Rating: Neutral | Target Price: RMB 17.0–19.7 (base-case fair value range) | Current price: RMB 19.40 (close on 2026-09-01, market cap approx. RMB 1,069 billion) Margin of safety: -12.4% (base-case fair value floor of RMB 17.0 vs. current price — no margin of safety) | Time horizon: 6–12 months | Initiation of coverage Scenario distribution: Bear RMB 11.5–13.5 (28% probability) | Base RMB 17.0–19.7 (50%) | Bull RMB 27.0–31.0 (22%); probability-weighted fair value approx. RMB 19.06, with the current price about 1.8% above it
East Money's H1 2026 net profit attributable to shareholders reached RMB 8.064 billion (+44.9%), a record for the period, with Q2 alone at RMB 4.326 billion, an all-time high. However, approximately 78% of the company's revenue is directly tied to market turnover and margin financing balance — making it the market's most efficient "volume monetization machine" — which also means earnings have been pushed to a cyclical high by the historic H1 2026 average daily turnover of RMB 2.74 trillion. In mid-to-late August, turnover shrank to RMB 1.8–2.0 trillion, and margin balances pulled back from the RMB 3 trillion peak to RMB 2.67 trillion; the direction of earnings decline is confirmed, with magnitude still to be determined. The current price of RMB 19.40 (PE-TTM 21.0x, PB 3.12x / 14th percentile of the past 5 years) implies a turnover center of approximately RMB 1.8–2.0 trillion per day, broadly consistent with actual August readings — after retracing roughly 31% from its 52-week high, the market has front-run the pricing of "volume normalization." However, sell-side consensus (2026E RMB 15.5 billion, implying H2 daily average turnover of RMB 2.45 trillion) is still anchored to bull-market volumes, 22%–44% above actual August levels; the downward-revision risk has not been fully cleared. Base-case fair value is RMB 17.0–19.7, with the current price at the upper edge of the range: first-class quality, fair price, no margin of safety — Neutral/Wait-and-see. Use the October Q3 report and the Q4 volume/policy window as decision triggers: turn positive if 20-day average volume holds above RMB 2.3 trillion; turn to Avoid if it falls below RMB 1.8 trillion for two consecutive quarters.
The most important change over the next 6–12 months is the direction of convergence of the turnover center: market-wide average daily turnover has retreated from RMB 2.74 trillion in H1 2026 to approximately RMB 1.9 trillion in August (RMB 1.8–2.0 trillion in mid-to-late month), and the margin balance fell 11% from its June peak of RMB 3.0 trillion to RMB 2.67 trillion — volume is converging along three tiers: "Bear 1.4 / Base 1.8–2.0 / Bull 2.4+ trillion RMB," to be confirmed quarter by quarter from 2026Q4, with direction set by H1 2027. Second is the pace of sell-side consensus downward revisions: of 14 covering institutions, estimates are still being revised up over the past 90 days (+5.4%), with no Sell ratings; the scissors gap between earnings forecasts and actual volumes is the main source of expectation divergence.
Primary share price drivers, in order: ① the market turnover center (±RMB 0.5 trillion in volume roughly corresponds to ±RMB 1.8–2.4 billion in attributable net profit, or ±17% in fair value); ② Q3 results validation (2025Q3's single-quarter RMB 3.530 billion is the highest historical base — a quarterly figure ≥RMB 3.5 billion turns YoY growth positive; ≥RMB 3.8 billion refutes panic pricing); ③ the sustainability of market share and platform premium (which determines whether the valuation anchor remains an internet platform or slides toward traditional brokers).
Verifiable expectation gap: the current price has already priced in volume normalization (implied center of ~RMB 1.8–2.0 trillion, consistent with actual August readings), while sell-side earnings forecasts still imply RMB 2.45 trillion for H2 and RMB 2.9 trillion for 2027 — the expectation gap skews downward, and is a matter of "confirmation" rather than "new shock," as price has adjusted ahead of earnings expectations. This report estimates 2026E attributable net profit of RMB 13.8–14.6 billion and 2027E of RMB 11.8–13.8 billion, 6%–11% and 18%–30% below consensus; the core disagreement lies solely in the turnover-center assumption. Evidence grade C: the turnover center is not directly observable, and there are methodological disagreements over market share — this is the largest source of error for all conclusions.
Verification and falsification: verification hinges on Q3 single-quarter attributable net profit, the AMAC quarterly top-100 fund distribution rankings (whether Tiantian Fund's asset-holding share can hold and recover), 20-day average volume, and margin balances; falsification triggers include volume falling below RMB 1.8 trillion for two consecutive quarters (bear-case path), equity fund market share falling below 3.3%, or margin share falling below 3.0% (collapse of the platform premium).
The timeline must be precise: July's average daily turnover was still as high as RMB 2.69 trillion (-13.8% MoM); the real shrinkage occurred in mid-to-late August (RMB 1.8–2.0 trillion, lasting about 5 weeks), and on September 1 a single day rebounded to RMB 2.64 trillion — the direction of decline is confirmed, but the duration is still short, with volatility at month-end. On this basis: assuming H2 average daily turnover of RMB 1.7–1.9 trillion, 2026 full-year attributable net profit is RMB 13.8–14.6 billion (+14% to +21%), and a 2027 center of RMB 1.8–2.2 trillion corresponds to RMB 11.8–13.8 billion. This forecast is 6%–11% and 18%–30% below sell-side consensus (2026E RMB 15.5 billion / 2027E RMB 16.85 billion); the entire divergence stems from the turnover center — if Q4 policy easing pushes volume back above RMB 2.3 trillion, forecasts must be revised up; the main risk of this forecast lies precisely in extrapolating from only about 5 weeks of volume data. The bearish-counter market view (none of the 14 covering institutions has cut below RMB 15 billion) holds that the volume decline is a bull-market continuation rather than an inflection point — this is the biggest counterparty to this thesis.
