[ET Net News Agency, 17 July 2020] Nomura raised its target price for China Galaxy
Securities (CGS)(06881) to HK$6.1 from HK$4.13 and maintained its "neutral" rating.
The research house lifted its FY2020-22F A-share market ADT (average daily turnover)
estimates by 28%/44%/52%. It also increased its FY2020-22 A-share IPO volume growth to
80%/50%/50% from 50%/30%/30%.
As a traditional big broker with heavy offline branch coverage, CGS is most sensitive to
ADT changes. For every 1% increase in ADT will lead to a 0.4% increase in FY2020 earnings,
Nomura added.
That said, Nomura thinks the company is most vulnerable to the trend of declining
brokerage business commission rates and relies much on its extensive offline branches to
reach customers, making it difficult for the company to improve operating efficiency. (KL)