Guotai Junan International: Guotai Junan Securities to Set Up a Wholly-Owned Subsidiary in Saudi Arabia, Target Price HK$1.84

On July 29, Guotai Junan International published a research report detailing recent developments involving Guotai Junan Securities and its parent company. The institutions have entered into a memorandum of understanding with Saudi Arabia’s King Abdullah Financial District (KAFD) to form a wholly-owned overseas subsidiary and initiate related international business activities. According to the report, this expansion aligns with the group's internal strategic priorities and broader global economic and policy conditions. The collaboration with KAFD is projected to deliver substantial policy advantages, support talent acquisition, and streamline resource coordination—key factors expected to elevate the company’s global operational capabilities.

The report further underscores Guotai Junan Securities’ active role in the China Securities Association’s Belt and Road Strategy Committee. Having previously launched index products focused on the Belt and Road initiative, the firm intends to build upon its current initiatives to strengthen its long-term strategic direction.

Trading performance in July revealed positive momentum, with Guotai Junan International’s average daily trading volume of H-shares rising by 56% month-over-month. After a phase of platform recalibration, the company’s return on equity (ROE) has begun to stabilize. The profitability of its diversified business segments is recovering steadily, and transformation strategies are showing tangible progress. In terms of valuation, the firm maintains a buffer when compared to competitors in the industry.

Earnings projections within the report estimate Guotai Junan International's net profit at RMB 2.3 billion for 2024 and RMB 2.6 billion for 2025. The anticipated price-to-book (P/B) ratios are 0.45x and 0.42x, respectively. With a 2024 target P/B ratio of 0.55x, the report sets a price target of HK$1.84 and affirms a “Buy” rating for the company’s shares.