Here is the English translation of the provided text: Guotai Junan's absorption and merger with Haitong Securities marks the first major acquisition and restructuring of a leading securities firm following the "New Nine Articles," accelerating the pace of industry consolidation.

The merger is beneficial for both parties to complement each other's strengths, leverage synergistic effects, and despite the uncertainties in Haitong Securities' business development, it remains to be seen whether the combined entity will become a flagship securities firm.

On September 5th, both Guotai Junan and Haitong Securities issued suspension of trading announcements, planning a significant asset restructuring.

Guotai Junan stated that the company is planning to merge Haitong Securities by issuing A-shares to all A-share shareholders and H-shares to all H-share shareholders of Haitong Securities, and raising supporting funds through the issuance of A-shares, with trading suspended starting September 6th.

The announcement indicated that the restructuring involves both A-shares and H-shares, with numerous matters and complex processes involved.

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Additionally, the restructuring is conducive to building a top-tier investment bank and promoting high-quality development of the industry.

According to the regulations of the Shanghai Stock Exchange, the suspension of trading is expected not to exceed 25 trading days.

Recently, Guotai Junan's proposed absorption and merger with Haitong Securities aims to accelerate the industry's merger and acquisition process, with the integration of leading firms expected to have a demonstration effect, and the carrier-class securities firms are poised to set sail.

Minmetals Securities believes there are three main focuses for this event: First, in terms of indicators, the combined total assets and net assets are in an absolute leading position in the industry, with revenue, net profit, and segmented business income indicators consistently ranking in the top three; Second, from a business development perspective, the merger can concentrate resources for business empowerment, promote mutual synergy between customer resources and business capabilities, enhance capital operation efficiency and the value of licenses; on the other hand, it can also strengthen the overall capital strength, accelerate the sorting out and clearing of risks, and promote high-quality development of the business; Third, from the industry trend perspective, early mergers of securities firms were mainly driven by the purpose of business or regional complementarity to improve the territory, aiming to achieve broader market coverage, expand market share, and enhance overall competitiveness.

Recent acquisitions such as Guosen Securities' acquisition of Wanhe Securities and Jinlong Shares' transfer of Dongguan Securities' equity indicate that equity integration within the state-owned system has begun, but previous cases were more focused on the differentiated development framework of small and medium-sized securities firms mentioned in the "New Nine Articles."

However, Guotai Junan's merger with Haitong Securities indicates that the construction of world-class investment banks has officially been put on the agenda.

Against the current background of cautious innovation in business development and relatively low overall leverage ratios, domestic securities firms' ROE is significantly lower than that of international investment banks.

If the capital constraints are further relaxed and the leverage ratio is increased, they will have more confidence and strength to compete with world-class investment banks.

Against the backdrop of accelerated central enterprise integration and pilot mergers of leading securities firms, the demonstration effect of peer mergers is expected to gradually emerge, thereby effectively promoting the maturity and landing of 2-3 world-class investment banks, and this overall transformation of the industry pattern is worth looking forward to.

The policy context of industry mergers and acquisitions.

This time, Guotai Junan's absorption and merger with Haitong Securities is the largest-scale securities company A+H dual-market absorption and merger case in the history of China's capital market, and it is also the first leading securities firm merger case after the "New Nine Articles," opening up the imagination for subsequent securities industry mergers and reorganizations.

Finance is the lifeblood of the national economy.

Building a strong financial country and promoting high-quality economic development with high-quality financial development is a key link in comprehensively deepening reforms and serving Chinese-style modernization.

The Central Financial Work Conference has clarified the positioning of financial institutions of different sizes, starting from the political and people-oriented nature of financial work, supporting state-owned large financial institutions to be excellent and strong, and serving as the main force in serving the real economy and the ballast stone in maintaining financial stability.

As the mainstay of the direct financing market, the securities industry should take serving the real economy as its fundamental mission, find its own positioning, and while cultivating flagship securities firms that can compete with top international financial institutions, promote the professional and characteristic development of small and medium-sized securities firms, and contribute to the upgrading of the national industrial structure and the construction of a multi-level capital market.

