BofA Securities has released a research report reiterating its "Buy" rating on CICC (03908) H-shares, with a target price maintained at HK$27.6.

The bank expects CICC's third-quarter net profit to reach RMB 6.1 billion, representing year-on-year and quarter-on-quarter growth of 172% and 31% respectively, primarily driven by mark-to-market investment gains from Changxin Technology (688825.SH), with estimated pre-tax investment gains of approximately RMB 2.7 billion. Underwriting fees and derivative income are also expected to record strong year-on-year increases.

BofA Securities forecasts that CICC's net profit for the first three quarters of this year will grow 117% year-on-year, equivalent to 88% of the market's full-year earnings forecast for the company, and representing the fastest growth rate in the industry.

The bank notes that CICC's interim profit grew 89% year-on-year, and third-quarter performance is expected to be even stronger. The current disconnect between earnings performance and share price will provide investors with an attractive entry opportunity.

CICC received approval from the China Securities Regulatory Commission last month to absorb and merge with Dongxing Securities (601198.SH) and Cinda Securities (601059.SH) through a share swap.

BofA Securities believes that investors are overly concerned about risks related to the merger. Considering that the transaction is expected to be completed in October, with Cinda Securities and Dongxing Securities being consolidated for less than three months, the bank expects limited dilution effect this year.