Guotai Haitong Securities Co., Ltd. has issued a research report recommending top-tier brokers that possess comprehensive full-business-chain advantages, along with stronger growth potential and sustainability in sci-tech investment. While the substantial unrealized gains in the short term primarily reflect cyclical patterns, the report argues that, over the medium to long term, leading brokers that have successfully established an integrated "investment-investment banking-exit" loop and demonstrated proven project-sourcing capabilities through portfolio validation are poised for a re-rating of their sci-tech investment operations.
The broker's key viewpoints are outlined below. Since the second half of 2025, IPOs on the ChiNext and STAR boards have gradually recovered, allowing brokers to enter a concentrated realization window for early-stage sci-tech projects they invested in, generating unrealized gains worth tens of billions of yuan. This report seeks to address two market concerns: first, after key projects go public, how much earnings elasticity can be unlocked in the short term, and what is the pace of realization; second, whether brokers' sci-tech investments are more cyclical or growth-oriented over the medium to long term.
From a short-term perspective, the elasticity from pending IPO projects in the pipeline is only projected to equate to roughly 5% of annual profits, and the benefits are concentrated among a select few brokers. At the industry level, excluding already-listed projects like Changxin Technology, the estimated after-tax unrealized gains from brokers' investments in upcoming IPO projects amount to merely 5% of the industry's annual net profit, representing a "profit enhancement" rather than a "profit restructuring." At the firm level, the unrealized gains are heavily concentrated in top-tier projects and leading brokers, rather than being an industry-wide benefit. For smaller brokers, a single project's realization could trigger double-digit elasticity, whereas for leading brokers, the unrealized gains primarily reflect the strategic value of investment banking synergy and project positioning, resulting in smoother and more sustainable earnings performance.
From a medium to long-term perspective, the growth potential of brokers' sci-tech investments still awaits validation. This round of unrealized gain realization should be understood as the product of a confluence of three cyclical tailwinds: cost advantages, a systemic re-rating of valuations, and scarcity premiums on new issuances, none of which are likely to be replicated in new investments. First, return rates face mean-reversion pressure, with the average first-day return for new listings on the ChiNext and STAR boards in 2026 reaching 418%, far exceeding the 269% and 235% seen in 2024 and 2025, and even more elevated relative to the double-digit returns in 2022 and 2023. Second, only a limited number of brokers possess the capability to consistently source high-quality projects, relying either on the synergy of a three-investment-linked business chain or on proprietary fund platform channels supported by regional advantages.
Drawing on overseas cases, Goldman Sachs' proprietary private equity investments exhibit more pronounced cyclicality, with significant volatility in earnings, as the firm has been continuously reducing on-balance-sheet exposure while pivoting toward an off-balance-sheet fee-based model. A review shows that Goldman Sachs' private equity net income could contribute nearly 30% of net profit during bull markets, but would plummet by over 90% during tightening cycles, underscoring its high beta characteristics. Over the past decade, Goldman Sachs has shrunk its on-balance-sheet private equity scale by 94%, fully transitioning to off-balance-sheet asset management. In contrast, domestic brokers' alternative investment subsidiaries have continued to expand in scale, yet profitability has struggled to remain stable. Leading brokers, akin to Goldman Sachs, have taken proactive steps to reduce scale, while private equity subsidiaries have not seen significant expansion.
Risk warnings: The pace of IPOs may fall short of expectations; significant volatility in capital markets; delays in the listing progress of key projects; and the potential deviation of estimation models from actual scenarios.