Guosheng Securities Inc. has released its semi-annual report for the first half of 2026, showing total operating revenue of 927 million yuan, a modest 1.09% year-on-year increase, while net profit attributable to shareholders reached 216 million yuan, up 3.04% from the same period last year. However, among the 22 A-share pure securities firms that have published their interim results as of August 25, the company currently ranks last in both revenue and profit growth rates.
The sluggish performance is primarily attributed to a sharp 60% decline in proprietary trading income, a stark contrast to the significant growth experienced by most other brokerages during this period. This underperformance, coupled with several other lagging metrics, has been linked to the historical investment project HTT, also known as Qudian, raising questions about the company's investment management capabilities.
Delving into the breakdown, the brokerage and wealth management segment served as a stabilizing force, generating 689 million yuan in revenue, a 24.36% increase. The credit business also performed admirably with revenue of 175 million yuan, surging 53.93% year-on-year. In contrast, the proprietary trading business became the biggest drag, with income plummeting 61.67% to just 67 million yuan. Investment income fell by approximately 67% to 55 million yuan, while fair value gains swung from a positive 29 million yuan to a loss of 75 million yuan, resulting in a combined swing of about 218 million yuan to a loss of roughly 20 million yuan.
According to the report, the market value fluctuation of the HTT (Qudian) stock had a significant negative impact on the consolidated profit, recording a loss of 84 million yuan for the period. The investment banking business also suffered a substantial decline, with net fee income dropping 41.51% to only 17.47 million yuan.
Using the standard formula for calculating proprietary trading income, Guosheng Securities recorded a negative 20 million yuan for the first half of 2026, ranking it last among the 22 reporting brokerages and making it the only one with a negative figure. Even when using the 67 million yuan figure disclosed in the report, the company still holds the lowest position. Furthermore, it is one of the few brokerages to see a significant reduction in this area, with 18 of the 22 firms reporting growth and none other experiencing a decline of less than 30%.
From an investment return perspective, the company's performance is also at the bottom. Based on the negative 20 million yuan calculation, the proprietary trading investment return rate is -0.39%, the only negative rate among its peers. Even using the disclosed 67 million yuan figure, the return rate of 0.64% places it at the bottom of the ranking.
The report attributes the 61.67% decline in proprietary trading revenue primarily to reduced investment gains and fair value changes, largely due to fluctuations in the HTT stock held by its subsidiary, Guosheng (Hong Kong) Investment Co., Ltd. Interestingly, the company states that HTT is a historical investment project acquired in 2016 and is not an investment target of its proprietary trading business. This raises questions about the appropriateness of that statement, given the impact on reported income, which the company may need to clarify.
Market concerns about Guosheng Securities' proprietary trading have been present since its first-quarter report, with previous analyses questioning its risk control in pre-investment due diligence and post-investment management. Concerns have been raised about the significant risk exposure to the single HTT stock, given the controversies surrounding Qudian's business model, including its past campus loan operations and multiple unsuccessful transformation attempts. Questions linger about the adequacy of assessments regarding the sustainability of Qudian's business and regulatory compliance risks before the major investment decision, and why the position wasn't reduced to lock in profits when there were billions in floating gains, nor cleared out when the business model deteriorated and the stock price began its downward trend.
It is noteworthy that on February 13, 2026, the Shanghai Stock Exchange issued a decision to publicly reprimand Guosheng Securities for issues related to its trading management. However, the semi-annual report did not disclose the specific details of this reprimand.