Market-share figures diverge across methodologies, and the decline is of the same order as the methodology gaps: third-party estimates show ~4.3% in 2025 → ~3.5% in H1 2026 (SWS Research and others), the Kaiyuan methodology shows 3.82% for 2025, and double-counting the company's disclosed equity + fund trading volume gives ~4.6% → 4.2% (38.46÷2÷420 trillion vs. 26.45÷2÷317.5 trillion) — absolute levels differ by more than 0.5pct across methodologies. The trend direction is consistently downward, but the magnitude falls between 0.2–0.8pct — a weaker signal than a "cliff." The gap between brokerage income growth (+54.8%) and market-wide volume growth (approx. +66% to +101%) also includes falling commission rates (0.0193%, -5%) and the structurally lower commission rates on ETF/institutional trades — it cannot all be attributed to client attrition. Conversely, client asset-side indicators are stabilizing or even improving across the board: margin share of 3.08%–3.2% (-0.1pct YoY, +0.04pct QoQ, or "flat vs. year start"), fund holding share recovering, MAU share flat — the "traffic–data–license" loop remains intact, but bull-market increments flow more to institutions and ETFs; the company captures beta rather than alpha. If margin share falls below 3.0% for two consecutive quarters or holding share declines, this thesis is void and the valuation anchor must switch to traditional brokers.
In the first half year after fee reform, Tiantian Fund's net margin rose rather than fell (approx. 4.5% in H1 2025 → 5.3%), thanks to RMB 1,890.2 billion in sales (+79%) — "compensating price with volume"; the temporary rise in H1 trailing commissions and the industry's four major expense categories growing +6.6% YoY indicate the fee-cut shock has not yet hit the books. The real revenue-reduction point comes with the full effect on existing C-class shares of "sales service fees waived for holdings over one year" starting 2027-01-01 — only then will it be clear whether distribution can shift from "transaction-driven" to "retention-based service fees." The direct impact on group profit is limited (Tiantian Fund is 1.4% of net profit; in an extreme loss scenario, a drag of approx. RMB 200–300 million/year); the real cost is to the valuation narrative: distribution shifts from a profit growth line to thin-margin infrastructure, weakening one pillar of the internet platform premium. This can be tracked via Q3 distribution income YoY and holding shares on the AMAC quarterly top-100 list.
Back-solving from a mid-cycle multiple band of 22–28x, the current price implies an average daily turnover center of approx. RMB 1.8–2.0 trillion, consistent with actual mid-to-late August readings (RMB 1.7–2.1 trillion) — the process of retracing about 31% from the 52-week high of RMB 28.21 was precisely the market front-running the pricing of shrinking volume. The relationship between "already priced in" and "downgrades not yet cleared" must be made clear: if price has adjusted ahead of earnings expectations, sell-side cuts of RMB 15.5 billion to around RMB 14.0 billion are confirming events with limited incremental impact; what truly opens downside is volume breaking below the priced-in center (20-day average of RMB 1.8 trillion) — that would be new information. Consensus implies H2 2026 attributable net profit of RMB 7.436 billion (+14.1% YoY), requiring average daily volume of approx. RMB 2.45 trillion — 22%–44% above actual August levels; the historically low PB percentile of 3.12x provides no marginal support, because it embeds expectations of ROE premium convergence (14% vs. industry median of 6.7%), and if the share narrative deteriorates, the valuation anchor will converge toward the sector median of 1.1x PB rather than stay at the historical percentile.
The scarcity of the business model is beyond doubt: customer acquisition cost from own traffic approaching zero, a licensing monetization depth unique in the market, CapEx of only about RMB 200 million per year, and a diversified client base (top five clients only 5.74%). But two points must be clarified. First, "RMB 100 billion in cash on the books" is a common investor misperception — excluding client funds there is no large pool of distributable net cash; the 2025 dividend was only RMB 1.58 billion (payout ratio 13.1%) with no buybacks, and most of the cash sits in regulatory capital and interest-earning assets. Second, the household wealth migration driven by deposit rates falling below 1% is a real force lifting the center (the turnover center has risen from 0.88/1.07 trillion RMB in 2023–24 to the current 1.8–2.0 trillion RMB magnitude), but the transmission lags (239.7万 new accounts in August, -10% YoY) — it limits bear-market depth and does not underpin bull-market continuation. The prop bond exposure (RMB 122.677 billion) is a second risk chain independent of volume: the company's sensitivity disclosure shows +50bp in rates corresponds to approx. -RMB 2.7 billion in total profit (equivalent to one-third of H1 2026 attributable net profit).
