The wave of securities firm consolidation rises again: Dongwu Securities plans to acquire Donghai Securities, trading halted starting today

On March 2nd, a new case was added to the wave of consolidation in the securities industry. Dongwu Securities Co., Ltd. (Stock code: 601555) announced this morning that it is planning a major asset restructuring, aiming to acquire control of Donghai Securities by issuing A-shares. Dongwu Securities’ A-shares will be suspended from trading starting today, with an expected suspension period of no more than 10 trading days.

According to the announcement, the preliminary intended counterparty for this transaction is Changzhou Investment Group Co., Ltd., the controlling shareholder of Donghai Securities. Changzhou Investment Group holds 26.68% of Donghai Securities’ shares, making it the largest shareholder. Currently, Dongwu Securities has signed a Letter of Intent for the issuance of shares to purchase assets with Changzhou Investment Group, clarifying the acquisition intention and main terms.

Dongwu Securities stated that the transaction is still in the planning stage. The final details, including the ultimate counterparty, scope of the target assets, and transaction amount, have not yet been finalized. The company will need to complete relevant decision-making and approval procedures and sign formal agreements. There are still uncertainties regarding the matter. The company said it will actively promote various tasks during the suspension period and strictly fulfill information disclosure obligations as required.

As the acquirer, Dongwu Securities is headquartered in Suzhou, Jiangsu Province. It is one of the core securities firms in Jiangsu, established with a focus on regional markets. It has gradually built a comprehensive business chain covering securities brokerage, underwriting and sponsorship, proprietary trading, and asset management. Investment banking and wealth management are its core revenue sources. Dongwu Securities has a strong customer base and channel advantages in Jiangsu, with outstanding performance in brokerage and investment banking within the region. It is also actively expanding into venture capital, futures, and related fields. Its industry sectors include finance, capital market services, Shanghai-Hong Kong Stock Connect, margin trading, and venture capital, demonstrating strong overall competitiveness.

According to the 2025 annual performance forecast released by Dongwu Securities on January 31, the company expects to achieve a net profit attributable to the parent company of between 3.431 billion and 3.668 billion yuan for the year, representing an increase of 45% to 55% compared to the previous year. After deducting non-recurring gains and losses, the net profit is expected to be between 3.427 billion and 3.663 billion yuan, with a similar growth rate of 45% to 55%, indicating steady performance.

The target company, Donghai Securities, is a well-established securities firm with over 30 years of history. It was originally Changzhou Securities, founded in 1993, and listed on the New Third Board in 2015. In recent years, Donghai Securities’ performance has experienced significant fluctuations. According to its semi-annual report for 2025, the company achieved operating revenue of 815 million yuan in the first half of the year, a year-on-year increase of 38.07%. Net profit attributable to shareholders of the listed company was 106 million yuan, a substantial increase of 231.01% year-on-year. Net profit after non-recurring gains and losses was 157 million yuan, up 532.50% year-on-year. The growth was mainly driven by a 48.5% increase in net income from brokerage business to 325 million yuan and a 160.71% increase in proprietary trading income to 294 million yuan.

However, behind these impressive figures are concerns. On one hand, the company’s investment banking business has continued to shrink, with net income of only 55 million yuan in the first half of 2025, a sharp decrease of 56.58% year-on-year.

On the other hand, Donghai Securities also faces legacy issues. In 2025, the company was fined 60 million yuan by the China Securities Regulatory Commission for inadequate diligence in a major asset restructuring project involving Jinzhou Cihang over ten years ago. This penalty was directly recorded as non-operating expense in the first half of the year, significantly impacting the current period’s profit.

It is worth noting that both Dongwu Securities and Donghai Securities are based in Jiangsu Province, with close geographic proximity and complementary businesses. If the acquisition proceeds smoothly, it will enable deep regional resource integration and further strengthen their market positions in Jiangsu. Currently, Dongwu Securities has a market value of approximately 46.159 billion yuan, with a price-to-book ratio of 1.09, at a relatively low level historically. Advancing the merger now could also help reduce integration costs.

The year 2025 has been dubbed the “Year of Mergers and Acquisitions in the Securities Industry” by industry insiders. Under the guidance of policies such as the Central Financial Work Conference’s call to “cultivate top-tier investment banks and investment institutions” and the new “National Nine Rules” supporting leading institutions to enhance core competitiveness through mergers and restructuring, a series of high-profile cases have been launched.

From Guotai Junan Securities’ merger with Haitong Securities to form “Guotai Haitong Securities,” to China International Capital Corporation’s announced merger with Dongxing Securities and Cinda Securities; and to Guolian Securities’ successful integration with Minsheng Securities, now renamed “Guolian Minsheng.”

These consolidations have significantly increased industry concentration. According to Wind data, as of mid-2025, the total assets of the top ten securities firms accounted for 57.27% of the entire industry. In this context, industry resource integration has become a key path for leading securities firms to enhance their comprehensive strength, consolidate advantages, and address weaknesses.