Orient Securities Company Limited (ORSECH)

Orient Securities’ current credit quality is best assessed as a lower-tier investment-grade market-based financial credit supported by Shanghai municipal support expectations and its franchise as a leading Chinese securities company. However, this credit quality is based not on a bank-type stable deposit base, but on the company’s scale, capital, liquidity, market access, and support expectations as a securities company. The credit trajectory has stable to mildly positive near-term elements from the 2025 earnings recovery, higher profit in 2026 Q1, and the strategic potential of the Shanghai Securities acquisition proposal. However, given proprietary trading, financial assets, market funding, and uncertainty around the acquisition, this is not yet a stage to assume rapid upward revaluation. The probability of a rapid near-term deterioration in credit quality is not high, but if China capital-market stress, weaker repo / collateral / short-term funding conditions, Shanghai Securities integration burden, and changes in support expectations coincide, funding conditions and spreads could react before earnings do.

The credit profile is supported by the Shanghai base, state-owned shareholders led by Shenergy, A+H listing, integrated securities operations, client accounts and assets under custody, Orient Securities Asset Management, Orient Futures, the stake in China Universal Fund, 2025 net profit attributable to shareholders of the parent of RMB5.634bn, parent-company net capital of RMB53.550bn at end-2025, LCR of 173.04%, NSFR of 136.24%, and S&P’s support-inclusive BBB- / Stable rating. These place the company above ordinary small securities companies and support market access and investor confidence.

At the same time, the largest constraint is the strong linkage between earnings, the balance sheet, and market conditions. The 2025 profit was strong, but investment income, proprietary trading, and Institutional and sales trading / proprietary investment made large contributions, accompanied by sensitivity to financial assets, repos, bonds issued, client collateral, and short-term funding. Financial investments and derivative assets accounted for roughly half of total assets at end-2025, and repurchase agreements and bonds issued were also substantial. For a securities company, collateral and funding conditions can deteriorate before earnings, so P/L alone cannot capture credit changes.