Absorption and Major Wisdom suspended from review, Xiangcai Securities' "brokerage + fintech" integration and profitability face challenges

Investing in stocks? Rely on Golden Kylin Analyst Reports—authoritative, professional, timely, comprehensive—helping you uncover potential thematic opportunities!

In the context of ongoing industry consolidation in the securities sector, the restructuring deal between Xiangcai Securities Co., Ltd. (hereinafter: Xiangcai Securities) and the established financial information service provider Shanghai Dazhihui Co., Ltd. (hereinafter: Dazhihui) has become a major highlight in securities M&A activity.

On March 15, both Xiangcai Securities’ parent company Xiangcai Co., Ltd. and Dazhihui announced that the review of Xiangcai Co.’s share swap merger with Dazhihui was suspended by the Shanghai Stock Exchange.

This highly anticipated merger has been temporarily halted due to expired valuation reports and invalid financial data.

Regarding performance, both parties disclosed their 2025 earnings data in January.

Unreviewed financials for Xiangcai Securities in 2025 show a net profit of 553 million yuan, a 157.21% increase year-over-year. Despite strong growth, the investment banking business has declined sharply for two consecutive years, with profits heavily dependent on market conditions.

In contrast, Dazhihui expects a net profit attributable to parent company of between -34 million and -50 million yuan in 2025.

Whether the transaction can pass review remains to be seen—after East Money and Zhishen, whether it can set a new benchmark for internet-based securities firms still requires further observation.

1

Nearly a year in the making,

The M&A deal hits a “pause”

Xiangcai Securities was originally established in 1992 as the Hunan Province Xiangcai Securities Business Department, officially founded in 1996, making it one of the first nationwide comprehensive securities firms in China.

In 2007, New Lake Holdings Ltd. invested 2.4 billion yuan to acquire a controlling stake in Xiangcai Securities. In 2020, it went public via a backdoor listing on the Hegang Science and Technology, later renamed Xiangcai Co. In July 2024, Zhejiang state-owned assets invested in the company. As a result, Xiangcai Securities now features a mixed ownership structure of private enterprise control plus state-owned shareholding.

In recent years, under policies encouraging securities industry mergers and consolidations, the number of industry M&A cases has increased. However, the nearly one-year-long restructuring process between Xiangcai Co. and Dazhihui was recently put on hold.

On March 15, Xiangcai Co. announced that the share swap merger with Dazhihui and the related fundraising transaction had been suspended. The reason cited was that the valuation data submitted in the application documents had expired and needed updating. According to the “Rules for the Review of Major Asset Restructurings of Listed Companies,” the Shanghai Stock Exchange suspended the review of this transaction.

On the same day, Dazhihui issued a detailed announcement explaining the specific reasons for the suspension.

Dazhihui stated that the valuation report in the application documents was valid until March 14, 2026, and the latest audited financial statements were as of June 30, 2025. Since these financial data will expire on March 31, 2026, and data updates are still underway, the SSE has suspended the review of this transaction.

Image / Dazhihui Announcement

Both companies indicated that the suspension would not significantly impact the transaction. Their operations remain normal, and they are actively working on updating valuation data, financial statements, and application documents. Once completed, they will promptly submit the updated materials and request to resume review.

In fact, this “broker + fintech” alliance has been in preparation for nearly a year.

In March 2025, Xiangcai Co. announced that it was planning to merge with Dazhihui through a share swap involving all A-shares held by Dazhihui’s shareholders, issuing new A-shares to raise supporting funds.

By September 2025, Xiangcai Co. officially disclosed the “Share Swap Merger and Fundraising and Related Party Transaction Draft Report,” clarifying the core restructuring plan: each Dazhihui share could be exchanged for 1.27 new A-shares of Xiangcai Co.; the company planned to raise up to 8 billion yuan from no more than 35 specific investors.

Image / Xiangcai Co. Announcement

After the merger, Dazhihui will delist and deregister as a legal entity; Xiangcai Co., as the surviving entity, will inherit all assets, liabilities, businesses, personnel, contracts, licenses, and other rights and obligations of Dazhihui.

“Bullet Finance” notes that the earliest record of this merger between Dazhihui and Xiangcai Securities dates back to 2015.

At that time, Dazhihui planned to acquire 100% of Xiangcai Securities for 8.5 billion yuan, aiming to replicate the “Internet + securities license” model. However, due to Dazhihui’s disclosure violations and subsequent investigation by the CSRC, as well as confirmed financial fraud, the deal was aborted.

Now, this merger is back on the table, but with a dramatic role reversal.

Public information shows that Dazhihui was founded in December 2000 and listed on the Shanghai Stock Exchange in January 2011. It is one of the early domestic internet financial information service providers with notable market recognition.

Xiangcai Co. stated in its interim report that completing the transaction would help Xiangcai Securities achieve a leap in wealth management and other sectors. Leveraging Dazhihui’s extensive experience in internet traffic operations and fintech R&D, Xiangcai Securities aims to expand client reach and optimize online service scenarios.

