The Effect of an Enterprise's Scale on Its Profitability Structure

Figure 4.4 shows the revenue of 17 listed securities companies ranked by scale in descending order (based on their operating revenues in the first quarter of 2011).

All of the 17 listed securities traders are comprehensive securities companies engaging in six categories of business. From the perspective of revenue structure, securities traders with a larger operation scale, such as CITIC and Haitong Securities, enjoy a relatively well-rounded development pattern and a more balanced revenue structure. This is thanks to an abundant supply of capital and satisfactory revenues from all lines of business. Small-scale securities traders, on the other hand, are relatively more reliant on brokerage commission business and proprietary business.

Figures 4.5 and Figure 4.6 show the results of a comparative case study of CITIC and Northeast Securities that analyzed the impact of operation scale on the revenue structure of a securities trader. The two figures show

Revenue Structures of Publicly Listed Securities Traders in Quarters 1 through 3 of 2011

FIGURE 4.4 Revenue Structures of Publicly Listed Securities Traders in Quarters 1 through 3 of 2011 Source: Wind Information Co.

CITIC Securities Revenues Structure in 2007 through 2010 and Quarters 1 through 3 of 2011

FIGURE 4.5 CITIC Securities Revenues Structure in 2007 through 2010 and Quarters 1 through 3 of 2011

Source: CITIC Securities Quarterly Report 2011.

that CITIC Securities has a business structure that is very different from that of Northeast Securities. The differences have become increasingly apparent with time. Due to its large size and considerable strength, CITIC Securities has an increasingly balanced and rational business structure, as manifested in the declining percentage of brokerage business and the trend toward balanced proportions of various lines of business. The small and relatively weak Northeast Securities, on the other hand, has a business structure dominated

Northeast Securities Revenues Structure in 2007 through 2010 and Quarters 1 through 3 of 2011

FIGURE 4.G Northeast Securities Revenues Structure in 2007 through 2010 and Quarters 1 through 3 of 2011

Source: Northeast Securities Quarterly Report 2011.

by brokerage, with other business lines suffering from slow growth and low percentages.

 
< Prev   CONTENTS   Next >