The leading brokerage, based in the southern town of Shenzhen, refuted market speculation that it would choose a back-door listing, at a press conference yesterday.

"We have never considered that option. We can meet the criteria for an initial public offering (IPO) on the domestic capital market in 2007," said Chairman of the Board Gong Shaolin.

The company recorded 1.03 billion yuan (US$129.6 million) in revenue and 428.5 million yuan (US$53.9 million) in net profit for the first half of this year.

Having turned a profit in both 2004 and 2005, the firm is expected to meet the requirement of three consecutive profits before it can go public on the main board of the Chinese stock market next year.

Its total shares were raised to about 3.23 billion in August after it issued 1.5 billion new shares to investors. Port-to-road conglomerate China Merchants Group has a stake of more than 50 per cent in the enlarged shares of CMS, up from its previous share of 35 per cent.

The announcement comes after CMS completed the acquisition of 21 outlets and a call centre from troubled brokerage Beijing Securities last Friday.

"The new outlets, with 10 in Beijing and two in Tianjin, overturned the situation that the company is strong in the South China market but weak in the North China market," said President Yang Kun.

The acquisition will not bring new debt to the company as it was closed when the trading day ended last Friday under instruction from the central regulatory authority, re-opening on Monday.

The total number of CMS outlets has been raised to 54, including two call centres, in 25 major Chinese cities, compared with the previous 19.

The company plans to acquire an additional 30 outlets by the end of 2007 to further expand its retail network around the country, Yang said.

"We will carefully select the new outlets. Quality comes first," she said, noting that the locations should be complementary to the existing outlets and they should comply with the company's strategy to preferentially develop business in the areas of the Pearl River Delta, the Yangtze River Delta and the Bohai Rim.

Xiong Jiantao, vice-president of CMS, in charge of the brokerage business, said the operation of the outlets had been stable over the past two days. "We have acquired sufficient capital and management capability for the network expansion," he said.

The brokerage business was robust in the first eight months of this year, gaining 325 million yuan (US$40.9 million) in profit, Xiong said. The company took 3.208 per cent of the market share, up 13 per cent from a year ago and ranking seventh of all mainland brokerages.

"We aim to enter the first five in the near future," he said.

To make up the outlet shortage, CMS will allocate more resources to promote online transactions. "We hope more than 50 per cent of the transactions will be fulfilled through the online platform," Xiong said.

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