Ant finally realizes its dream of becoming a securities firm.
Author | Wang Hanyu
Editor | Zhang Fan
On the 30th of this month, Ant Group will officially complete the acquisition of the controlling stake in Yiu Kwan Securities, an established Hong Kong brokerage, through its Shanghai Yunjin Information Technology Co., Ltd.
This nearly one - year - long transaction not only fills the last piece of the puzzle for Ant Group's securities business but also triggers a new round of discussions in the capital market about whether the "Internet + brokerage" model can replicate the simultaneous growth of performance and stock price in Hong Kong.
Previously, on March 16, Yiu Kwan Securities issued an announcement stating that the tender offer launched by Ant Group had been approved by relevant Chinese authorities and the Hong Kong Securities and Futures Commission, and all transaction conditions had been met. The formal completion of the delivery was expected on March 30.
According to the agreement, Ant acquired 50.55% of Yiu Kwan Securities' shares at a price of HK$3.28 per share, with a total consideration of approximately HK$2.814 billion.
As soon as the news was announced, the market responded immediately. After resuming trading on March 17, Yiu Kwan Securities' stock price soared by more than 80% during intraday trading. By the end of the trading day, it still rose by nearly 47%, closing at HK$13.60 per share.
This price not only far exceeded Ant Group's acquisition cost but also pushed Yiu Kwan Securities' market value to exceed HK$23 billion at one point, achieving several - fold growth compared to before the announcement.
In fact, looking back at history, Ant Group's path to obtaining a brokerage license has not been smooth. Whether it was investing in Debon Securities or applying for Yunfeng Securities, neither attempt was successful. Now that it has finally realized its brokerage dream in Hong Kong by acquiring Yiu Kwan Securities, can Ant replicate the myth of the soaring stock price and performance of Orient Fortune after its acquisition of Tongxin Securities?
The Previous Myth: Orient Fortune's Traffic Closed - Loop
To determine whether Ant Group can replicate the success, we first need to understand why Orient Fortune's stock price soared back then.
In 2015, Orient Fortune announced the acquisition of Tongxin Securities, which was later renamed Orient Fortune Securities. This move was regarded by the market as a milestone in the realization of Internet traffic monetization.
At that time, after the acquisition news was announced, Orient Fortune's stock price soared from less than HK$5 per share before the suspension to over HK$15 per share at its peak. The core of the rising logic behind it lies in the business closed - loop.
Before the acquisition, Orient Fortune was a typical Internet company with a large amount of vertical traffic from platforms like Guba and Tiantian Fund Network. However, it lacked a securities trading license and could only earn advertising fees by diverting users to other brokerages.
After the acquisition of Tongxin Securities, Orient Fortune achieved a complete closed - loop of "information - data - trading". Users can directly open an account and trade on Orient Fortune Securities after viewing Guba and checking data on Orient Fortune.
This closed - loop ecosystem maximizes the value of traffic. The market valuation shifted from a simple advertising company to an Internet brokerage with growth potential, bringing a significant valuation premium.
At the same time, Orient Fortune introduced the "free thinking" of the Internet into the securities industry. Relying on extremely low trading commissions and a convenient online account - opening experience, it quickly snatched market share from traditional brokerages.
More importantly, during the A - share bull market from 2014 to 2015, Orient Fortune developed margin trading and short - selling businesses based on its large user base, making interest income a new growth pole.
Financial report data shows that in 2015, the year of the acquisition of Tongxin Securities, Orient Fortune's revenue reached 2.812 billion yuan, a year - on - year increase of 359.59%; its net profit attributable to the parent company was 1.848 billion yuan, a year - on - year increase of 1015%. From 2016 to 2019, Orient Fortune's margin trading and short - selling interest income was 138 million yuan, 381 million yuan, 591 million yuan, and 774 million yuan respectively, with an annual compound growth rate of over 65%.
In contrast, in the market of 2015, there was no real Internet brokerage in the A - share market.
