East Money Information Co.,Ltd. (300059) released its 2026 semi-annual report, posting total operating revenue of RMB 10.505 billion, a 53.22% year-on-year increase, with net profit attributable to shareholders reaching RMB 8.064 billion, up 44.85%. The robust performance is closely tied to the heated market conditions, yet the company's proprietary trading business surprisingly declined despite favorable market trends, as financial investment scale expanded while proprietary investment returns shrank.

Additionally, the company's market share in equity and fund trading slipped, indicating that while the industry's overall pie is growing, East Money's slice is diminishing. The structural imbalance in its business model remains unresolved, with investment banking revenue nearly negligible and asset management contributing a minimal share of income.

From an investment perspective, East Money's price-to-book ratio currently stands at double the industry average for listed brokerages, despite the company having long passed its rapid growth phase and entered a stable profitability stage. Furthermore, securities business revenue now accounts for nearly 80% of total income, suggesting it should be valued in line with standard listed securities firms.

Expanding Financial Investments but Declining Proprietary Returns

In the first half of 2026, East Money generated total operating revenue of RMB 10.505 billion, up 53.22% year-on-year, while net profit attributable to shareholders rose 44.85% to RMB 8.064 billion. Breaking down the business segments, securities services revenue reached RMB 8.226 billion, climbing 55.83% and representing 78.3% of total revenue, while financial e-commerce services contributed RMB 2.085 billion, up 47.22%, accounting for approximately 19.84% of revenue.

Examining the income statement, net fee and commission income totaled RMB 5.955 billion in H1 2026, up 54.78% year-on-year; net interest income rose 58.65% to RMB 2.271 billion; investment income fell 34.81% to RMB 1.032 billion; and fair value gains surged 255.78% to RMB 289 million. Combined, investment income and fair value changes amounted to RMB 1.321 billion, a year-on-year decline of roughly 5.5%. The company acknowledged that proprietary trading investment returns had decreased during the period.

Despite the fervent A-share market activity in H1 2026, East Money's proprietary income declined. The semi-annual report noted significantly improved A-share market activity with a structural advantage in technology and growth sectors. The ChiNext Index and STAR 50 Index both hit record highs, surging 35.58% and 64.25% respectively. Total A-share turnover reached approximately RMB 317.5 trillion, setting a fresh half-year record, with 20.1613 million new accounts opened, up 60% year-on-year.

Notably, East Money's financial investment scale expanded from RMB 123.065 billion at the start of 2026 to RMB 142.171 billion by mid-2026, adding nearly RMB 20 billion within six months.

Declining Market Share in Equity and Fund Trading

East Money's business structure remains heavily skewed, with over 80% of revenue derived from brokerage and margin financing activities. In H1 2026, net brokerage income stood at RMB 4.808 billion, representing 58.45% of securities services revenue, while net interest income of RMB 2.271 billion accounted for 27.61%. However, investment banking net income was merely RMB 60 million, just 0.73% of securities services revenue, and asset management income totaled RMB 107 million, a mere 1.3% share, combining for only 2% of the segment.

Given that fund distribution also depends heavily on market conditions, East Money's overall business model remains highly susceptible to market volatility. A downturn in trading volumes would expose the company to significant earnings fluctuations. More critically, despite a substantial surge in equity and fund trading volumes during the first half, East Money's market share actually contracted.

According to research from Shenyin & Wanguo Securities, A-share (including Shanghai, Shenzhen, and Beijing markets) average daily equity and fund turnover reached RMB 3.24 trillion in H1 2026, up 101% year-on-year, while East Money's equity and fund trading volume grew 65% to RMB 26.45 trillion, with its market share dropping 0.73 percentage points year-on-year to 3.52%. Given that equity and fund trading volume serves as the lifeline of East Money's business, the company may sustain growth through previously accumulated market share, but whether it can maintain its competitive position remains uncertain.

Controlling Family Cashes Out Nearly RMB 10 Billion While Payout Ratio Hits Record Low

Insider selling is not necessarily a bearish signal, but when the scale reaches tens of billions, its implications cannot be ignored. Starting in July 2025, Lu Lili, wife of East Money's actual controller Qi Shi (Shen Jun), and his father Shen Yougen, reduced their holdings through various methods, cashing out nearly RMB 10 billion.

In July 2025, Shen Yougen transferred 158.8 million East Money shares via inquiry-based transfer at RMB 21.66 per share, netting approximately RMB 3.44 billion. In September 2025, Lu Lili and Shen Yougen transferred another 237.8 million shares through the same mechanism, with 16 institutional investors acquiring the shares at RMB 24.40 each, yielding RMB 5.802 billion. Earlier, from September 2020 to February 2021, Shen Yougen had already disposed of 107 million shares through centralized bidding, cashing out RMB 2.883 billion.

In the first half of this year, East Money announced no cash dividend distribution, no bonus shares, and no capital reserve conversion to increase share capital. Despite recording RMB 8.064 billion in net profit for the period—the highest since listing—shareholders received no interim dividends. Historically, East Money's payout ratio has been notably low. Wind data shows cumulative cash dividends since listing of RMB 6.398 billion, representing just 9.67% of total net profits of RMB 66.236 billion.

This 9.67% historical payout ratio is the lowest among 44 A-share listed brokerages with pure securities operations, well below the average of 33.78%. Among leading securities firms, CITIC Securities, Guotai Haitong, GF Securities, and Huatai Securities have historical payout ratios of 35.95%, 35.65%, 39.21%, and 33.62% respectively, all exceeding 30%. A payout ratio below 10% means that for every RMB 10 earned, East Money distributes less than RMB 1 to investors.

According to multiple media reports, JPMorgan has downgraded East Money's rating to Neutral from Overweight. As a top-tier international investment bank, JPMorgan's coverage of Chinese brokerages carries significant market influence. The downgrade signals the bank's view that East Money's share price has already fully reflected its fundamentals. Notably, in the same research report, JPMorgan upgraded CITIC Securities' H-share rating from Neutral to Overweight.

Wind data indicates that as of August 26, 2026, East Money's price-to-book ratio stood at 3.11 times, compared with an average of 1.44 times for 44 A-share listed brokerages. The company's PB ratio is now more than double the industry average. However, East Money has long passed its high-growth phase and entered a stable profitability stage. With securities business revenue approaching 80% of total income, the company should arguably be valued on par with standard listed securities firms.

Market observers suggest that East Money's historically high PB valuation was justified by an "internet brokerage premium." The market generally believed its traffic advantages, customer acquisition cost efficiency, and asset-light model could support a higher valuation than traditional brokerages. However, this logic faces multiple challenges. First, traffic dividend advantages are fading. As internet traffic dividends diminish, customer acquisition costs may trend upward. In H1 2026, the company's sales expenses surged 82.13% year-on-year to RMB 256 million, significantly outpacing the 53.22% revenue growth rate.

Second, market share in equity and fund trading is declining. In H1 2026, East Money's trading market share fell to approximately 3.5%, per Shenyin & Wanguo research data. Against a backdrop of nearly doubling industry turnover, its share dropped rather than rose. Third, with securities business revenue approaching 80% of total income, the company should more appropriately be benchmarked against traditional brokerage valuation levels, given that its securities services revenue reached RMB 8.226 billion in H1 2026, accounting for 78% of the total.