Being the first stockbroker to report its earnings, Orient Securities of Shanghai yesterday posted a 2,256 percent jump in 2006 net profit to 933 million yuan.

Pre-tax profit for 2006 amounted to 1.27 billion yuan. Total annual revenue rose 480 percent to 1.86 billion yuan.

Stock investment and commission services were two major contributors to Orient Securities' profit. Gain from stock investment totaled 830 million yuan, up 920 percent, and commission income reached 747 million yuan, up 250 percent from 2005. Income from trust management and corporate investment amounted to 235 million yuan and 206 million yuan, respectively.

Pan Xinjun, president of Orient Securities, said the company planned to be listed in the stock market in the near future, either with an initial public offering (IPO) or acquiring enough shares in a listed company to tak a listed status.

Orient Securities' performance reflects the magnitude of the stock market boom that took off in early 2006. The total turnover on the Shanghai and Shenzhen stock exchanges increased to 9.2 trillion yuan, and total IPO financing reached 140 billion yuan.

Based on these figures, analysts estimate that total commission and underwriting income for all securities companies amounted to about 37 billion yuan.

Most securities companies reported sharp surges in earnings. For example, Merchants Securities said its net profit increase to 877 million yuan in the first 11 months of last year, and expected to surpass 900 million yuan for the whole year.

Industrial Securities, made a loss in 2005, but said it expects a turnaround in 2006 because of the bullish stock market. "Our estimated profit for 2006 is expected to be over 200 million yuan, though the exact number has yet to be announced," said Fu Jianshe, an analyst from Industrial Securities.

Earlier, Everbright Securities, which had a net profit of 57.48 million yuan in 2005, reportedly said it expected its 2006 profit to increase 1,391 percent to about 800 million yuan.

"Securities companies will have a more considerable profit this year because of the sharp increase in funds flowing into the stock market," said Fu.

Analysts expect many securities companies will seek to list on the stock market in 2007 to increase their capital, which will be necessary to take full advantage of the many new business opportunities.

Currently, only two have listed on the Shanghai Stock Exchange, from a total of 114 security companies.

"The stock market needs to expand its scale by attracting more and more companies to list, especially well-performing security companies which will attract flows of capital," said Tong Guolin, an analyst at Fullgoal Fund Management.

(China Daily January 9, 2007)