Orient Securities reported 9M26 revenue of RMB12.17bn,-4.23%YoY;attributable NP of RMB5.38bn,+5.25%YoY;and recurring attributable NP of RMB5.28bn,+5.14%YoY.Weighted average ROE rose by 0.16pp YoY to 6.51%.In 3Q26,revenue fell by 44.54%YoY to RMB2.61bn,while attributable NP declined by 47.78%YoY to RMB860mn,mainly reflecting lower investment income.Growth in brokerage,asset management,and interest income supported 9M26 earnings.The company's differentiated asset management franchise and wealth management transformation offer further growth potential.We maintain BUY on both the A-and H-shares.
Asset base contracts from end-1H26
At end-3Q26,total assets were RMB525.12bn,+7.86%from year-start but-4.84%from end-1H26.Equity attributable to shareholders rose by 2.28%from end-1H26 to RMB86.55bn.Leverage excluding client deposits declined by approximately 0.30x to 4.13x.Financial investments fell by 5.01%from end-1H26 to RMB240.96bn.Trading financial assets and other debt investments declined by 8.31%and 3.62%to RMB115.35bn and RMB91.13bn,respectively,while other equity instrument investments rose by 5.38%to RMB34.03bn.On standalone basis,net capital increased by 8.25%from end-1H26 to RMB61.65bn,while the capital leverage ratio rose by 1.12pp to 15.39%.
Lower investment income weighs on revenue
Net investment income declined by 18.78%YoY to RMB5.03bn in 9M26 but remained the largest stream of revenue,accounting for 41.35%of the total.3Q26 net investment income was RMB395mn,marking asharp slowdown from the RMB4.64bn accumulated in 1H26.Investment income fell by 8.36%YoY to RMB5.34bn in 9M26,while gains from changes in fair value declined by 75.16%to RMB223mn.Both investment income and valuation movements affected revenue performance.Net investment banking income fell by 21.68%YoY to RMB918mn in 9M26,including RMB319mn in 3Q26.A recovery in investment banking and investment operations warrants further validation.
Asset management sustains YoY growth
Net brokerage and asset management income rose by 13.41%and 24.76%YoY to RMB2.70bn and RMB1.21bn in 9M26,respectively,with 3Q26 contributions of RMB888mn and RMB366mn.Continued asset management growth helped offset investment income volatility.Net interest income increased by 61.58%YoY to RMB1.26bn in 9M26,including RMB422mn in 3Q26,as credit businesses contributed more to revenue.Administrative expenses fell by 10.86%YoY to RMB5.55bn in 9M26,with the administrative expense ratio down approximately 3.39pp to 45.63%.Expenses declined faster than revenue,supporting positive earnings growth.3Q26 administrative expenses were RMB1.71bn,while credit impairment charges were RMB3mn.
Earnings forecast and valuation
Reflecting pressure on investment and investment banking income,we lower our revenue assumptions for these businesses.We forecast 2026–2028 revenue of RMB15.47bn/16.09bn/17.95bn(previously RMB18.40bn/20.45bn/22.35bn;cuts of 16%/21%/20%)and attributable NP of RMB6.11bn/6.42bn/7.24bn,+8%/+5%/+13%YoY(previously RMB7.26bn/8.16bn/9.02bn;cuts of 16%/21%/20%).We forecast 2027 BPS of RMB10.33.A-/H-share peers trade at average 2027E PB multiples of 0.80x/0.58x based on Wind consensus.Reflecting the company's differentiated asset management franchise and wealth management transformation potential,we assign 1.1x/0.6x 2027E PB to the A-/H-shares,deriving target prices of RMB11.36/HKD7.24(previously RMB12.90/HKD9.17,based on 1.3x/0.8x 2026E PB).We maintain BUY on both share classes.
Risks:weaker-than-expected investment income due to equity market volatility,lower trading activity weighing on brokerage and wealth management revenue.