The scarcity of Orient Fortune's model, combined with the liquidity dividend of the 2015 bull market, formed a "Davis double - click". The market believed that the efficiency of the Internet would subvert the business model of traditional brokerages.
License Is Not a Moat, and the Era Dividend Is Hard to Recapture
Comparing with Orient Fortune's path, Ant Group's intention to acquire Yiu Kwan Securities is also clear.
Yiu Kwan Securities holds the "full licenses" of Hong Kong's Type 1, 2, 3, 4, 5, 7, and 9 brokerages, enabling it to conduct businesses such as securities trading, futures contract trading, leveraged foreign exchange trading, providing securities advice, providing futures contract advice, automated trading services, and asset management.
By filling this last piece of the puzzle, Ant Group can provide more comprehensive services, including Hong Kong and US stock trading, to hundreds of millions of wealth management users of Alipay and Ant Fortune in the future. Ant Group's own technological accumulation in the fintech field can also support Yiu Kwan Securities' digital transformation.
However, compared with Orient Fortune back then, the market environment Ant Group faces today is completely different.
On the one hand, in 2015, the simultaneous growth of Orient Fortune's valuation and performance had its special background: at that time, the A - share market was in a bull market, and the concept of "Internet brokerage" was scarce. Orient Fortune directly converted the large number of users from Guba into securities customers through a brokerage license, achieving a closed - loop from traffic to trading within a single regulatory system.
In the Hong Kong market where Yiu Kwan Securities is located, although it has a high degree of internationalization, its trading volume and the number of investors are far lower than those of the mainland market. Moreover, the Hong Kong capital market has always been dominated by institutional investors, and the commission level has been pushed to the "rock - bottom price". The space for seizing market share through price war is very limited.
On the other hand, looking at the regulatory environment of the Hong Kong market, the brokerage license itself is not a scarce resource.
Different from the strong - regulation and total - quantity - control regulatory rules for securities companies in the Chinese mainland, Hong Kong, as an international financial center, has relatively open market access. Therefore, the brokerage license is more like an "entry ticket" in a fully competitive market rather than a "moat" representing scarce qualifications.
Comparing the market situations of the two places, data from the Hong Kong Securities and Futures Commission shows that as of the third quarter of 2024, the total number of licensed corporations in Hong Kong was 3,290, while the total number of licensed brokerages in the Chinese mainland has long been stable at around 140.
In addition, although there are still few brokerages with the "full - license" advantage like Yiu Kwan Securities, considering the Internet business gene, the businesses that are truly expected to have strong business synergy are securities trading, consulting services, and asset management, that is, the activities regulated by Type 1, 4, and 9 licenses.
Internet brokerages such as Futu Securities and Huasheng Securities, which entered the Hong Kong market earlier, already hold Type 1, 4, and 9 licenses, the so - called "149 licenses". Tiger Brokers also holds the key Type 1 license that meets the securities trading qualifications.
As a latecomer, Ant Group needs to compete for market share in a more mature market, and the difficulty is greater than that of Orient Fortune back then.
Therefore, although the capital market gave a warm response on the first trading day, it may be overly optimistic to expect Yiu Kwan Securities' stock price to replicate the several - fold increase of Orient Fortune back then or for Ant to achieve a performance explosion in the short term.
In the long run, however, Ant's acquisition of the brokerage qualification is still expected to gain support in terms of improving the global asset allocation service ability and increasing commercialization paths. The real highlight of this acquisition does not lie in whether it can replicate Orient Fortune's stock price myth, but in how Ant Group uses its technology and operational capabilities to embark on a differentiated internationalization path under the cross - border regulatory framework.
For Ant Group, this is not only a completion of a key qualification but also a new challenge. Ant needs to master the art of balance between globalization and localization, innovation and compliance.
*Disclaimer:
The content of this article only represents the author's views.
The market is risky, and investment should be made with caution. Under no circumstances does the information in this article or the opinions expressed constitute investment advice to anyone. Before making an investment decision, if necessary, investors must consult professionals and make decisions carefully. We have no intention of providing underwriting services or any services that require specific qualifications or licenses for the parties involved in the transaction.
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