With the rapid development of China's economy and capital market, and the continuous improvement of the level of opening up, scale, group, and specialization are the development direction of securities companies, and market-oriented mergers and reorganizations are an important path for securities companies to improve the serious homogenization situation and be excellent and strong.

At present, China has become the world's second-largest capital market, but it still lacks financial institutions that can compete with overseas top investment banks.

The merger and reorganization of leading securities firms provide a feasible path for building carrier-class securities firms with international competitiveness and enhancing the global influence of China's financial market.

Against the background of policy encouragement to build carrier-class securities firms and help build a strong financial country, in 2019, the China Securities Regulatory Commission (CSRC) first proposed "actively promoting the construction of carrier-class securities companies" and proposed six related measures such as "supporting market-oriented mergers and reorganizations within the industry."

In July 2020, the CSRC issued a notice encouraging securities and fund companies with conditions to carry out market-oriented mergers and reorganizations.

In October 2023, the Central Financial Work Conference proposed, "It is necessary to focus on building a modern financial institution and market system, and cultivate first-class investment banks and investment institutions"; in November, the CSRC once again made a voice, supporting leading securities companies to be excellent and strong through business innovation, group operations, mergers and reorganizations, and other means, to build first-class investment banks, and play an important role in serving the main force of the real economy and maintaining the ballast stone of financial stability.

In March 2024, the CSRC's "Opinions on Strengthening the Supervision of Securities Companies and Public Fund Regulations to Accelerate the Construction of First-Class Investment Banks and Investment Institutions (Trial)" proposed "supporting leading institutions to be excellent and strong through mergers and reorganizations, organizational innovation, and other means" "by 2035, forming 2 to 3 investment banks and investment institutions with international competitiveness and market leadership"; in April, the "Several Opinions on Strengthening Supervision, Guarding Against Risks, and Promoting High-Quality Development of the Capital Market" (New "Nine Articles") emphasized "supporting leading institutions to enhance core competitiveness through mergers and reorganizations, organizational innovation, and other means" "increasing the intensity of mergers and reorganizations, and taking multiple measures to activate the mergers and reorganizations market."

The 20th Central Committee's third plenary session raised "deepening financial system reform" to an important height.

This "Guotai Junan + Haitong Securities" merger is not only a key link in China's construction of a first-class investment bank and helping to build a strong financial country, but also fits the spirit of the third plenary session of the 20th Central Committee "to serve Chinese-style modernization with high-quality financial development."

The integration effect remains to be observed.

According to the simple addition of data in the first half of 2024, the total assets and net assets of Guotai Junan and Haitong Securities after the merger will reach 1.62 trillion yuan and 346 billion yuan, respectively, both in the industry's first place.

It is estimated that after the merger is successful, the profitability and asset scale of the two securities firms will be significantly improved.

The calculated operating income after the merger is expected to reach around 60 billion yuan, and the net profit attributable to the parent company may exceed 10 billion yuan.

The operating income and net profit attributable to the parent company will jump to the top two in the industry, the total asset scale will jump to the first in the industry, and it will become the second securities firm in the industry with assets exceeding one trillion yuan.

Similarly, based on the first half of the year's data, after the merger, the operating income of both parties accounts for 11% of the listed securities firms, and the brokerage, investment banking, asset management, proprietary, and interest business accounts for the proportion of all listed securities firms will increase to 10.4%, 14.4%, 12.2%, 8.8%, and 16.7%, respectively, and the investment banking and interest business income accounts will be promoted to the first place in the industry.

Looking at the business separately, according to the simple total calculation, after the merger, the brokerage, investment banking, asset management, credit, and proprietary businesses will reach 10.62 billion yuan, 7.109 billion yuan, 6.01 billion yuan, 6.891 billion yuan, and 9.607 billion yuan, respectively.

The brokerage, investment banking, and credit businesses will rise to the first place in the listed securities firms, the asset management business will rise to the third place, and the proprietary business will rise to the fourth place.

It can be seen that the integration has the greatest effect on Guotai Junan's brokerage business, investment banking business, and credit business.

