Other liabilities
Liabilities + Net assets
Capital raise by subsidiaries Bond repayment
402,679 402,679 (RMBmm)
Other assets
Financial assets available
for sale
Cash and bank balances
Financial assets at fair
value through profit or loss
Financial assets held
under resale agreements
Margin accounts
receivable
Cash held on behalf of
brokerage clients
Net assets
Account payable to
brokerage clients
Financial assets sold
under repurchase
agreements
Short-term debt
instruments issued
Long-term bonds
Other debt
Other liabilities
Total assets Liabilities + Net assets
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11
Company Overview
Financial Overview
Business overview
Agenda
Development strategy
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12
1.5
2.6 2.3
2014 2015 1H16
Market share
89
105
92
2014 2015 1H16
53
114
82
2014 2015 1H16
12.4
45.2
11.7
2014 2015 1H16
Strengthening Leadership in Brokerage and Wealth Management Business
Balance of client deposits Size of capital intermediary business
Further strengthening leadership in brokerage business and maintaining market position in capital intermediary business through
product and service expansion and O2O platform enhancement
(RMBtn)
Source: Company data
(RMBtn)
Market share 7.9% 8.3% 3.8% 4.6% 8.5% 4.5%
(RMBbn) (RMBbn)
6.5% 5.7% Market share 5.2% 4.8% 5.5% 5.3%
Stocks and funds trading volume Market value of client entrusted securities
Ranking Ranking 1 1 1 3 3 3
Ranking Ranking 3 3 1 3 3 3
Market share
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13
656
924 980
2014 2015 1H16
233
893
250
2014 2015 1H16
43
134
78
2014 2015 1H16
27 41
2015 1H16
22 34
2015 1H16
Strengthening Leadership in Brokerage and Wealth Management Business (Cont’d)
Mutual funds distribution Entrusted fund and outsourced business scale
Expansion of customer base and optimization of customer mix, steady transformation of wealth management business model,
ongoing improvement of high net worth individuals and institutional client services, and continuous business innovation and
enhancement
Source: Company data
3.1% 4.9% 4.9%
Entrusted fund business
Private fund outsourcing business
(RMBbn)
(RMBbn)
307 514
269 504
Number of brokerage and wealth management clients Value of financial products distributed
(10 thousands)
(RMBbn)
(RMBbn)
1,850 2,366 2,795 Financial
products
for sale
Market share # of products
for sale
# of products
for sale
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14
Leading Mobile Finance Franchise
An industry leading mobile financial service platform
To further enhance competitive edges in mobile financial services through client-centric principles and centralized marketing
efforts
ZhangLe WM is driving customer services and customer stickiness
1,830k Daily active users
15,160k 555k
93%
Cumulative downloads and
users on platform
# of accounts opened on
mobile terminals
% of new account
opening
37%
% of transaction
value
78%
% of transacting
clients
Source: Company data, Analysys, TalkingData, Quest
Note: 1. As of June 30, 2016
Centralized
marketing
Centralized
services
Centralized
operations
ZhangLe
WM
platform
Online marketing platform around ZhangLe WM
1
ZhangLe WM ranked #1 among trading app
developed by securities companies as of
June 2016
1
ZhangLe WM ranked #1 in terms of user
activeness and coverage among all traditional
securities apps1
3 On 2016 TOP1,000 APP in China, ZhangLe
WM ranked #3 in terms of number of monthly
active users among stock trading APPs,
following only Flush and Great Wisdom
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15
12,996
28,335
54,422
1H14 1H15 1H16
11,592 20,613
39,328
1H14 1H15 1H16
10 10
22
29
8
2012 2013 2014 2015 1H16
No.1 M&A advisor to Chinese listed companies for 5
consecutive years2
Dominant M&A Franchise and Steady Growing Underwriting Business
Industry leading M&A capabilities substantially raised brand awareness. Strategic partnership with high quality clients generates
business opportunities. Focus on new business during execution of landmark deals and innovative business model
Source: MergerMarket, company information, Wind
Note:
1. Number of greater China M&A transactions by MergerMarket
2. Number of transactions is based on transactions approved by CSRC
3. Equity underwriting includes IPO, private placement, public follow-on offering and rights issue; Would rank #1 in terms of number of ECM transactions in 2015 if counting 8 exchangeable bonds and 1 convertible bond
