Net profit plummeted nearly 87%, Hongye Futures' performance "dives" again! Internal control risks frequently exposed

On March 31, Suohongye Futures Co., Ltd. (referred to as Hongye Futures) released its 2025 annual report.

Continuing the downtrend shown in the company’s previous-year third-quarter report, its net profit last year fell 86.61% year over year. After the company “flipped” its performance in its first year after going public on the A-share market in 2022, it has once again seen a major plunge in net profit. Against the backdrop of generally improving industry momentum, when an established listed futures company turns in such results, it inevitably draws sighs.

Net profit plunged by nearly 87%

According to the latest annual report released by Hongye Futures, in 2025 the company recorded total operating revenue of RMB 287 million, representing a 20.53% year-over-year decline on an adjusted basis; full-year net profit attributable to shareholders of listed companies was RMB 3.9927 million, down 86.61% year over year.

By business segment, multiple key businesses of Hongye Futures declined significantly. In the brokerage business segment, in 2025 the company’s net commission income from brokerage business was RMB 167 million, down 3.8% year over year. Interest income from customer funds deposits was RMB 47.4905 million, down 44.37% year over year. The market share of the company’s full-year trading amount was 0.37%; the average daily customer equity decreased 8.36% year over year.

In the asset management business segment, as of the end of 2025, the company’s asset management scale was RMB 1.059 billion, down 93.43% from the end of 2024; revenue from asset management business (excluding fee income generated by structured entities included in the consolidated scope) was RMB 2.9866 million, down 50.24% year over year. The company’s profit from risk management business for the full year was RMB 8.8871 million, with a decline in line with that of 2024, also more than half.

What offers some modest relief is that Hongye Futures’ overseas financial services business performed relatively well. As of the end of 2025, the company’s overseas securities business revenue increased 38.82% year over year.

Hongye Futures’ performance decline last year shows a significant deviation from the overall development trajectory of the industry. In 2025, China’s domestic futures market developed steadily, and futures companies benefited from the broader growth environment, making the overall industry situation promising. At the end of last year, total market funds in the futures market increased to about RMB 2.15 trillion, up 32% year over year, and the aggregate customer equity of futures companies reached RMB 2 trillion, up about 31%. Data from the China Futures Association shows that in 2024, nationwide futures companies cumulatively achieved operating revenue of RMB 42.015 billion, up 1.7%; cumulative net profit was RMB 11 billion, up about 16%. However, according to a reporter from Securities Times, the industry’s “Matthew effect” is prominent and there has been significant divergence: the investment returns of some futures companies have greatly boosted the industry’s profitability level.

Despite the unsatisfactory performance, in its annual report Hongye Futures still summarized last year’s operations with the wording that “the company’s overall development highlights are prominent and relatively stable.” The company emphasized that in 2025, under the correct leadership of the board, it closely followed the work main line of “strengthening regulation, preventing risks, and promoting high-quality development.” Under the regulatory measures featuring “long teeth and sharp thorns,” with edges and corners, along with adjustments to stock exchanges’ refund policies, “externally” the company based its approach on “benchmarks,” and “internally” on “improvement.” It focused on stabilizing revenue, controlling costs, preventing risks, and strengthening assessments, striving to overcome numerous difficulties.

Less than peers on key indicators even after nearly four years as an A-share listed company

In August 2022, Hongye Futures went public on the A-share market, becoming the first futures company in China to be listed as an “A+H” company. After nearly four years, Hongye Futures, which should have leveraged its listing to move onto a fast track of development, is now not performing well, with multiple key indicators still relatively behind peers within the industry, and also significantly lagging behind the other three A-share listed futures companies.

In terms of performance, Hongye Futures’ starting point was not low, but after its listing on the A-share market its performance showed major fluctuations. In 2021, Hongye Futures’ operating revenue had already reached RMB 1.64 billion, and its net profit attributable to parent company was RMB 80.21 million. However, after going public on the A-share market in 2022, the company suddenly “flipped” its performance: in that year, net profit attributable to parent company plunged 84.56% to RMB 12.3819 million. In 2023, driven by expanding revenue through off-exchange business, the company’s operating revenue grew by nearly 30%, but its net profit continued to decline by nearly 40% to RMB 7.7915 million. In 2024, Hongye Futures’ revenue and profits rebounded significantly: operating revenue rose to RMB 2.876 billion, and net profit attributable to parent company recovered to RMB 29.8262 million, up 282.8% year over year. What is startling is that in 2025 the company’s performance plunged again, which may once again raise market concerns.