According to the mid-year report of 2024, the actual controller of Guotai Junan is Shanghai International Group, and the largest shareholder is Shanghai State-owned Assets Operation Co., Ltd., with a holding ratio of 21.35%; Haitong Securities' shareholders' holding ratio is dispersed, there is no controlling shareholder and no actual controller, and the company's largest shareholder is Shanghai Guosheng Group and its wholly-owned subsidiary Shanghai Guosheng Group Asset Co., Ltd., with a holding ratio of 10.38%.

It is worth noting that both securities firms belong to Shanghai state-owned assets, and the securities firms under the same control system are expected to increase the feasibility of the merger.

However, this merger also involves issues such as license integration and risk asset disposal.

Guotai Junan and Haitong Securities hold public fund licenses (Huaan Fund, Guotai Junan Asset Management, Haifutong Fund, Fugu Fund, Haitong Asset Management), which need to be integrated according to the "one participation, one control, one license" requirements.

In addition, Haitong Securities has been affected by the losses of its subsidiary Haitong International in recent years and has faced operational difficulties.

The merger needs to pay attention to issues such as risk asset disposal.

The current market is more concerned about whether Guotai Junan's absorption and merger with Haitong Securities can create a flagship securities firm in the true sense?

As a representative of the leading securities firms in the industry, CITIC Securities has stable profitability, and its asset scale and operating income have been at the top of the industry for many years.

CITIC Securities is selected as a comparative sample for analysis.

According to the 2023 annual report, the business situation of CITIC Securities, Guotai Junan, and Haitong Securities is sorted out.

Although the asset scale of both parties after the merger has become the first in the industry, whether it can become a flagship securities firm still needs many conditions other than scale.

The 2023 annual report data show that after Guotai Junan's absorption and merger with Haitong Securities, the total assets and net assets scale reached 1,679.989 billion yuan and 348.178 billion yuan, respectively, becoming the first in the industry.

In addition, after the merger, "Guotai Junan + Haitong" ranks first in the number of business departments, net income from investment banking business, and net interest income.

(Note: The translation is provided in a continuous format without breaking it down into smaller segments as the original text is quite extensive and detailed.

)In the field of wealth management, taking the acquisition of Guangzhou Securities by CITIC Securities as a reference, the merger of Guotai Junan and Haitong Securities not only benefits the enhancement of its own business layout across the country, especially in the Yangtze River Delta area, but also allows for a rapid increase in stock and fund trading volume.

Haitong Securities has a strong competitive advantage in investment banking business, and after the merger, the two parties will join forces to become the leader in investment banking.

In terms of proprietary business, due to the significant losses from fair value changes in 2023, the income from Haitong Securities' proprietary business has dragged down the merged income, which is significantly lower than that of CITIC Securities.

In the field of asset management, the merger has to some extent increased the scale and income of Guotai Junan's asset management business, but there is still a gap compared to CITIC Securities; as Guotai Junan holds a public fund license and controls Huaan Fund, while Haitong Securities controls Haifutong Fund and has a stake in Fullgoal Fund, under the "one participation, one control, one license" model, the circulation of public fund licenses still needs to be observed.

In terms of net interest income, although Guotai Junan's net interest income has become the industry leader after the merger, Haitong Securities has a higher credit impairment loss rate than its peers, hence further observation is needed on the disposal of asset quality.

Through the above analysis, it can be seen that the "Guotai Junan + Haitong" merger is beneficial for both parties to complement each other's strengths and play a synergistic effect.

However, in recent years, Haitong Securities has faced operational and performance pressures, and whether the merger can become a flagship securities firm is still to be seen.

The pace of industry restructuring is accelerating, and the securities industry has set off a wave of market-oriented mergers and acquisitions.

Leading securities firms are expanding outwardly to build world-class investment banks, while small and medium-sized securities firms are improving their capital strength through mergers and acquisitions, achieving complementary advantages in business resources, and enhancing market competitiveness and comprehensive customer service capabilities.

In August 2024, Guosen Securities announced plans to issue A shares to purchase 96.08% of Wanhe Securities' shares.

Both Guosen Securities and Wanhe Securities are controlled by the Shenzhen Municipal State-owned Assets Supervision and Administration Commission, and this merger provides a reference for state-owned securities firms' mergers and acquisitions.

Guotai Junan is actually controlled by the Shanghai Municipal State-owned Assets Supervision and Administration Commission, and the top ten shareholders of Haitong Securities are mainly Shanghai state-owned enterprises.

