Xiangcai Securities, a wholly owned subsidiary of Xiangcai Co., Ltd., has been placed under investigation by the China Securities Regulatory Commission for suspected violations of real-name securities account regulations. This comes at a critical juncture as the Shanghai Stock Exchange resumes its review of Xiangcai Co., Ltd.'s share swap and absorption merger with Great Wisdom, along with a supporting capital raise. Since the beginning of this year, Xiangcai Securities has been warned by regulators four times, with the hardest-hit area being its brokerage business, which accounts for half of its revenue. Based on Great Wisdom's share capital of 198,900 shares, the total value of this related-party transaction reaches 18.957 billion yuan, while Great Wisdom's net assets at the end of 2025 were only 1.336 billion yuan, meaning goodwill after the merger will be as high as 17.621 billion yuan. Xiangcai Securities reported revenue of 2.124 billion yuan in 2025, contributing more than 90 percent of Xiangcai Co., Ltd.'s revenue, but its two largest businesses, brokerage and proprietary investment, together account for about 79 percent, making its performance highly dependent on market conditions.
Xiangcai Co LtdXiangcai Securities under CSRC investigation for suspected violations of real-name account regulations.
Shanghai DZH LtdMerger with Xiangcai may create high goodwill, but impact on Great Wisdom is unclear.
