Investment Rating - The report maintains a "Buy" rating for the company [3][7] Core Views - The company's 2025 performance aligns with expectations, with a revenue of 35.79 billion and a net profit of 3.89 billion, reflecting a year-over-year change of -5.2% and +0.67% respectively [2][3] - The financing leasing business shows growth, while the industrial operations revenue is stabilizing [7] - The company has a high dividend yield of 7.4%, with a total dividend of 0.56 HKD per share for the year [2][3] Financial Data and Profit Forecast - Revenue and net profit projections for 2024 to 2028 indicate a recovery trend, with expected net profits of 4.21 billion in 2026, 4.73 billion in 2027, and 5.22 billion in 2028, reflecting year-over-year growth rates of +8%, +13%, and +10% respectively [3][8] - The company’s return on equity (ROE) is projected to improve from 7.7% in 2025 to 9.2% by 2028 [3][8] - The dividend payout ratio is expected to remain stable, with a projected dividend per share (DPS) increase [7][8] Revenue and Profit Breakdown - The financing leasing segment generated 22.7 billion in revenue, a year-over-year increase of 4.5%, accounting for 63% of total revenue [7] - The industrial operations revenue decreased to 9.36 billion, down 19% year-over-year, contributing 26% to total revenue [7] - The health segment reported a revenue of 3.57 billion, down 13% year-over-year, making up 10% of total revenue [7] Investment Analysis - The report suggests a cautious adjustment of profit forecasts for 2026-2027 due to the contraction in domestic business, while maintaining a positive outlook on the international business growth [7] - The company is expected to see significant growth in overseas revenue, projected to increase by 50% in 2026 [7]

Summary of Far East Horizon's 2025 Conference Call Company Overview - **Company**: Far East Horizon - **Year**: 2025 Key Points Financial Performance - **Total Revenue**: 35.8 billion RMB, a decrease of 5.2% compared to 2024 [3] - **Net Profit**: 3.9 billion RMB, a slight increase [3] - **Cash Dividend**: Total dividend per share reached 0.56 HKD, with a cash payout ratio of 61% [3][16] - **Earnings Per Share (EPS)**: 0.87 RMB [3] Financial Metrics - **Interest-Earning Assets**: Reached 272 billion RMB, up 4.38% year-on-year [2] - **Net Interest Margin**: 4.39%, and Net Yield: 4.83%, both improved from 2024 [6] - **Asset Quality**: Non-performing loan (NPL) ratio at 1.03%, overdue loans over 30 days at 0.82% [5][14] Business Segments Financial Services - **Inclusive Finance Growth**: Assets in inclusive finance reached 28.2 billion RMB, a 63.38% increase, with interest income up 125.25% [2][5] - **Client Strategy**: Focus shifted to approximately 9,500 leading enterprises, abandoning mid-tier clients [4] - **Risk Management**: Prudent write-off policy for overdue loans, with a high write-off rate reflecting the strategy [10] Industrial Operations - **Revenue from Hongxin Jianfa**: 9.36 billion RMB, with a net profit of 150 million RMB, impacted by domestic market competition [11] - **Overseas Revenue**: Increased nearly threefold to 1.4 billion RMB, with a profit of 130 million RMB [11] - **Future Outlook**: Anticipated recovery in domestic construction and healthcare sectors [12] Healthcare Operations - **Revenue**: 3.57 billion RMB, net profit of 80 million RMB, affected by domestic healthcare policy changes [13] - **Operational Strategy**: Focus on underserved areas to avoid direct competition, maintaining positive cash flow [13] Strategic Adjustments - **Market Positioning**: Shift towards high-end client services, targeting leading enterprises with comprehensive financial solutions [17] - **Inclusive Finance Strategy**: Targeting small and micro enterprises with transaction sizes controlled at 2-3 million RMB [18] - **Future Growth Potential**: Inclusive finance expected to reach 20% of interest-earning assets, with a current monthly flow of 30 billion RMB [18] Risk Management and Future Outlook - **Credit Cost Increase**: Rising credit costs due to strategic adjustments in client targeting and regional focus [21] - **2026 Expectations**: Anticipated stabilization in performance for both construction and healthcare sectors, with proactive measures to manage bad debts [22] Shareholder Returns - **Dividend Policy**: Future dividends may increase if performance improves, with a current attractive yield of 7-8% [20] Conclusion - **Overall Stability**: The company maintains a stable financial structure and is positioned for gradual growth across its business segments, with a focus on risk management and strategic client targeting [20]

