HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Bright Smart Securities & Commodities / Equity Bottom-Up

Bright Smart Securities & Commodities (1428 HK)

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<li>
<a href="https://www.smartkarma.com/entities/bright-smart-securities-commodities-group" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities (1428 HK)</a> rallied by 132% since our last Insight, fueled by the euphoria in the brokerage and securities sector on the HK government's stablecoin initiative.</li>
<li>At HK$16.44, it is at 100% PER premium to the sector average, ex-<a href="https://www.smartkarma.com/entities/guotai-junan-international" target="_blank" data-smartkarma-citation="entities:13438:1" rel="noopener">Guotai Junan International (1788 HK)</a>. The risk-reward payoff now looks less attractive.</li>
<li>It also implies net profit to grow by 150% by FY31F and priced at 18x PER. This appears stretched in the near term, though long-term prospects stay decent. </li>
</ul>



Bright Smart Securities (1428 HK) rallied by 132% since our last Insight, fueled by the euphoria in the brokerage and securities sector on the HK government's stablecoin initiative.
At HK$16.44, it is at 100% PER premium to the sector average, ex-Guotai Junan International (1788 HK). The risk-reward payoff now looks less attractive.
It also implies net profit to grow by 150% by FY31F and priced at 18x PER. This appears stretched in the near term, though long-term prospects stay decent. 


<ul>
<li>
<a href="https://www.smartkarma.com/entities/bright-smart-securities-and" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities (1428 HK)</a>'s earnings rebounded solidly by 20.4% YoY in 2H FY25, fueled by higher client accounts and assets, and better HK market turnover.</li>
<li>BSS has been an underperformer against peers since May, as other brokerage companies rallied on the back of potential entry into the virtual asset dealing business. </li>
<li>Ant Financial will be able to transform BSS into a sizeable cross-asset house. The share price's current implied earnings growth and PER valuations are conservative.</li>
</ul>



Bright Smart Securities (1428 HK)'s earnings rebounded solidly by 20.4% YoY in 2H FY25, fueled by higher client accounts and assets, and better HK market turnover.
BSS has been an underperformer against peers since May, as other brokerage companies rallied on the back of potential entry into the virtual asset dealing business. 
Ant Financial will be able to transform BSS into a sizeable cross-asset house. The share price's current implied earnings growth and PER valuations are conservative.


Bright Smart (1428 HK): Bright and Smart FY25

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bright-smart-securities-commodities-group" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener"></a>Ant Financial has essentially passed through all hurdles in its acquisition of a 50.55% stake in <a href="https://www.smartkarma.com/entities/bright-smart-securities-commodities-group" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities (1428 HK)</a> from the current controlling shareholder.</li>
<li>With a 68.5% surge in share price YTD, it is now trading on 31.8x FY27F PER and 9.2x P/B. A lot of 'dream' or 'hope' value has already been discounted. </li>
<li>It is more expensive than <a href="https://www.smartkarma.com/entities/futu-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27858:1" rel="noopener">Futu Holdings Ltd (FUTU US)</a> and <a href="https://www.smartkarma.com/entities/up-fintech-holding-ltd" target="_blank" data-smartkarma-citation="entities:27957:1" rel="noopener">UP Fintech (TIGR US)</a>, so taking some money off the table is sensible. </li>
</ul>



Ant Financial has essentially passed through all hurdles in its acquisition of a 50.55% stake in Bright Smart Securities (1428 HK) from the current controlling shareholder.
With a 68.5% surge in share price YTD, it is now trading on 31.8x FY27F PER and 9.2x P/B. A lot of 'dream' or 'hope' value has already been discounted. 
It is more expensive than Futu Holdings Ltd (FUTU US) and UP Fintech (TIGR US), so taking some money off the table is sensible. 


Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

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Private /: China’s private sector set for boost as local governments step up support


CX Daily: New Business Comes With Old Risks for China’s Struggling Tutoring Industry

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bright-smart-securities-and" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities (1428 HK)</a> will benefit from Ant Financial's technology innovation capabilities, customer group, digitalisation, and cross-selling to over 640m of Alipay users.</li>
<li>With <a href="https://www.smartkarma.com/entities/futu-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27858:1" rel="noopener">Futu Holdings Ltd (FUTU US)</a> having an average PER of 19x for 2020-2025, we use 15x for BSS after a conservative estimate of 50% earnings growth in 5 years. </li>
<li>We value BSS at HK$8.13, but this is a conservative estimate. Its earnings growth is likely to be faster than our forecast, given its better leverage on the new parent.  </li>
</ul>



Bright Smart Securities (1428 HK) will benefit from Ant Financial's technology innovation capabilities, customer group, digitalisation, and cross-selling to over 640m of Alipay users.
With Futu Holdings Ltd (FUTU US) having an average PER of 19x for 2020-2025, we use 15x for BSS after a conservative estimate of 50% earnings growth in 5 years. 
We value BSS at HK$8.13, but this is a conservative estimate. Its earnings growth is likely to be faster than our forecast, given its better leverage on the new parent.  


Bright Smart (1428 HK): An Attempt to Derive a Value

Hong Kong

BOCOM International is an investment holding company primarily engaged in securities brokerage, corporate finance, underwriting, asset management, and margin financing. It offers services such as securities trading, financial advisory, and direct investment in debt and equity. The company was founded in Hong Kong in 1998.

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BOCOM International (3329 HK)

Bright Smart (1428 HK): Valuation Update

Bright Smart announced that it is still working on satisfying condition c.), which is reporting with the NDRC. Given that the Long Stop Date is 25...

Osbert Tang, CFA

Bright Smart (1428 HK): Bright and Smart FY25

BSS saw a 20.4% YoY earnings rebound in 2H FY25, driven by increased client accounts and assets, and better market turnover. Ant Financial's...

Osbert Tang, CFA

Bright Smart (1428 HK): Enough Is Enough

As expected, Ant Financial has put forward the Unconditional MGO at HK$3.28, or a 74% discount to its last close. This is a formality in the...

Osbert Tang, CFA

CX Daily: New Business Comes With Old Risks for China’s Struggling Tutoring Industry

Edtech /In Depth: New business comes with old risks for China’s struggling tutoring industry Syngenta /: Syngenta IPO back on hold over concerns...

Caixin Global

Bright Smart (1428 HK): An Attempt to Derive a Value

Bright Smart benefits from Ant Financial's technology and customer base, with potentially faster-than-forecast growth. At a 50% 5-year growth and...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Bright Smart (1428 HK): Valuation Update

Bright Smart announced that it is still working on satisfying condition c.), which is reporting with the NDRC. Given that the Long Stop Date is 25...

Osbert Tang, CFA

Bright Smart (1428 HK): Bright and Smart FY25

​BSS saw a 20.4% YoY earnings rebound in 2H FY25, driven by increased client accounts and assets, and better market turnover. Ant Financial's...

Osbert Tang, CFA

Bright Smart (1428 HK): Enough Is Enough

As expected, Ant Financial has put forward the Unconditional MGO at HK$3.28, or a 74% discount to its last close. This is a formality in the...

Osbert Tang, CFA

CX Daily: New Business Comes With Old Risks for China’s Struggling Tutoring Industry

Edtech /In Depth: New business comes with old risks for China’s struggling tutoring industry Syngenta /: Syngenta IPO back on hold over concerns...

Caixin Global

Bright Smart (1428 HK): An Attempt to Derive a Value

​Bright Smart benefits from Ant Financial's technology and customer base, with potentially faster-than-forecast growth. At a 50% 5-year growth and...

Osbert Tang, CFA

BSS saw a 20.4% YoY earnings rebound in 2H FY25, driven by increased client accounts and assets, and better market turnover. Ant Financial's...

Bright Smart benefits from Ant Financial's technology and customer base, with potentially faster-than-forecast growth. At a 50% 5-year growth and...