Core Viewpoint - China Cinda's 1H24 performance is in line with market expectations, with revenue growth of 2.3% year-on-year, but a significant decline in net profit attributable to shareholders by 47% due to increased provisioning [1] Group 1: Financial Performance - 1H24 revenue increased by 2.3% year-on-year, primarily driven by the acquisition of operational and other non-performing asset businesses [1] - Revenue from operational acquisition business grew by 11.5% year-on-year, attributed to an increase in internal rate of return by 2.7 percentage points year-on-year and 4.1 percentage points compared to 2H23, reaching 10.9% [1] - Other non-performing asset business revenue increased by 3.6 billion yuan year-on-year, influenced by a low base last year and more stable project valuations [1] Group 2: Cost and Asset Quality - Revenue from acquisition and restructuring business declined by 50% year-on-year, mainly due to a 40.5% decrease in scale and a 0.7 percentage point drop in monthly annualized yield to 6.1% [2] - Debt-to-equity swap business revenue fell by 63%, impacted by market fluctuations affecting asset valuations and poor performance of some joint ventures [2] - 1H24 liability cost decreased to 3.41%, down 4 basis points from 2H23, due to an increase in low-cost interbank liabilities and bond financing [2] Group 3: Asset Impairment and Provisions - Asset impairment losses increased by 58% year-on-year in 1H24, with non-performing asset impairment losses rising by 14% and loan impairment losses by 31% [3] - The impairment ratio for acquisition and restructuring non-performing assets rose by 5.79 percentage points to 19.45%, while the provision coverage ratio decreased by 5 percentage points to 107% [3] - The non-performing loan ratio for the Southern Commercial Bank increased by 52 basis points to 2.84% [3] Group 4: Profit Forecast and Valuation - Due to short-term industry pressures on asset quality, the 2024E net profit forecast is lowered by 16% to 4.7 billion yuan, and the 2025E net profit is reduced by 15% to 4.7 billion yuan [3] - The current stock price corresponds to a price-to-book ratio of 0.14x for both 2024E and 2025E [3] - The target price is adjusted down by 21% to 0.69 HKD, reflecting a potential upside of 7.8% from the current stock price [3]
中国信达(01359.HK)：加快推动业务转型升级