The other three A-share listed futures companies generally performed better than Hongye Futures after listing. After Nanhua Futures was listed, the company continued to push forward in overseas business, off-exchange subsidiaries, and other areas. Its net profit attributable to parent company increased step by step—from RMB 790 million in 2019 all the way to RMB 458 million last year—cumulative growth of nearly 479.75%. RuidA Futures, leveraging its listing opportunity, focused on building trading capabilities such as futures asset management. In 2025, net profit attributable to parent company reached RMB 547 million; cumulative growth after listing was 352.07%. Yong’an Futures has not yet released its latest annual report; in recent years its net profit has stayed above RMB 500 million, and the company is in the middle of a transformation process.

On the business level, Hongye Futures is not without highlights. Its overseas business layout has some foundation in the industry. The company has subsidiaries in the markets of Hong Kong, Singapore, and Europe, and its customer equity scale shows an upward trend. However, overall profitability is still constrained by volatility in domestic business and risk management business. Data shows that Hongye Futures’ weighted average return on net assets last year was only 0.21%, far lower than Nanhua Futures’ 11.3% and RuidA Futures’ 17.7%.

As for shareholder returns, Hongye Futures is also not doing well. In 2015 and 2022, Hongye Futures conducted two IPOs on the Hong Kong and A-share markets, raising a total of nearly RMB 700 million. From its Hong Kong listing in 2015 to 2021, the company cumulatively paid dividends of about RMB 134 million. Since its A-share listing in 2022, Hongye Futures has cumulatively paid dividends of about RMB 44 million. Although the dividend payout ratio is not low, due to performance fluctuations, the total dividend amount has dropped significantly. In 2024, Hongye Futures’ dividend yield was 0.1%, clearly lower than the other three A-share listed futures companies.

According to public information, after the lock-up period of major shareholders such as Jiangsu Suohonghuihong Group Co., Ltd., Jiangsu Hongsu Industrial Co., Ltd. (hereinafter “Hongsu Industrial”), and Jiangsu Hongye International Logistics Co., Ltd. was released, they all implemented selling (reduction of holdings) in Hongye Futures. Only Hongsu Industrial alone was forced to sell more than RMB 500 million due to a debt dispute.

Multiple industry insiders pointed out that the core significance of a futures company going public is to obtain long-term capital support through the capital markets, thereby enhancing its ability to withstand market cycles and to expand its business. If capital cannot be converted into improved profitability ability, but instead manifests more as an exit channel for shareholders, then the strategic value of the listed platform will be affected to some extent. It can be seen that Hongye Futures’ moves in capital operations are relatively limited, and it is relatively weak in terms of the logic of “capital backstopping business.”

Internal control risks frequently exposed

Listed companies often represent companies in various industries. Generally speaking, after a company becomes a publicly listed company, under requirements for information disclosure and oversight from all parties, it will continuously improve its internal controls and compliance levels. However, as a financial institution listed in both “A+H” locations, Hongye Futures does not appear to perform well in this regard, and internal control risks have been exposed frequently in recent years.

According to an incomplete count by a Securities Times reporter, since going public on the A-share market, Hongye Futures and its subsidiaries have been punished by regulatory authorities at least 6 times. In January last year, due to failing to establish rules and regulations to include employees’ office computer MAC addresses, IP addresses, and work mobile phone numbers into the scope of transaction monitoring, there were vulnerabilities in internal control. The Jiangsu Securities Regulatory Bureau took administrative regulatory measures ordering rectification against Hongye Futures Co., Ltd. In February last year, Hongye Futures’ subsidiary—Hongye Capital—had defects in its internal control mechanisms during the course of carrying out off-exchange derivatives trading business, and it received a disciplinary penalty of a “censure” from the China Futures Industry Association.

In addition, Hongye Futures was ordered to rectify by the Jiangsu Securities Regulatory Bureau twice in November 2022 and June 2024 due to different violations in its asset management business. In September 2024, the Changsha Branch of Hongye Futures had employees provide convenience for customers’ futures margin trading activities in violation of regulations and receive compensation, and it was penalized by the Hunan Securities Regulatory Bureau. In November 2024, the Jiangsu Securities Regulatory Bureau took an administrative regulatory measure ordering Hongye Futures to increase the number of compliance checks. After investigation, it was found that branch institutions introduced customers to overseas subsidiaries and gave performance incentives to employees.

Of note is that most of the penalties received by Hongye Futures occurred after 2024—i.e., during the period after the company’s core management team was adjusted. According to public information, in October 2023 Hongye Futures’ former chairman resigned, and the company began adjusting its management. In January 2024, Shu Kairong started acting as chairman and legal representative, and by July 2024 he became the official chairman and was reappointed in last year’s board reshuffle. In the same period, some other senior executive positions at Hongye Futures also changed—for example, in May last year, Zhao Dong, the former deputy general manager in charge of branch institutions, resigned.

For massive information and precise analysis, everything is on the Sina Finance APP