| Metric | FY2023 | FY2024 | FY2025 | H1 2026 (latest) | Q1 2026 |
|---|---|---|---|---|---|
| Total operating revenue (RMB bn) | 11.081 | 11.604 | 16.068 | 10.505 (+53.2%) | 5.031 (+44.3%) |
| Net profit attributable to shareholders (RMB bn) | 8.193 | 9.610 | 12.085 | 8.064 (+44.9%) | 3.738 (+37.7%) |
| Recurring attributable net profit (RMB bn) | 7.862 | 9.253 | 11.654 | 7.727 (+47.1%) | — |
| Gross margin (operating revenue basis, %) | 86.16 | 84.04 | 84.48 | 86.21 | — |
| Net margin (attributable/total operating revenue, %) | 73.94 | 82.81 | 75.21 | 76.76 | 74.3 |
| Net operating cash flow (RMB bn) | -3.138 | 44.588 | -10.222 | 30.314 | 30.433 |
| Free cash flow (OCF−CapEx, RMB bn) | — | 44.353 | -10.379 | 30.100 | — |
| Cash and equivalents (RMB bn, incl. customer deposits) | 61.399 | — | 124.283 | 153.732 | — |
| Interest-bearing debt (RMB bn, excl. reverse repos) | — | 69.754 | 97.016 | 104.559 | — |
| Asset-liability ratio (broker basis, %) | 69.96 | — | 76.62 | 80.54 | — |
| Weighted average ROE (%) | 11.94 | 12.64 | 14.03 | 8.46 (half-year) | — |
| Basic EPS (RMB) | 0.5168 | 0.6087 | 0.7650 | 0.5102 | 0.2365 |
Note: Under the broker-holding structure, cash/operating cash flow includes client fund distortions (customer brokerage deposits of RMB 216.681 billion at end-H1 2026); the asset-liability ratio includes client-fund liabilities, so conventional "cash cow" interpretations do not apply. The gap between recurring and attributable profit is minimal (FY2025 non-recurring items of RMB 431 million, mainly government subsidies, or 3.6% of attributable profit; H1 2026: RMB 337 million) — earnings are predominantly recurring.
Reasons for metric changes (items with YoY ≥ ±20%, company basis): ① H1 2026 revenue +53.2% / attributable profit +44.9% — net fee and commission income +54.78% (higher securities brokerage income) and net interest income +58.65% (larger funds lent), i.e., market volume-driven; ② operating cash flow FY2025 -122.9%, H1 2026 +555.1% — per the company, driven by net changes in trading financial assets and net inflows of customer brokerage deposits (client funds), with low correlation to net profit; ③ selling expenses H1 2026 +82.13% — higher staff compensation and marketing spend; ④ investment income H1 2026 -34.81% — prop trading is mainly bonds; bond market volatility caused declines in trading spreads and fair value (per earnings call); ⑤ customer brokerage deposits +53.6% vs. period start — increased brokerage client deposits.
2026H1 revenue was RMB 10.505 billion (+53.2%), net profit attributable to parent RMB 8.064 billion (+44.9%), non-GAAP recurring net profit RMB 7.727 billion (+47.1%); Q2 standalone revenue was RMB 5.474 billion, net profit attributable to parent RMB 4.326 billion (+15.8% QoQ vs. Q1's RMB 3.738 billion, +51.7% YoY), a record single quarter. Tiantian Fund's non-money-market AUM reached RMB 1,012.0 billion (+31% vs. end of last year), with equity AUM at RMB 526.0 billion; equity fund trading volume was RMB 26.45 trillion (+65%). The interim report itself exceeded prior sell-side expectations (cumulative upward revision of +5.4% in consensus over the 90 days after disclosure), yet the stock fell -3.55% the day after release, with roughly RMB 2.7 billion in main-force net outflows over three days—what the market cares about is not the already-realized H1, but H2 elasticity after trading volumes pulled back in July–August: consensus full-year net profit of RMB 15.5 billion implies H2 attributable net profit of RMB 7.436 billion (+14.1% YoY), which is hard to achieve with August's average daily trading volume of about RMB 1.9 trillion; this report assumes H2 of RMB 5.7–6.5 billion and a full year of RMB 13.8–14.6 billion. No interim dividend, no buyback—in stark contrast to the buoyant trading volumes—a persistent governance discount.
Business model in brief: An asset-light internet wealth management platform plus full-license monetization—upstream, owned traffic (Eastmoney website/Guba/APP, customer acquisition cost near zero); midstream, triple monetization: securities brokerage + margin financing (78.3% of total operating revenue in 2026H1), Tiantian Fund distribution (19.8%), and Choice financial data subscriptions (~1.9%, contract liabilities only RMB 197 million). Revenue is essentially transaction-driven (commissions + interest + subscription/redemption fees), with a low share of recurring income; no independent pricing power—commission rates (~1.9 bps, falling ~5% annually) and fund sales fee rates are both squeezed by regulation and competition.
Cash content of earnings test: The OCF/net profit series was -0.38 (FY2023) → 4.64 (FY2024) → -0.85 (FY2025) → 3.76 (2026H1)—violent swings completely decoupled from profit. This is a structural feature of brokerage holding-company statements (client fund flows and proprietary financial asset trading dominate cash flows); the company's explanation of "low correlation with net profit" is consistent across periods and does not suggest financial engineering, but it means conventional "cash cow" OCF/FCF tests do not apply to this business model. What truly deserves testing is recurring profitability: the non-GAAP/attributable gap has stayed below 4% for consecutive periods (FY2025 non-recurring items of RMB 431 million, mainly government grants); nearly all of the RMB 8.064 billion half-year profit came from the core business.
Return on capital: ROIC is distorted for financial firms, so use ROE—FY2025 weighted ROE was 14.03%, the highest among 52 securities firms (industry median ~6.7%), and it held at 12.64% even during 2024's trough in trading volume. This earnings resilience across volume cycles comes from a net margin above 76% and near-zero marginal cost of traffic monetization; compare Huatai at 8.2%–9.2% (full licenses) and Hithink RoyalFlush at 36.7% (pure software, no capital intensity).
