MARC Ratings has affirmed its AA/Stable non-bank financial institution rating on CGS International Securities Malaysia Sdn Bhd (CGS MY) and the MARC-1 rating on CGS MY’s Commercial Papers Programme of up to RM1.0 billion in nominal value.
The ratings reflect CGS MY’s strong franchise and market position in Malaysia’s stockbroking industry, having consistently ranked among the top two brokerage firms by trading volume over the past four years. Rating support is further derived from its close integration with the CGS Group. CGS MY is wholly owned by Hong Kong–based CGS International Holdings Ltd, which sits under China Galaxy Securities Co Ltd (CGS), a major Chinese securities group ultimately controlled by the Chinese government through China Investment Corporation ─ China’s sovereign wealth fund ─ and the Ministry of Finance. MARC Ratings views the likelihood of parental support as high, underpinned by CGS’ track record of providing letters of comfort for CGS MY’s borrowings and the strengthened oversight arising from CGS MY’s direct reporting line to CGS.
CGS MY maintained a leading market position in Malaysia’s stockbroking industry, ranking first by trading value with a market share of 11.2% as at 1Q2026. Stockbroking remained its key earnings contributor, accounting for 97.9% of revenue in 2025. Nevertheless, the company has made progress in diversifying its revenue streams through its capital markets advisory businesses. These businesses have gained traction following the acquisition of equity capital market and corporate finance licences in 2024, supported by a growing pipeline of initial public offering, placement and advisory mandates.
Asset quality continued to reflect the residual impact of the impaired Equity Price Participation Structure (EPPS) transaction identified in the previous year, resulting in an overall impairment ratio of 2.19% as at 1Q2026 (2025: 2.54%). Excluding the EPPS exposure, asset quality within the core share margin financing portfolio remained strong, with an impairment ratio of only 0.16%. While the overall impairment ratio is likely to remain elevated in the near term, recovery efforts on the EPPS exposure are ongoing.
Capitalisation remained sound despite moderating from historical levels, with the capital adequacy ratio standing at 9.7x as at end-2025 and 7.4x as at April 2026, well above the regulatory minimum of 1.2x. The decline was primarily attributable to the impaired EPPS exposure and capital deployed to support the expansion of the company’s futures businesses.
Despite a softer industry operating environment in 2025, CGS MY remained profitable, recording revenue of RM384.4 million and pre-tax profit of RM25.3 million. MARC Ratings expects the company’s leading market position, continued diversification into fee-based businesses and close integration with the CGS Group to support earnings stability and underpin its credit profile over the medium term.