Haitong Securities’ taking upfront profit hit ahead of merger: report

This will allow Haitong to enter the merger with "less baggage," S&P Global said. 

Haitong Securities' expected profit hit is possibly part of a strategy to clean the group’s balance sheet before the proposed merger with Guotai Junan Securities, according to S&P Global Ratings.  

S&P noted that this exercise will lay a good foundation for the creditworthiness of the merged group.

"By taking more pain up front, Haitong would enter into the proposed merger with less baggage," S&P Global noted.

On 24 January 2025, Haitong released a profit warning, indicating a loss of $2.9b (RMB2.7b) in the fourth quarter of 2024. This came after losses in the third quarter, estimated at $1.7b (RMB1.6b).

The ratings agency said Haitong is likely writing off chunks of its legacy portfolio in Hong Kong, which China's property market turmoil dragged down.

S&P rates Haitong (BBB/Developing/A-2) one notch lower than Guotai Junan (BBB+/Stable/A-2).

($1=RMB0.93)