CapEx scrutiny: CapEx averaged RMB 160–240 million annually (FY2025: RMB 157 million), under 1.5% of revenue; CapEx/depreciation is ~1.41 but the absolute amount is minimal—no "capital black hole." Expansion relies on client funds and bond financing (margin balance sheet expansion), not plant and equipment.
Moat and quality red flags: The moat is a flywheel of traffic (19.18 million MAU, 10.3% share) × data (Choice/MiaoXiang AI) × dual licenses (securities + fund distribution), with extremely dispersed customers (top five clients: 5.74%). Three red flags: ① payout ratio stuck at 13%–15% for three consecutive years, buybacks halted since 2025—high profit retention coexists with restrained shareholder returns; ② the actual controller's spouse Lu Lili sold 207 million shares via negotiated block trade in Oct 2025 (cashing out ~RMB 5.8 billion; her father Shen Yougen exited his position simultaneously); ③ R&D expense fell for the first time in 2025 (-6.66% to RMB 1.067 billion) while R&D headcount rose +5.6%, unexplained in the annual report—a counter-cyclical cut at the critical stage of AI investment, in tension with the "MiaoXiang" narrative.
Consistency of words and deeds: pragmatic. Verifiable commitment-vs-delivery record: ① At the April 2026 earnings call, actual controller Qi Shi explicitly stated "there are currently no ongoing share reduction plans"—and through August 2026 there have been no new concentrated sales by the actual controller or senior management (only incentive vesting and a 20-million-share charitable donation)—delivered; ② the dividend logic has been stated consistently (both the annual report and earnings calls describe retaining profit to bolster East Money Securities' capital and support margin financing growth)—delivered and internally consistent; ③ the company provides no quantitative guidance (industry convention), and the 2026 operating plan is qualitative, while H1 actual +44.9% far exceeded general market expectations. No record of overpromising, but no voluntary disclosure beyond the bare minimum either.
Shareholder friendliness: neutral to restrained. Dividends (buybacks counted as dividends) for FY2023/2024/2025 were RMB 1.143/1.435/1.580 billion, payout ratios of 13.95%/14.94%/13.08%; roughly RMB 500 million in buybacks each in 2023–2024, halted since 2025; no interim distribution for 2026. A company with RMB 98.4 billion in book attributable net assets earning RMB 12 billion a year returns less than 0.6%/year to shareholders (dividends + buybacks / market cap)—against RMB 153.7 billion of cash on hand (even excluding client deposits), its payout policy is more restrained than any comparable internet platform.
Risk signals: ① Family selling inertia—in Oct 2025 Lu Lili + Shen Yougen sold a combined 238 million shares via negotiated block trade, cashing out ~RMB 5.8 billion (RMB 24.40/share; media tally puts cumulative family cash-outs at ~RMB 9.2 billion); Lu Lili still holds 1.01% (~RMB 3.1 billion), implying precedent-based supply; ② executives sold multiple blocks on-market in the RMB 21–24 range (director Cheng Lei, 2.6 million shares @ RMB 21.15, etc.); the current price of RMB 19.40 is below their exit levels; ③ minor compliance blemishes: East Money Securities was warned and fined RMB 740,000 by the PBOC for anti-money-laundering lapses (remediated); East Money Futures/advisory units were ordered to rectify; ④ no pledge risk (pledge ratio 0.03%), no lock-up expiry pressure.
| Segment (2026H1) | Revenue (RMB bn) | % of total operating revenue | YoY | Gross margin | Business logic in one line |
|---|---|---|---|---|---|
| Securities business (brokerage + margin + proprietary) | Net fee income 5.955 + net interest income 2.271 | 78.3% | +54.8% / +58.7% | No corresponding cost line (securities industry convention) | Owned traffic → account opening → trading and leverage; direct monetization of volume beta |
| Financial e-commerce (Tiantian Fund) | 2.085 | 19.8% | +47.2% | 93.28% (net margin only ~5.3%) | Fund subscriptions/AUM → subscription fees + trailing commissions + sales service fees; fee reform means thin margins on volume |
| Financial data services (Choice, etc.) | 0.195 (half-year) | ~1.9% | +21% | Not separately disclosed (within IT services, 84.67%) | B/C subscriptions + MiaoXiang AI enablement; small in scale—the observation window for AI monetization |
Core profit segment: Securities business contributes over ~96% of group net profit (Tiantian Fund's RMB 111 million is only 1.4%; Choice is even smaller)—the investment thesis must center on brokerage/margin volume elasticity; Tiantian Fund and Choice drive the valuation narrative, not current profit. Proprietary trading (investment income RMB 1.032 billion, -34.8%) is an independent variable within the securities segment; its RMB 122.677 billion bond exposure makes it a function of interest rates, not trading volume. Gross margin structure: Tiantian Fund 93.28% vs. IT services 84.67%, a gap of ~8.6 pp—both asset-light, but data services carry higher labor and compute costs; the securities segment has no gross margin metric by industry convention, so cross-segment gross margins are not directly comparable.
Accounting red flags: based on the periodic reports reviewed (FY2023–FY2025 annual reports, 2026 interim report, and quarterly reports), no obvious signs of financial engineering were found—revenue recognition is consistent across periods; goodwill of RMB 2.946 billion is only 3.0% of attributable net assets (from the East Money Securities acquisition, no impairment signs); intangibles are 0.6% of assets; no large R&D capitalization, no pattern of revenue stuffing.