Investment Rating - The report maintains a "Buy" rating for the company [3] Core Insights - The company's annual performance for 2025 met expectations, with total revenue of 37.731 billion RMB, a year-on-year decrease of 5.17%. Interest income was 21.807 billion RMB, an increase of 2.95%, and net profit attributable to shareholders was 3.889 billion RMB, up 0.67% year-on-year [9] - The net interest margin expanded significantly, benefiting from both volume and price contributions. The average balance of interest-earning assets increased by 1.36% to 266.438 billion RMB, while the net interest margin reached 4.39%, up 33 basis points from the first half of 2025 [9] - The company plans to distribute a dividend of 0.31 HKD per share, resulting in a dividend payout ratio of 61%, which is an increase of 6 percentage points from 2024 [9] Financial Forecasts - Total revenue projections for 2026, 2027, and 2028 are 37.828 billion RMB, 38.201 billion RMB, and 38.734 billion RMB, respectively, with growth rates of 0.26%, 0.98%, and 1.40% [2] - Net profit attributable to shareholders is expected to be 3.939 billion RMB, 4.046 billion RMB, and 4.151 billion RMB for the same years, with growth rates of 1.29%, 2.73%, and 2.58% [2] - The company's price-to-earnings (PE) ratio is projected to decrease from 7.75 in 2025 to 7.26 by 2028, while the price-to-book (PB) ratio remains stable around 0.61 [2][10]

Investment Rating - The investment rating for the company is "Buy" [6] Core Views - The company has demonstrated stable performance with total revenue and net profit attributable to shareholders of 35.785 billion and 3.889 billion yuan respectively in 2025, showing a year-over-year change of -5.20% and +0.67% [6][2] - The company has a robust dividend policy, with a dividend per share of 0.56 HKD and a dividend payout ratio of 61%, resulting in a dividend yield of 7.22% as of March 11 [2][6] - The company is expected to benefit from a dual strategy of "upward attack + downward cultivation" and the rapid growth of its overseas business, leading to a positive outlook for net profit growth in the coming years [2] Summary by Sections Performance Overview - In 2025, the company achieved total revenue of 35.785 billion yuan, a decrease of 5.20% year-over-year, while net profit attributable to shareholders was 3.889 billion yuan, an increase of 0.67% year-over-year [2][6] - The weighted average ROE was 7.71%, a slight decrease of 0.09 percentage points year-over-year [2][6] Financial Metrics - The company’s interest-earning assets increased to 2720.47 billion yuan, up 4.38% from the previous year, with inclusive finance assets growing significantly by 63.06% to 281.79 billion yuan [2] - The average yield on interest-earning assets for 2025 was 8.18%, an increase of 0.12 percentage points year-over-year [2] Cost and Margin Analysis - The company optimized its liability structure, resulting in a significant reduction in average cost of debt to 3.79%, down 0.27 percentage points year-over-year [2] - The net interest margin expanded to 4.39%, an increase of 0.39 percentage points year-over-year [2] Asset Quality - The non-performing asset ratio improved to 1.03%, a decrease of 0.04 percentage points from the previous year, indicating a positive trend in asset quality [2] - The provision coverage ratio remained strong at 227.82%, indicating prudent provisioning practices [2] Future Projections - The company is projected to achieve net profits of 4.061 billion, 4.254 billion, and 4.367 billion yuan for 2026, 2027, and 2028 respectively, with year-over-year growth rates of 4.43%, 4.77%, and 2.64% [2][4]

Investment Rating - The report maintains a "Buy" rating for the company [3] Core Insights - The company's annual performance for 2025 aligns with expectations, achieving total revenue of 37.731 billion RMB, a year-on-year decrease of 5.17%. Interest income was 21.807 billion RMB, up 2.95% year-on-year, with a net profit attributable to shareholders of 3.889 billion RMB, an increase of 0.67% year-on-year [9] - The net interest margin has expanded significantly, benefiting from both volume and price contributions. The average balance of interest-earning assets increased by 1.36% year-on-year to 266.438 billion RMB, while the net interest margin reached 4.39%, up 33 basis points from the first half of 2025 [9] - The company plans to distribute a dividend of 0.31 HKD per share for the end of 2025, resulting in a dividend payout ratio of 61%, an increase of 6 percentage points from 2024 [9] Financial Forecasts - Total revenue projections for 2026, 2027, and 2028 are 37.828 billion RMB, 38.201 billion RMB, and 38.734 billion RMB, respectively, with growth rates of 0.26%, 0.98%, and 1.40% [2] - Net profit forecasts for the same years are 3.939 billion RMB, 4.046 billion RMB, and 4.151 billion RMB, with growth rates of 1.29%, 2.73%, and 2.58% [2] - The company's price-to-earnings (PE) ratio is projected to decrease from 7.75 in 2025 to 7.26 by 2028, while the price-to-book (PB) ratio remains stable around 0.61 [2]

