Huatai Securities Co. Ltd. (HTSC)

HTSC’s current credit quality can be assessed as an investment-grade market-based financial credit supported by Jiangsu provincial support expectations and its franchise as a major Chinese securities company. The baseline direction is stable, but the profit improvement from 2025 to Q1 2026 is both a positive sign of market recovery being captured and a factor associated with larger total assets, short-term funding, and proprietary and derivatives sensitivity. The probability of rapid short-term credit deterioration is not high, but if China capital market stress, worsening short-term funding conditions, proprietary losses, a change in Jiangsu support expectations and major regulatory or conduct incidents were to coincide, funding conditions and spreads could react before P/L does.

The credit is supported by the customer base centred on wealth management, institutional services and international business, 2025 profit attributable to shareholders of the parent of RMB16.383bn, parent-company net capital of RMB103.411bn at end-March 2026, a risk coverage ratio of 310.47%, LCR of 409.47%, NSFR of 152.57%, Moody’s Baa1 / S&P BBB+ international ratings, and Jiangsu provincial shareholders. These place HTSC above ordinary small and medium-sized securities companies and support domestic and offshore market access.

The main constraint, however, is the volatility inherent in a market-based financial institution. As the company itself explains, the strong earnings increase in Q1 2026 was supported by market recovery and more active trading. Total assets increased from RMB1.077tn at end-2025 to RMB1.225tn at end-March 2026, and the adjusted debt-to-assets ratio at end-2025 rose to 75.25%. Given the increase in non-equity securities and derivatives/net capital as well, the better the earnings environment, the more important it is to check the growth in risk volume and funding.