The merger of "Guotai Junan + Haitong Securities" is conducive to accelerating the integration of Shanghai state-owned capital resources and further promoting the optimization and allocation of resources.

It is also an example of concentrating efforts to build a financial "national team", promoting state-owned large financial enterprises to benchmark world-class financial enterprises, and promoting leading securities companies to be better and stronger.

Under the influence of multiple factors such as shareholder demands, clear policy orientation, and increased openness, the supply-side reform of the securities industry will continue to be promoted, mergers and acquisitions may accelerate, and the industry concentration is expected to be further improved.

Against the background of accelerating the integration of local state-owned capital resources and encouraging state-owned enterprises to be better and stronger, future attention can be focused on mergers and acquisitions among securities firms with the same actual controller, the transfer of securities equity among central and state-owned enterprises under the background of returning to the main responsibility and business, and the integration of securities firms with complementary business and regional advantages.

However, in the case of Guotai Junan's absorption and merger of Haitong Securities, the specific integration effect in actual operation still needs to be observed.

First, this integration involves multiple business licenses and several domestic and foreign listed and listed subsidiaries.

Guotai Junan controls Huaan Fund and Guotai Junan Asset Management (with a public fund license), while Haitong Securities controls Haifutong Fund, has a stake in Fullgoal Fund, and fully controls Haitong Asset Management.

According to current policy requirements, license integration is needed.

Second, Haitong Securities has been affected by overseas business and investment banking business events, and the overall quality of underlying assets is not good.

In overseas business, Haitong Securities' entity in Hong Kong, Haitong International, has been hit by consecutive explosions in recent years due to investment in real estate dollar bonds, and was delisted from the Hong Kong stock main board in January 2024.

In terms of investment banking business, Haitong Securities has faced certain uncertainties in business development in recent years due to regulatory penalties and changes in senior management.

Finally, personnel integration is an important part of mergers and acquisitions, and it is the key to maintaining the stable and sustainable development of enterprises after mergers and acquisitions, and to smoothly integrating and playing a synergistic effect.

After the merger of the two securities firms, it is necessary to ensure effective personnel integration to ensure the long-term stable development of the enterprise, and the specific integration effect still needs to be honed in practice.

The absorption and merger of Guotai Junan and Haitong Securities is the first merger and reorganization of leading securities firms since the new "Nine Articles" emphasized "supporting leading institutions to enhance core competitiveness through mergers and acquisitions, organizational innovation, and other means", and it is also the largest A+H dual-market absorption and merger, and the largest integration case of listed securities firms in the history of China's capital market, involving multiple business licenses and several domestic and foreign listed and listed subsidiaries.

Leading securities firms not only have advantages in scale and capital strength, but also show excellent capabilities in strategic layout, business innovation, risk management, and other aspects.

In the future, the capital market will accelerate the pace of high-quality development, and under the dual action of internal drivers and policy orientation, the merger and integration of securities firms may accelerate.

Leading securities firms and regional securities firms with capital strength are expected to continue to expand through external mergers and acquisitions, bringing investment opportunities to heat up.

At present, the mergers and acquisitions of Guolian Securities and Minsheng Securities, Guosen Securities and Wanhe Securities, Zheshang Securities and Guodu Securities, Ping An Securities and Founder Securities, and Hua Chuang Securities and Pacific Securities are also being promoted.

It is expected that as the number of industry merger and reorganization cases gradually increases, the concentration of the securities industry is also expected to increase, the differentiation between leading and small securities firms will intensify, and the industry pattern of "leading securities firms + small and medium-sized characteristic securities firms" will gradually become clear.

The merger of Guotai Junan and Haitong Securities is the first large-scale merger and reorganization of leading securities firms after the "new nine articles", which will help "form 2-3 investment banks and investment institutions with international competitiveness and market leadership", and enhance competitiveness through the integration of assets, business, and personnel.

The securities industry will benefit from the merger and reorganization reform to enhance the industry's ability to develop high-quality, and the industry pattern will further improve towards leading securities firms.

Securities mergers usually take a long time, and the short-term industry valuation will have room for improvement due to mergers and reorganizations.