Cross-period consistency checks: ① Operating cash flow / attributable net profit swung between -0.85 and +4.64 (four periods)—consistent with the company's explanation (client funds and financial asset distortions); a business-model trait, not an anomaly; ② R&D expense went 1.081 → 1.143 → 1.067 billion yuan (first decline in 2025, -6.66%) while expense ratio fell 9.75% → 6.64% → 5.14% and R&D headcount rose +5.6%—unexplained by the company; this is the only disclosure gap in this review; combined with the disclosure that "MiaoXiang Skills has not yet generated revenue," there is an unexplained zone between the accounting treatment of AI investment and the narrative; ③ cash dividend ratio hovering at a low 13%–15%, buybacks halted since 2025—diverging from net profit growth but consistent with the company's stated policy of "retaining profit to bolster securities capital."
Current market data (close of 2026-09-01): Share price RMB 19.40, total shares 15.822 billion, total market cap ~RMB 306.9 billion. PE-TTM 21.0x (TTM attributable net profit RMB 14.582 billion; 2nd percentile of the past 5 years, 3rd percentile of the past 3 years—earnings are at a cyclical high in trading volume, making the PE percentile mechanically distorted; reference only); static PE (FY2025) 25.4x (12th percentile of 5 years); PB 3.12x (book value per share RMB 6.22; 14th percentile of 5 years, 24th percentile of 3 years); PS (total operating revenue, TTM) 15.6x. Forward: consensus-basis 2026E/2027E PE of 19.8x/18.2x; this report's earnings basis implies 2026E PE of ~21.0–22.2x (~21.6x on a RMB 14.2 billion midpoint). Average daily turnover of RMB 4.06 billion (1.3% of market cap)—excellent liquidity, no illiquidity discount.
| Peer comparison (2026-09-01/02) | PE-TTM | PB | ROE (FY2025) | Net margin | Key difference |
|---|---|---|---|---|---|
| East Money | 21.0x | 3.12x | 14.0% | 75.2% | Traffic-license closed loop; volume beta + platform premium |
| Hithink RoyalFlush | 36.0x | 14.0x | 36.7% | 53.2% | Pure software/AI monetization, no license; greater bull-market elasticity |
| Huatai Securities | 9.0x | 0.93x | 8.2% | ~22% | Full-license traditional broker; 7.5% margin share, 2.4x East Money's |
| Compass | 247.3x | 20.6x | 9.1% | Low | Small-scale replica of the East Money path (Maigao Securities in early ramp); multiples distorted, listed for reference only |
Market-implied expectations: What does the current price require? Backing out from a mid-cycle multiple band of 22–28x, the price implies a daily trading volume center of ~RMB 1.8–2.0 trillion and normalized attributable profit of ~RMB 11.0–13.5 billion—broadly consistent with August actuals (RMB 1.7–2.1 trillion). In one sentence: the current price requires volume to hold at August levels with no share loss, while sell-side consensus requires volume to return above RMB 2.45 trillion—price has already converged to reality; earnings forecasts have not. This is the core basis of this report's judgment on "cheap or expensive," not the isolated 21x PE.
Three-layer value (EPV): Asset value (liquidation floor) = book value per share of RMB 6.22; EPV with zero growth = RMB 8.0/share (mid-cycle normalized EPS of RMB 0.72 ÷ WACC of 9%; the normalized base is recurring attributable profit of ~RMB 11.4 billion assuming daily trading of ~RMB 1.65 trillion and margin balance of RMB 2.2 trillion, cross-validated at RMB 10.8–12.1 billion by two approaches—historical profit-volume fitting and bottom-up sum-of-the-parts; WACC = risk-free rate 1.8% + β 1.2 × equity risk premium 6%); growth/volume option = current price − EPV = RMB 11.4, ~59% of the current price. Note: in financial holding statements, returns on interest-earning assets funded by own capital are already in normalized earnings, so EPV does not add net cash (line-by-line verification shows a net debt structure; see C5). Only about 40% of the current price is supported by zero-growth earnings; roughly 60% is the price paid for "volume center above RMB 1.8 trillion + deepening platform monetization + AI option"—the reasonableness of the current price depends entirely on the delivery of these three items; this is the quantitative expression of "fair but no margin of safety." If the volume center slides toward RMB 1.4 trillion, the option component should shrink substantially.
Three scenarios and odds (see distribution at the top of the report):
| Scenario | Probability | Fair range | Key assumptions and swing factor | vs. current price |
|---|---|---|---|---|
| Bear | 28% | RMB 11.5–13.5 (midpoint 12.5) | Volume center RMB 1.4–1.6 trn + continued share loss (brokerage <3.3%/margin <3.0%) + continued commission-rate decline; +50bp rate shock to proprietary (pretax impact ~-RMB 2.7 bn); 2027E attributable profit RMB 9.5–10.5 bn × 18–20x, implying PB 1.85–2.17x | Midpoint -35.6% |
| Base | 50% | RMB 17.0–19.7 (midpoint 18.35) | Volume center RMB 1.8–2.0 trn, margin balance RMB 2.4–2.6 trn, share stabilizing (brokerage ~4%/margin 3.1–3.2%); 2027E attributable profit RMB 12.0–12.8 bn × exit PE 22–25x (anchor: midpoint between the company's 3-year median PE of 28.9x and the securities sector median of 15.5x, weighted by ROE premium; the current multiple is a reference, not an anchor) | Midpoint -5.4%, lower bound -12.4% |
| Bull | 22% | RMB 27.0–31.0 (midpoint 29) | Volume sustained at RMB 2.4 trn+ (fund retention from 20.16 million new accounts + rate cuts + long-term capital inflows), share recovery to 4%+, AI/wealth management visibly monetized; 2027E attributable profit RMB 15.5–16.0 bn × 28–31x (anchor: company's 5-year median PE of 30.5x, mapped to Hithink's current 36x in buoyant conditions) | Midpoint +49.5% |
The bear case is designed to cover the valuation implications of the most pessimistic published market forecasts: the verifiably most pessimistic named sell-side house (Kaiyuan Securities, 2026-03-20, cut 2026E/2027E from RMB 15.6/18.1 bn to RMB 15.1/17.1 bn on "securities market share and results slightly below expectations," maintaining Buy) still implies above ~RMB 14.8 even at the sector median of 15.5x; this report's bear case of RMB 11.5–13.5 is more pessimistic, providing ample coverage. The base scenario (2027E RMB 12.0–12.8 bn) sits below the lower bound of all published market forecasts (RMB 16.85–17.1 bn) for the reasons stated in C4: consensus has not yet reflected August's volumes; the convergence path is either sell-side downgrades into this report's range, or a volume recovery proving this report conservative—this is the report's main divergence from the market, explicitly flagged in the expectations-gap section. The bull case covers the consensus target price median of RMB 24.8 and the most optimistic RMB 31.2.