4. Debt underwriting includes corporate bonds, enterprise bonds, commercial paper, medium term note, financial bonds, government backed agency debts, convertible bonds, exchangeable bonds, asset-backed
securities, and placement tools
Equity underwriting volume and ranking3 Debt underwriting volume and ranking4
Ranking Financial advisor Number of transactions
1 Huatai Securities 29
2 CICC 25
3 China Renaissance 21
4 Morgan Stanley 19
5 Goldman Sachs 16
6 Southwest Securities 16
6 UBS 15
8 China Securities 15
8 Haitong Securities 14
10 GF Securities 14
Leading M&A house in 1H161
(RMBmm) (RMBmm)
(Number of transactions)
1 1 1 1 1
Ranking 7 5 3
Ranking 18 14 12
13 24 18 Number of
transactions 17 21 49 Number of
transactions
Ranking
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Dominant M&A Franchise and Steady Growing Underwriting Business (Cont’d)
Source: Company information, Wind
A market leader with successful cases
Yangtze Power acquired 100% shareholding
in Chuanyun Company for RMB79.7 billion
through a stock and cash deal
The deal showcased significant innovation
in obtaining administrative approval and
M&A approval
The deal is well recognized by Three
Gorges Group, Yangtze Power, and the
broader market
The deal demonstrated Huatai’s outstanding
capability in advising M&A restructuring
transactions for large-scale SOE clients
Restructuring of China Yangtze Power, a new
chapter for serving SOE clients
In April 2016, Focus Media successfully
launched a non-public offering of 253
million shares to raise RMB5bn
Largest A-share re-listing by Chinese
Concepts Stocks to date, marking a
milestone among similar type of transactions
The success was attributed to meeting the
needs of international shareholders by
introducing domestic strategic investors
and the cash + stock shell arrangement
and taking into consideration of the
uniqueness of the A-share market
A-share relisting by Focus Media
State Power Investment’s public offering of
renewable corporate bonds with total
issuance amount of up to RMB20bn and the
1st issuance size of RMB4bn
1st renewable corporate bonds issued by an
SOE
1st renewable corporate bonds issued by a
power company
1st renewable corporate bonds underwritten
by Huatai Securities as a lead underwriter
1st renewable corporate bonds by an state-
owned power company
Acted as a sole lead underwriter for
GoerTek’s RMB1.5bn corporate bonds
5-year tenor, with interest rate step-up at
issuer’s option and bondholder redemption
option at the end of year 3
Both issuer and bond ratings of AA and coupon
rate at 4.28%, the lowest among all issuance
of similar type of products by private
companies during similar period of time
Active investor subscription with 3.83 times
subscription
Successfully raised low-cost bond financing for
a leading private company
Outstanding achievements in implementing the “professional division of work + systematic synergies” business model and the
“client manager + product specialist + industry expert” talent cultivation model
Number of listings sponsored and size of the private placement
102
1,369
1H15 1H16
9 21
(RMBmm)
NEEQ business focus
12 times
increase
Listings
sponsored
4 NEEQ projects covers well known and reputable companies in a wide range of fields
including online travelling, online education, online medical, media, and information
services. Well positioned to provide whole-chain services, including industrial
consolidation and investment and financing, to high quality TMT players
4 Leverage strengths of the investment banking in the healthcare industry to establish
partnership with multiple well-known healthcare institutional investors and biochemical
and pharmaceutical parks in various locations. The projects currently listed all
outperform the industry
4 Among top 10 NEEQ listings in 1H16 by issuance size, 2 were sponsored by Huatai.
The company will continue leverage advantages in M&A business and explore
inorganic opportunities for the clients by sourcing high quality acquisition targets
Emerging
features of the
TMT industry
Active expansion of
capital market
transaction services
Focus on
medical and
pharmaceutical
industry
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17
Asset management business realizes tremendous growth, facilitating the transformation into wealth management business model.