Core Viewpoint - CICC has downgraded the earnings forecast for Far East Horizon (03360) for 2026 by 13% to 4.1 billion HKD, while introducing a forecast of 4.3 billion HKD for 2027, citing ongoing operational pressures and increased provisions due to the expansion of inclusive finance business [1][9]. Financial Performance - Far East Horizon's revenue for 2025 is expected to decline by 5% to 35.8 billion HKD, with net profit attributable to shareholders increasing by 1% to 3.9 billion HKD, reflecting a slight underperformance against expectations due to pressures on the construction and development segment and cautious provisioning amid rapid expansion of inclusive finance [2][10]. - The company's financial business revenue is projected to grow by 4.5% to 22.7 billion HKD in 2025, accounting for 63% of total revenue, driven by a 3% increase in interest income to 21.8 billion HKD and a 66% rise in consulting fee income to 0.9 billion HKD [3][11]. - The net interest margin is expected to expand by 34 basis points to 4.83%, with the average asset yield increasing by 4.9 percentage points to 15.71% [3][12]. Industry Operations - The overall performance of the industry remains under pressure, with the operational revenue expected to decline by 18% to 13.3 billion HKD, representing a 6 percentage point decrease in revenue share to 37% [4][13]. - The construction and development segment is anticipated to see a 19% drop in revenue to 9.4 billion HKD, with adjusted net profit decreasing by 84% to 0.15 billion HKD, prompting a strategic shift towards overseas markets where revenue is expected to increase by 360% [6][13]. - The health segment is projected to experience a 13% decline in revenue to 3.6 billion HKD, with net profit down by 64% to 0.08 billion HKD, as the company continues to upgrade its strategic focus towards a "medical + health" integrated service model [6][13].

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Insights - The company recorded a net profit attributable to shareholders of 3.889 billion RMB in 2025, a slight increase of 0.67% year-on-year, which is slightly below the expected 4 billion RMB [1] - The financial business showed steady performance with a recovery in interest-earning asset scale, ending 2025 with a net interest-earning asset of 272 billion RMB, a growth of 4.38% compared to the end of 2024 [2] - The asset quality continued to improve, with a non-performing loan ratio of 1.03% at the end of 2025, better than the 1.07% at the end of 2024 [2] - The net interest margin reached 4.39% in 2025, up from 4.0% in 2024, supported by the rapid expansion of inclusive finance business [2] - The company plans to maintain a stable dividend payout ratio, with a dividend per share (DPS) of 0.56 HKD for 2025, representing a payout ratio of approximately 61% [5] Financial Business Summary - The net interest margin/net interest yield for 2025 was 4.39%/4.83%, compared to 4.00%/4.48% in 2024 [2] - The asset yield increased from 8.06% in 2024 to 8.18% in 2025, benefiting from a diversified financing strategy and steady expansion of inclusive finance [2] - The company achieved a significant growth rate of 63.1% in the inclusive finance business, which now accounts for 10.4% of total interest-earning assets [3] Inclusive Finance Business Summary - The inclusive finance business saw a net interest-earning asset of 28.179 billion RMB in 2025, contributing 3.541 billion RMB in interest income, a year-on-year increase of 125.25% [3] - The company has established over 80 business outlets and served more than 30,000 clients in economically developed regions [3] - The company implemented stricter policies for identifying and writing off non-performing assets, resulting in a year-end balance of zero non-performing assets on the balance sheet [3] Industrial Operations Summary - The industrial operations segment faced challenges, with net profits for Hongxin Jianfa and Hongxin Health declining by 84% and 64% respectively [4] - The company is transitioning from a disease-centered approach to a health-centered strategy, aiming to enhance its medical capabilities and expand into consumer health [4] Dividend and Valuation Summary - The target price for the company is set at 8.90 HKD, based on a discounted cash flow (DCF) valuation method [12] - The estimated net profit attributable to shareholders for 2026 and 2027 is adjusted to 4 billion RMB and 4.2 billion RMB, reflecting a decrease of 17% and 19% respectively [5]

Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Views - The company reported a slight decline in revenue but stable profits, with 2025 operating income (excluding tax) at 36 billion yuan, down 5.1% year-on-year, and net profit attributable to ordinary shareholders at 3.9 billion yuan, up 0.7% year-on-year [1] - The company's total assets grew slightly to 371 billion yuan, a 2.9% increase year-on-year, with loans and receivables increasing by 4.9% to 273.5 billion yuan [1] - The net interest margin improved to 4.83%, up 35 basis points year-on-year, driven by a decrease in the cost of interest-bearing liabilities and an increase in the proportion of inclusive finance business [1] - The gross margin for the industrial operations segment decreased to 25%, down 5 percentage points year-on-year, primarily due to a decline in the gross margin of the subsidiary [2] - The company's asset quality remained stable, with a non-performing loan ratio of 1.03%, down 0.04 percentage points from the beginning of the year [2] Financial Forecasts - The company expects net profit for ordinary shareholders to be 3.9 billion yuan in 2026, with a growth rate of 1%, and 4.0 billion yuan in 2027, with a growth rate of 3% [3] - The diluted EPS is projected to be 0.82 yuan for 2026 and 0.84 yuan for 2027, with a current PE ratio of 8.5x for 2026 [3] - The dividend per share for 2025 is set at 0.56 HKD, corresponding to a dividend yield of over 7% [3]

Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Views - The company reported a slight decline in revenue but stable profits, with 2025 operating income (excluding tax and additional charges) at 36 billion yuan, a year-on-year decrease of 5.1%, and a net profit attributable to ordinary shareholders of 3.9 billion yuan, an increase of 0.7% year-on-year [1] - The company's total assets grew slightly to 371 billion yuan by the end of 2025, a year-on-year increase of 2.9%, with loans and receivables increasing by 4.9% to 273.5 billion yuan [1] - The net interest margin improved to 4.83%, up 35 basis points year-on-year, driven by a decrease in the cost of interest-bearing liabilities and an increase in the proportion of inclusive finance business [1] - The gross margin for the industrial operations segment decreased to 25%, down 5 percentage points year-on-year, primarily due to a decline in the gross margin of the subsidiary [2] - The company maintained a stable asset quality, with a non-performing loan ratio of 1.03%, down 0.04 percentage points from the beginning of the year [2] Financial Forecasts - The company adjusted its profit forecasts, expecting net profits for ordinary shareholders to be 3.9 billion yuan in 2026, 4.0 billion yuan in 2027, and 4.2 billion yuan in 2028, with year-on-year growth rates of 1%, 3%, and 3% respectively [3] - The diluted EPS is projected to be 0.82 yuan for 2026, 0.84 yuan for 2027, and 0.87 yuan for 2028, with corresponding PE ratios of 8.5, 8.2, and 8.0 [3] - The company plans to distribute a dividend of 0.56 HKD per share for 2025, resulting in a dividend yield of over 7% [3]

Core Viewpoint - The company Far East Horizon (03360) has its earnings forecast for 2026 reduced by 13% to 4.1 billion HKD due to ongoing operational pressures and increased provisions driven by the expansion of inclusive finance business [1] Financial Performance - Far East Horizon's revenue for 2025 is expected to decline by 5% to 35.8 billion HKD, while net profit attributable to shareholders is projected to increase by 1% to 3.9 billion HKD, with a slight decrease in profit for the second half of 2025 [2] - The financial business is expected to see a revenue increase of 4.5% to 22.7 billion HKD, accounting for 63% of total revenue, driven by a 3% rise in interest income to 21.8 billion HKD and a 66% increase in consulting fee income to 0.9 billion HKD [3] - The net interest margin is expected to expand by 34 basis points to 4.83%, with the average asset yield increasing by 4.9 percentage points to 15.71% [3] Operational Performance - The company's industrial operations are under pressure, with a projected revenue decline of 18% to 13.3 billion HKD, accounting for 37% of total revenue [4] - The revenue from the subsidiary Hongxin Jianda is expected to drop by 19% to 9.4 billion HKD, with a significant 84% decrease in adjusted net profit to 0.015 billion HKD, prompting a shift towards overseas markets [4] - The health segment is also facing challenges, with a 13% revenue decline to 3.6 billion HKD and a 64% drop in net profit to 0.08 billion HKD [4]