Own forecasts vs. management guidance vs. sell-side consensus (anchor for next earnings reconciliation):
| Basis | 2026E attributable | 2027E attributable | Key assumptions |
|---|---|---|---|
| This report | RMB 13.8–14.6 bn (+14% to +21%) | RMB 11.8–13.8 bn | H2 daily trading RMB 1.7–1.9 trn, 2027 center RMB 1.8–2.2 trn, stable share, gradual commission decline, neutral proprietary |
| Sell-side consensus (n=14, 09-02) | RMB 15.5 bn (+28.1%) | RMB 16.85 bn (+8.7%) | Implies H2 ~RMB 2.45 trn, 2027 ~RMB 2.9 trn |
| Management guidance | No quantitative guidance (industry convention) | — | Qualitative: AI enablement, deepening wealth management, retained profit supporting margin financing |
Conclusion: Fair. Score quality and price separately: quality is first-rate (industry-leading ROE, 76% net margin, genuinely asset-light, closed loop intact); price sits at the upper edge of the base-case fair range, with a margin of safety of -12.4% (vs. the base-case floor); probability-weighted fair value is RMB 19.06, ~1.8% above the current price—the odds structure is "upside to bull-case midpoint +49.5% vs. downside to bear-case midpoint -35.6%," but the bull case requires volume reflation and the bear case requires a volume breakdown, neither of which is the base assumption at the current price. Strategy: don't chase, don't short—wait for volume to give direction.
1. Market Size: The industry's "market size" is not a product TAM, but three observable pools of fund flows. ① A-share trading volume: ~RMB 0.88 trillion/day in 2023 (~RMB 212 trillion for the full year) → ~RMB 1.07 trillion/day in 2024 (RMB 258.4 trillion for the full year, exchange data) → ~RMB 1.73 trillion/day in 2025 (RMB 420.2 trillion for the full year, +62.6%, surpassing RMB 400 trillion for the first time; equity fund basis daily average RMB 2.05 trillion, +69.7%, Securities Association of China/exchanges) → ~RMB 2.74 trillion/day in 2026H1 (RMB 317.5 trillion for the half year, a half-year record, nearly doubling YoY) → pullback in July–August 2026 (July daily average RMB 2.69 trillion; RMB 1.8–2.0 trillion in mid-to-late August). ② Margin financing balance: back above RMB 2 trillion in Oct 2024 → ~RMB 2.5 trillion in Oct 2025 → first-ever breakthrough above RMB 3 trillion on 2026-06-23 → pulled back to RMB 2.67 trillion on 2026-08-27 (exchanges/Eastmoney Data Center). ③ Public fund AUM (AMAC): RMB 37.71 trillion at end-2025 → RMB 39.67 trillion at end-June 2026 (RMB 39.11 trillion at end-July); on the distribution side, the AMAC Top 100 list showed equity fund holdings of ~RMB 6 trillion at end-2025 (+23.6%), of which equity index fund holdings were RMB 2.42 trillion (+41.7%) — passive products are the fastest-growing vehicle for holdings. Growth forecast: trading volume is at a historical peak zone and has already contracted in July–August 2026; leading institutions expect securities industry net profit of roughly +36% in 2026, but growth will most likely slow significantly in 2027 off a high base; fees are a negative contributor (the three phases of public fund fee reform have cumulatively given up more than RMB 50 billion per year), so the industry is overall "making up for price with volume."
2. Industry Chain and Value Distribution: Upstream consists of financial information/data/trading system providers (market data, software) and public fund product suppliers (165 managers); the midstream is the monetization layer — brokerage/margin financing (commissions + interest), fund distribution (subscription/redemption fees + trailing commissions + sales service fees), data terminal subscriptions (B-side Choice/iFinD, C-side value-added services); downstream is 150 million+ retail investors and B-side institutions, with individual investors ultimately paying commissions, margin interest, and subscription/redemption fees. East Money's uniqueness lies in occupying both the upstream traffic gateway (customer acquisition cost near zero) and all three midstream monetization lines, with almost no external intermediary profit-sharing; its 2026H1 net margin of 76.8% far exceeds traditional brokers (Huatai at ~22%) — the thickest-margin segment (brokerage + margin financing) is precisely the segment it covers in-house. Bargaining power landscape: toward downstream retail investors, commission rates keep declining (industry net commission rate ~0.0215% → Shanghai region down to 0.0179% as of 2026-05, with "0.01% and zero minimum" pricing led by leading internet platforms); toward upstream fund companies, it historically leveraged holdings for strong trailing-commission bargaining power, but starting 2026 the "Sales Fee Management Regulations" impose a direct cap — industry bargaining power is being systematically transferred to regulators and users. Tiantian Fund's 2026H1 net margin was only 5.3%; under fee reform, the distribution segment has become nearly a "thin-margin, high-volume" business.