Continue to improve management capacity, launch new flagship products, strengthen fixed income business, develop entrusted
business, expand institutional business, and lead innovation of asset-backed securitization. Financing business and bank-
securities business continue to grow
58 101 118 284 500
693 3
13 23
345
614
834
2014 2015 1H16
Collective AM Targeted AM Specialized AM
AUM of securities companies’ AM business
The Emerging Leading Position of the Asset Management Business
Upgrading by introducing four featured brands
(RMBbn)
AUM ranking
Active AUM
ranking
5 4
5 3 2
Cash product represented by
Daily Gain, Daily Facai, and Huobi
Zengqiang
Active management bond
product represented by
Zijin Serial
Assets securitization product
represented by JD Baitiao
Investment and
financing product
represented by Tou Rong Bao
Source: Company information, Wind
Multiple breakthroughs in product and business innovation
Leading
scale
Ranked #3 in total size of new asset securitization products and #2
in issuance numbers in 1H16
21 specialized asset management programs with total AUM of
RMB23bn as of 30 June 2016
Large
ticket size
“JD Finance-Huatai Asset Management No. 1-5 JD Baitiao
Receivable Debt Asset-Backed Specialized Program” was
approved by Shenzhen Stock Exchange for a total AUM of
RMB10bn
“Huatai Asset Management-Bank of Jiangsu Rongyuan Series of
Asset-Backed Specialized Program” was approved by Shanghai
Stock Exchange for a total AUM of RMB10bn
Asset-backed securitization led industry innovation
Launched several landmark ABS products packaging underlying assets from
various financial sectors, e.g. banks, securities, and insurers
Huatai Asset Management-Bank of
Jiangsu Rongyuan No. 1 Asset-Backed
Specialized Program 6.4
Taiping Life Insurance Policy
Pledged Loan 2016 Asset-Backed
Specialized Program, Phase 1 5.0
JD Finance-Huatai Asset Management
2016 Factoring Contract Debt Asset-
Backed Program, Phase 1
20.0
Huatai Asset Management-Bank of
Jiangsu Rongyin No. 1 Asset-Backed
Specialized Program 5.0
(Size: RMB100mm)
1st notes
beneficiary rights
1st insurance
policy pledged
1st internet
factoring
1st bank notes
beneficiary rights
Completed a number of ground-breaking ABS programs in the country
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18
60
130
88
2014 2015 1H16
202
334 343
92
176 220
2014 2015 1H16
Mutual funds Non-mutual funds
AUM of affiliated mutual funds
The Emerging Leading Position of the Asset Management Business (Cont’d)
HTSC’s affiliated fund companies maintained steady development in scale while direct investment funds achieved rapid growth
Direct investment by Huatai Zijin Active in new fund setup and fund raising
4
16
29
2014 2015 1H16
Increased AUM by RMB9bn for Huatai Ruilian Funds Mergers (Limited
Partnership) under management by Huatai Ruilian Fund Management Co.,
Ltd
Huatai Ruilian set up a RMB10bn capital market parent fund to invest in
domestic private equity funds
Partnered with the local government to set up 4
industrial investment funds with total AUM of
RMB4.9bn
(RMBbn) (RMBbn)
Mutual fund
ranking 6 6 5 21 19 25
(RMBbn)
Number of
direct investment
funds
3 8 14
Mutual fund
ranking
Source: Company information, Wind
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19
Equity investment and transactions
Continuous Optimization of Investment and Trading Strategies Led to Significant
Market-Beating Performance
Actively responding to challenges from changes in policy and market conditions, firmly implementing “non-directional” strategy,
effectively adjusting investment and trading strategies to promote synergies between on-exchange and OTC transactions and
actively sourcing new businesses
Fixed-income, forex, and commodities
4Adjust investment strategy and portfolio mix on timely basis to
achieve effective hedging and launch various types of spread
trading; has achieved NAV growth that significantly exceeded
that of China-Bond Composite Index
4Accelerate acquisition of various proprietary and agency forex
trading licenses to complete business presence
4Focus on expansion of trading categories and optimization of
trading models and active launching of structured gold lending
business
Bond
proprietary
Commodities
Actively launching non-directional investment businesses to
strengthen absolute-return principles; effectively adopting various
financial instruments and trading technologies to thoroughly improve
investment research capabilities; and fully exploring and seizing
investment opportunities. Huatai’s investment return outperformed
that of CSI 300 Index during the reporting period
1
On-market quantitative hedging investment business has achieved
transformation to a trading-based model. By actively conducting Alpha
strategy trading, the business has recorded a positive return during
the reporting period
2
Forex
15
25
2015 1H16
Number and market value of NEEQ market making clients
Source: Company filings
Notional value and number of transactions of OTC options
trading
107
248
567
2014 2015 1H16
8 36 72
(RMBmm)
Number of
market
making
clients
(RMBbn)
40 41 Number of
transactions
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20
37.0%
56.4%
75.6%
2014 2015 1H16
81.5% 73.0% 53.4%
2014 2015 1H16
69.2% 79.5% 70.1%
2014 2015 1H16
19.7%
39.7% 46.1%
2014 2015 1H16
53.2%
70.3% 61.0%
2014 2015 1H16
464%
881% 743%
2014 2015 1H16
Net capital / Risk capital provisions Net capital / Net asset
Value of fixed income securities held / Net capital
Prudent Risk Management Measures Effectively Responding to Market Dynamics
Value of equity securities and derivatives held / Net capital
Prudent and effective risk management policies ensure satisfying all regulatory requirements and allowing the company to develop
steadily
Net capital / Liabilities Net assets / Liabilities
100%
40%
8%
20%
500%
Source: Company filings
Note: 1. Red dotted lines represent regulatory requirements
100%
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21
Company Overview
Financial Overview
Business overview
Agenda
