CSC's third quarter report data shows "abnormal movements," with "giant" investors becoming new shareholders

On the evening of October 30th, CSC released its third-quarter report.

The report shows that the company's operating revenue for the first three quarters reached 14.315 billion yuan, a year-on-year decrease of 22.13%; the net profit attributable to shareholders was 4.297 billion yuan, a year-on-year decrease of 24.49%; and the basic earnings per share was 0.45 yuan.

Core Data Changes

This third-quarter report disclosed a significant change in a major accounting figure.

The relevant indicator is the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses, which saw a year-on-year decline of 33.31% in the first three quarters of this year.

CSC explained that this was mainly due to a decrease in net income from fees and commissions, as well as net interest income.

Looking at the market-focused indicator "net income from fees and commissions," the year-on-year change for the first three quarters was -31.60%. The main reason for this was a decrease in net income from fees and commissions in investment banking.

"Giant" Capital Becomes New Shareholder

As of the end of September, a new face appeared among the top ten shareholders of CSC, namely Huatai-PB HuShen 300 ETF.

This blue-chip index ETF is currently the largest equity index fund in China, newly becoming the tenth largest shareholder of CSC.

In contrast, the Cathay Securities Index ETF saw a reduction in holdings during the same period.

Additionally, the offshore investor in A-shares—Hong Kong Central Clearing Limited—became the institution with the largest increase in holdings among the top ten shareholders.

Multiple Financial Data "Anomalies"

In this quarterly report, several items in CSC's financial statements showed increases or decreases of 100% or more. The reasons behind these "anomalies" are noteworthy.

Among leading brokerages, CSC's derivatives business is relatively prominent, which was also reflected in this third-quarter report.

(As shown below) The "short-term loans" item for the first three quarters saw a massive increase of 295.69% (compared to the end of 2023), mainly due to an increase in credit loans.

Furthermore, the derivative financial liabilities for the first three quarters increased by 48% compared to the end of last year, primarily due to the growth in the scale of derivative financial instruments.

Additionally, the company's borrowed funds at the end of the period showed a 100% decrease compared to the beginning of the year, with the relevant accounting item explanation indicating that this was mainly due to a reduction in borrowed funds

Response to Executive Incident

In its third-quarter report, CSC mentioned that Liu Naisheng, the executive in charge of investment banking, has been subjected to administrative regulatory measures involving regulatory discussions.

The main issues involve CSC's failure to effectively supervise the issuer in managing the special account for raised funds; insufficient attention to project risks during internal review; and the lack of re-approval for internal controls after substantial modifications to the prospectus disclosed externally.

In this quarterly report, CSC disclosed that the company has promptly addressed the relevant issues and further improved the processes for due diligence, ongoing supervision of raised fund management, tracking the implementation of internal review opinions, and the internal control processes for the consistency of external disclosure documents