3. Supply-Demand and Competitive Landscape: Demand is at its most accommodative point in history but shows initial cooling — deposit rates falling below 1% (big-six banks' one-year listed rate 0.95%, three-year 1.25%) are driving household reallocation; ~RMB 75 trillion of household time deposits mature in 2026 (CICC estimate); in 1Q26 household deposits increased RMB 1.5 trillion less YoY while non-bank deposits increased RMB 2 trillion more YoY; the Shanghai Stock Exchange opened 20.16 million new accounts in 2026H1 (+60%). However, August new accounts were 2.397 million (-10% YoY), and margin financing fell 11.2% from its peak — demand is shifting from "booming supply and demand" to "cooling at high levels." Supply side: ~50 brokers compete for retail brokerage (industry consolidation accelerating); hundreds of mid-to-tail third-party distributors are being cleared out faster under fee-reform compliance thresholds; entry barriers are licenses and traffic costs, not capital. Concentration: equity fund distribution holdings (end-2025, AMAC Top 100) — Ant at RMB 1.02 trillion + CMB at RMB 610.5 billion + Tiantian Fund at RMB 400.2 billion, CR3 ~33.8% (on a non-money-market basis, Ant's RMB 1.81 trillion is in a league of its own, about 1.8x Tiantian Fund's); brokerage is highly fragmented — East Money's equity fund share ~3.8%–4.6% (basis differences see C2), Huatai leads margin financing at 7.5%. Three substitution threats: ETF/passive products compressing the active equity trailing-commission pool (index holdings +41.7%); bank wealth management/insurance diversion (deposit migration into life insurance of RMB 1.5 trillion in 1Q26); and AI advisory, if mature, potentially restructuring fee models.
4. Cycles and Regulation: Currently in the "high cycle, initial signs of pullback" stage — policy bottom in Sep 2024 → 2025 bull market with trading volume +63% → accelerated peak in 2026H1 → contraction and cooling in July–August; industry profits still rising (listed brokers' 2026H1 net profit RMB 153.3 billion, ~+50% YoY), but leading indicators weakening: daily average trading volume (down over 30%), margin financing balance (-11.2%), new accounts (-10%). Leading indicator checklist: 20-day average volume, margin financing balance, new accounts, equity fund issuance, brokers' commission revenue growth. Three regulatory threads: ① Completion of the three-phase public fund fee reform ("Sales Fee Management Regulations" effective 2026-01-01, 12-month adjustment period; sales service fee caps of 0.4% for equity/mixed funds, 0.2% for index/bond funds, 0.15% for money market funds; waived after one year of holding; differentiated caps on trailing commissions) — short-term negative for distribution, medium-term positive for industry concentration; ② securities industry "anti-involution" and a low-level stable commission period (decline slowing after 0.0179%); ③ invigorating capital markets and channeling long-term funds into equities (three-year long-cycle assessment for insurance funds, second batch of long-term equity investment pilots, ≥80% weight of three-year assessment for public funds) continue to underpin trading volume and margin financing.
5. Peer Benchmarking: See E6 benchmarking table. Supplemental ranking by scale: East Money's 2025 net profit attributable to parent of RMB 12.085 billion surpassed CICC and Shenwan Hongyuan, ranking 6th–7th among listed brokers, but its 76.8% net margin is the industry's highest — a platform structure of "small revenue, high profit" vs. traditional brokers' "large revenue, low profit." Division of labor with Tonghuashun (iFinD/Hithink): Tonghuashun monetizes "traffic + software + AI" without licenses (net margin 53%, ROE 36.7%, greater bull-market elasticity), while East Money monetizes deeply with "traffic + licenses" (ROE 14% but absolute profit scale 5x+ that of Tonghuashun); Zhinanzhen is an early-stage replica of the same path (Maigao Securities net profit RMB 136 million, +93%, scale only ~1/7 of East Money's).
6. Company Positioning and Share Measurement: Dual-track leader in internet brokerage and third-party fund distribution — No. 1 in online retail brokerage, No. 3 in fund distribution (equity holdings of RMB 526 billion, behind Ant and CMB), 2025 net profit attributable to parent at a record high since listing. Share figures must be presented side by side: equity fund trading market share has three measures — 3.82% (Kaiyuan, 2025) ~ 4.3% (Shenwan and other third parties) ~ 4.6% (company-disclosed equity fund trading value on double-sided calculation); all declined consistently in 2026H1 (third-party basis to ~3.5%, company basis ~4.2%), with declines of 0.2–0.8 pct of the same magnitude as the basis differences; margin financing share stabilized at 3.08%–3.2%; Tiantian Fund's equity/non-money-market holdings share actually rose to 5.4%/4.2% (+0.84/+0.81 pct, Changjiang estimate). The gap between the company's and third-party measures mainly stems from ETF inclusion scope and single- vs. double-sided calculation; citations should follow the trend direction. Moat source: the traffic-data-license flywheel (monthly active share flat at 10.3%); share trends: slight decline on the trading side, recovery on the asset side — overall judgment: "leading position solid, but transitioning from a double hit of α+β share expansion to a phase dominated by industry β."