Development strategy
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22
Opportunities and Challenges in 2H16
3 Deepening market participation by institutions:
The increasing number of institutional investors create opportunities
to develop institutional businesses
Strengthening role of the capital market:
Supply-side reform and SOE reform, deleveraging and increasing
contribution by direct financing provide sustainable growth potential
for investment banking business
1
2 Robust household demand for wealth allocation:
Continued growth in household wealth, strong demand for broad
asset class allocation and shortage in investment opportunities drive
growth of wealth and asset management businesses
4
5 Emerging core competency:
Securities firms with strong strategic foresight and execution
capability stand out in the competitive environment
Increasing demand for risk management:
Liberalization of interest rate and exchange rate drives enhancement
of risk management capabilities, laying the foundation for FICC
businesses
3 Intensified homogenized competition:
As the pace of innovation slows down, securities companies are tested
for strategic vision, adaptability and flexibility amidst rising industry-wide
homogenized competition
1
2 Tightening financial regulation:
Tightening of regulation and intensified regulatory accountability pose
negative short-term effect on business growth but set up higher long-
term standards for securities companies
4
5
Decreasing market activeness:
In face of more challenging market environment signified by global
economic slowdown, continuous financial market volatility, cross-market
impact, decreasing stock trading volume
Faced with increasingly intensified cross-sector competition:
Penetration of internet finance and normalization of cross-sector
competition lead to more intense competition in commission rate for
brokerage business and in interest rate for capital-based intermediary
business
Source: Company filings, broker reports
Opportunities Challenges
Increasing credit risk exposure:
Increase in credit default events and transferring of financial risks have
posed greater challenges to business development and risk
management of securities companies
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23
Investment and trading
4 Continue to improve core competency in investment and trading business in the face of market volatility
4 Focus on diversification and market-neutral strategies, improve investment research capabilities, strengthen innovation in quantitative investment strategy,
deepen on-exchange and OTC capital intermediary businesses, broaden the presence and strengthen development of innovative businesses
4 For bond investment, strengthen market research capabilities to capture market opportunities, effectively hedge market volatility risk, strictly control credit risk exposure
and focus on expanding commodities and forex businesses
Development and Business Strategy in 2H16
3
Asset management
4 Promote active management capabilities and product innovation
4 Continue to strengthen market-leading businesses including fixed-income and financing, improve business diversity, expand alternative investment product
offering, launch mutual fund businesses, and solidify differentiated competitive advantages
4 Improve services for institutional clients, reduce exposure to bank-securities conduit business, solidify and expand first-mover advantages in asset-backed
securitization business, and strengthen financing and capital innovation
4 Improve comprehensive service capabilities and build up core capability and brand influence of direct investment funds
Brokerage and wealth management
4 Solidify market leadership, enhance mobile finance and the primary brokerage business, promote functional transformation of branches, maintain stable
development of credit business and accelerate the transformation into a wealth management model
4 Robust expansion of mid-to-high-end client resources, development of investment advisory team, and enhancement of comprehensive financial service expertise
to better leverage platform effect
4 Continue to build up strength of the research business and market pricing power by deepening industry knowledge
1
2
Investment banking
4 Provide tailored services based on clients’ different life cycles, further connect onshore and offshore markets, drive expansion of wealth management and asset
management businesses, and strictly control risks
4 Strengthen the key role of M&A business, strive for success with high quality M&A and refinancing businesses, focus on brand and reputation, and maintain the
industry leading position of the equity financing business
4 Capture bond underwriting business opportunities, drive business growth, and focus on product innovation and risk mitigation
4 Continue to invest in NEEQ, integrate financing business for growth companies, focus on key industries, and strengthen business origination capabilities
4
5
Overall strategy
4 Actively adapt to significant changes in market and regulatory environment, continue to implement whole value chain, mobile finance, financial innovation,
and international development strategies
4 Continue to expand customer base, develop client value, establish professional service system, and optimize customer base, business mix and asset-liability
structure
4 Continue to experiment new growth drivers, enhance compliance practice, and build differentiated core competency
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Disclaimer
This document is not for public dissemination and is for the exclusive use and information only of the persons to whom it is addressed and their advisers in connection with HTSC (a joint
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HTSC, (the “Company”), together with its subsidiaries, hereinafter referred to as the “Group”). It is being made available by the Company to a limited number of recipients. The contents of
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