2

“Broker + Fintech”,

Integration and Profitability Challenges

The partnership between Xiangcai Co. and Dazhihui is not the first time a securities firm has teamed up with fintech companies. In the A-share market, Compass has acquired MaGao Securities, and East Money has acquired Tongxin Securities, both successful examples demonstrating the potential of this model.

Despite a clear vision, the integration of Xiangcai Securities and Dazhihui faces slow review progress and practical profitability challenges.

Specifically, Dazhihui is a veteran fintech company with advantages in financial data, quantitative tools, and end-user coverage. In 2024, its app had an average of 10.53 million monthly active users, highlighting its traffic advantage.

Recently, Dazhihui released a performance forecast, expecting a net profit attributable to the parent of between -3.4 million and -5 million yuan in 2025, with net profit after non-recurring gains and losses between -6.9 million and -8.5 million yuan. This contrasts sharply with Xiangcai Securities’ impressive 2025 net profit of 553 million yuan.

Dazhihui explained that some business revenues increased in 2025, and cost reduction measures significantly lowered expenses, but revenue growth was still insufficient to fully cover costs.

In recent years, Dazhihui’s revenue growth has been sluggish, with volatile profits.

Wind data shows that from 2020 to 2024, the company’s total revenue was 708 million, 819 million, 780 million, 777 million, and 771 million yuan, respectively—fluctuating mainly between 700 million and 800 million, without sustained growth.

Net profits over the same period were 72 million, 16 million, -93 million, 86 million, and -204 million yuan, showing large swings. Notably, 2023 saw a brief return to profit, but 2024 again experienced significant losses.

This suggests that if Xiangcai Co. successfully merges with Dazhihui, short-term profitability may remain weak, facing challenges in asset profitability improvement and business integration, increasing operational uncertainty post-merger.

Meanwhile, whether their businesses can effectively collaborate depends on Xiangcai Co.’s management capabilities. Significant differences in customer base, trading systems, compliance, corporate culture, etc., imply a long integration cycle and high costs, and whether “traffic + trading” can be efficiently converted remains to be seen.

3

High growth in revenue and profit in 2025,

Two consecutive years of decline in investment banking

Beyond the merger plan, Xiangcai Securities’ own scale continues to expand.

As of June 30, 2025, Xiangcai Securities operated 67 securities branches nationwide, along with 4 business subsidiaries, 4 regional branches, and 2 wholly owned subsidiaries.

On January 19, Xiangcai Co. disclosed its wholly owned subsidiary Xiangcai Securities’ unaudited financial report for 2025.

Data shows that in 2025, the company achieved total revenue of 1.955 billion yuan, up 28.79% year-over-year; net profit was even more impressive—5.53 billion yuan, a 157.21% increase.

Xiangcai Co. stated that the overall upward trend in China’s capital markets and active trading provided opportunities for Xiangcai Securities to optimize asset allocation, with significant growth in wealth management and self-operated businesses such as brokerage, credit, and investment advisory, driving the substantial profit increase.

However, “Bullet Finance” notes that over a longer period, Xiangcai Securities’ profitability has been relatively weak.

Wind data shows that from 2020 to 2024, the company’s performance fluctuated significantly: total revenue was 1.578 billion, 2.045 billion, 1.076 billion, 1.485 billion, and 1.65 billion yuan.

Net profit during the same period was 484 million, 694 million, 39 million, 244 million, and 243 million yuan. Although 2023 and 2024 showed some recovery, profits remained at relatively low levels.

In this context, the high growth in 2025’s performance, especially net profit, is largely due to a low base in 2024, representing a typical low-base recovery.

Image / Xiangcai Co. Announcement

Specifically, in 2025, Xiangcai Securities’ brokerage net fee income was 742 million yuan, up 38.95%; asset management fee income was 40 million yuan, up 23.15%; and investment income was 384 million yuan, up about 18.89%.

Contrasting sharply with the overall high growth, the firm’s investment banking revenue declined significantly.

Data shows that in 2025, the net fee income from investment banking was only about 59.99 million yuan, down 29.44%; in 2024, it was 84.95 million yuan, down 46.1%.

This indicates that investment banking revenue shrank by over 60% from 2023 to 2025, from 158 million yuan to less than 60 million yuan.

“Bullet Finance” notes that in 2023, Xiangcai Securities had an IPO project—Feinan Resources—whose performance “changed dramatically” in its listing year, with poor sponsor quality. In 2024, its sole IPO sponsor, Anhui Anruisheng New Energy Co., Ltd., terminated its listing process on the Beijing Stock Exchange in April.

Wind data shows that Xiangcai Securities did not complete any IPO sponsorship projects in 2025 and currently has no IPO pipeline.

Investment banking is a core indicator of a securities firm’s capital intermediary and comprehensive service capabilities. Its decline not only weakens revenue structure but also reduces client coverage, making profits heavily reliant on brokerage and market conditions, with weak cyclical resilience.

Overall, acquiring Dazhihui is a key move for Xiangcai Securities to achieve differentiation, but whether the “broker + fintech” strategic blueprint can be smoothly realized still depends on future approval progress and integration efficiency.

Next, whether Xiangcai Securities can address its business gaps and successfully implement the restructuring remains a focus for “Bullet Finance.”

*Images in the article are from: Visual China, based on VRF protocol.