7. Quantified Demand Inflection Chain (Structural): The deposit migration chain is partially quantified — drivers (time deposit rates of 0.95%/1.25% + ~RMB 75 trillion of time deposits maturing in 2026) × migration evidence (1Q26 household deposits RMB 1.5 trillion less increase / non-bank deposits RMB 2 trillion more increase) × landing (2026H1 daily average trading volume RMB 2.74 trillion, new accounts +60%, public funds at RMB 39.67 trillion) → the industry's volume center rising from RMB 0.88/1.07 trillion in 2023–24 to the current RMB 1.8–2.0 trillion level; but the company's capture rate is a negative contributor (slight share decline), i.e., "industry penetration rising, company share slightly declining," which determines that East Money's benefit profile is β stronger than α. The AI chain (Miaoxiang large model + Choice, research assistant serving nearly 10,000 institutions) is directionally valid but monetization is unproven (financial data services revenue only RMB 195 million per half year, +21%; the company itself states Miaoxiang Skills has "not yet generated revenue") — listed as an observation item, not a valuation support.
The decisive battleground for internet wealth management platforms lies not in the conventional income statement, but in the unit economics of each stage of the funnel "traffic → account opening → funding → trading/subscription-redemption → leverage" — a generic financial framework easily misses this.
Funnel layers (2026H1): Top traffic — East Money APP monthly actives of 19.18 million in June, 10.3% share of stock app monthly actives (flat vs. start of year, Changjiang basis); conversion layer — of the SSE market-wide 20.16 million new accounts (+60%), the company was the No. 1 online gateway; customer brokerage deposits (client margin) of RMB 216.681 billion, +53.6% vs. period start (client inflows are a forward-looking indicator of brokerage/margin revenue, more leading than trading volume); monetization layer — equity fund trading value RMB 26.45 trillion (+65%), funds lent out RMB 96.447 billion (+19.3% vs. period start), Tiantian Fund sales of RMB 1,890.2 billion (non-money-market +100.5%).
Three elements of unit economics: ① Commission rate — not disclosed by the company; industry net commission rate ~0.0215% in 2025 (SAC), Shanghai region 0.0179% as of 2026-05; company estimate ~0.0193% (Kaiyuan, -5%/year); the price war has entered a "stable low period below 0.02%"; ② Margin financing spread — yield on funds lent not disclosed; market margin balance RMB 2.67 trillion, company share 3.08%–3.2%; interest rate sensitivity: each 50bp decline in the yield on funds lent equals roughly -RMB 480 million/year in interest income (pre-tax); each RMB 300 billion decline in margin balance corresponds to roughly -RMB 9 billion in the company's lent-out scale; ③ Distribution fee rate — comprehensive non-money-market distribution fee rate ~0.51% (Changjiang estimate, flat vs. 2025); with 10% discounted subscription fees and trailing commission caps, Tiantian Fund's 5.3% net margin "thin-margin, high-volume" profile is the norm, not an anomaly. Revenue = volume × share × fee rate, three factors multiplied: volume (β) contributed +66% in 2026H1, share (α) about -9%, fee rate -5% — understanding these three numbers explains the entire composition of H1 brokerage revenue +54.8%.
Funnel health assessment: Top traffic flat (non-growth is a concern — the customer acquisition engine is aging, with new accounts driven by market conditions rather than product innovation); mid-funnel client funds surged (+53.6%, the highest-quality signal); end-stage monetization suppressed by fee rates. AI's (Miaoxiang) role across the funnel is cost reduction and efficiency gains (customer service/information/fund selection), not new revenue; Choice + Miaoxiang B-side monetization is the only variable that could structurally change unit economics after 2027, but the current revenue scale (~RMB 400 million annualized) does not yet constitute a valuation support.
Overall view: Neutral, confidence 0.60, time horizon 6–12 months. East Money is a scarce "traffic-license" closed-loop platform in the A-share market, a monetization machine with the industry's highest ROE and net margin, with the long-term volume center systematically rising underpinned by deposit rates and household wealth migration; however, 2026 earnings are built on a historically high volume base, the direction of volume decline since August is confirmed, and at the current price of RMB 19.40 the stock sits at the upper edge of the base-case fair value (RMB 17.0–19.7) with no margin of safety (-12.4%); the opening of odds depends on the direction of volume, not valuation mispricing. Strategy: holders may hold, new money should not chase, do not short; two decision thresholds — if the 20-day average volume holds above RMB 2.3 trillion and margin financing recovers RMB 2.75 trillion (volume reflation, migrate toward the bull case RMB 27–31, turn positive); if the 20-day average volume falls below RMB 1.8 trillion for two consecutive quarters (bear case path, migrate toward RMB 11.5–13.5, turn avoid).
Risk alerts and monitoring points: ① Monthly volume and margin financing data (primary driver); ② Q3 report around 2026-10-24 (threshold: single-quarter net profit attributable to parent ≥ RMB 3.5 billion; 2025Q3's RMB 3.530 billion was the historical single-quarter high); ③ quarterly brokerage/margin market share (a break below 3.3%/3.0% would signal platform premium collapse); ④ Tiantian Fund's net margin and holdings share (statement verification around the fee reform's 2027 waiver-on-holdings clause taking effect); ⑤ interest rate risk of proprietary bond exposure (a cumulative +50bp in the 10-year treasury yield over 20 trading days corresponds to roughly -RMB 2.7 billion in total profit); ⑥ governance (further family share reductions, whether buyback/dividend policies are upgraded). Date and data notes: this report's price base is the 2026-09-01 close of RMB 19.40; sell-side consensus and rating data as of 2026-09-02; volume data as of end-August/early-September 2026.