Company Overview - China Huarong Asset Management Co., Ltd. was established on November 1, 1999, and was listed on the Hong Kong Stock Exchange on October 30, 2015[7]. - The company operates 31 branches and provides financial services across 30 provinces, autonomous regions, and municipalities in China, including asset management and financial leasing[7]. Financial Performance - Total revenue for the year 2018 was RMB 107,253.1 million, a decrease of 16.3% compared to RMB 128,070.6 million in 2017[43]. - The company reported a net profit of RMB 1,509.0 million for 2018, a decline of 94.3% from RMB 26,587.7 million in 2017[43]. - The average return on equity dropped to 1.3% in 2018 from 18.1% in 2017, a decrease of 16.8 percentage points[48]. - Basic earnings per share fell to RMB 0.04 in 2018 from RMB 0.56 in 2017, a decline of 92.9%[48]. - The company’s tax expenses for the year were RMB 4,502.9 million, down from RMB 10,014.0 million in 2017[43]. Revenue Breakdown - Interest income increased significantly to RMB 79,258.8 million, up 6.4% from RMB 74,425.0 million in 2017[43]. - The company’s commission and fee income was RMB 4,693.3 million, a decrease of 64.1% from RMB 13,039.1 million in 2017[43]. - The company reported a significant increase in financing lease income to RMB 6,784.4 million, up from RMB 6,181.2 million in 2017[43]. - The non-performing asset management segment generated revenue of RMB 64,770.7 million, accounting for 60.4% of total revenue, while the financial services segment contributed RMB 30,274.7 million, or 28.2%[140]. Asset and Liability Management - Total assets decreased to RMB 1,710,086.7 million in 2018 from RMB 1,870,260.3 million in 2017, a decline of approximately 8.6%[44]. - Total liabilities decreased to RMB 1,541,481.7 million in 2018 from RMB 1,687,625.4 million in 2017, a decline of approximately 8.6%[47]. - The debt-to-asset ratio remained stable at 90.1% in 2018 compared to 90.2% in 2017[48]. - The total equity decreased to RMB 168,605.0 million in 2018 from RMB 182,634.9 million in 2017, a decline of approximately 7.7%[47]. Risk Management and Strategy - The company emphasizes the importance of risk control and reform transformation in its future strategy[9]. - The company is committed to ensuring the accuracy and completeness of its financial reports, taking legal responsibility for any misstatements[38]. - The company plans to enhance project recovery and risk mitigation efforts in response to the increased impairment losses[94]. - The company aims to strengthen its core business in non-performing assets and improve service to the real economy in 2019[60]. Investment and Capital Structure - The company has a total of 200 million preferred shares planned for issuance in overseas markets, with a total value not exceeding RMB 20 billion[35]. - The company issued USD 1.1 billion in overseas bonds and CNY 10 billion in secondary capital bonds, reflecting strong market confidence[51]. - The capital adequacy ratio stood at 13.62%, meeting regulatory requirements and improving compared to the same period last year[51]. Non-Performing Assets - The scale of non-performing asset business reached CNY 866.25 billion, generating revenue of CNY 64.77 billion, increasing its share of total revenue from 53.8% to 60.4%[51]. - The total amount of non-performing loans was RMB 532,946.4 million, an increase from RMB 468,892.2 million in 2017[142]. - The net profit from non-performing assets in 2018 amounted to RMB 8,652.8 million, up from RMB 4,583.1 million in 2017, indicating an increase of 88.8%[160]. Operational Challenges - The company faced increased interest expenses and market risks, leading to a substantial decline in profitability[67]. - The company reported a significant increase in other asset impairment losses, which rose by 203.3% to RMB 2,769.0 million[70]. - The actual tax rate increased significantly from 27.4% in 2017 to 74.9% in 2018, largely due to losses incurred by certain subsidiaries[99]. Future Outlook - The company plans to accelerate its transformation and development in 2019, aiming for high-quality growth and value creation for stakeholders[54]. - The company aims to enhance the value of non-performing assets through personalized restructuring methods, targeting companies with temporary liquidity issues[163]. - The company plans to adjust its strategy for special opportunity investments based on non-performing assets to mitigate existing risks and enhance collaboration with the parent company's non-performing asset business[185].