Core Viewpoint - Guosen Securities initiates coverage on CITIC Financial Assets (02799) with a "Neutral" rating, projecting net profit for ordinary shareholders to reach 10.4 billion, 10.9 billion, and 11.0 billion yuan from 2025 to 2027, representing year-on-year growth of 8.5%, 4.1%, and 1.1% respectively, with corresponding EPS of 0.13, 0.14, and 0.14 yuan, and PE ratios of 7.6, 7.3, and 7.3 times, while PB ratios are 1.70, 1.38, and 1.16 times, suggesting a reasonable stock price range of 1.16-1.28 HKD [1] Financial Performance - In the first half of 2025, CITIC Financial Assets achieved operating revenue (including performance from joint ventures and associates) of 40.2 billion yuan, a year-on-year increase of 19.9%, and net profit from continuing operations of 5.5 billion yuan, up 19.7%, with net profit attributable to ordinary shareholders reaching 6.2 billion yuan, reflecting a 15.7% increase, while annualized ROE stood at 21.1% and ROA at 1.1% [1] Asset Growth - As of the end of Q2 2025, the total assets of the company amounted to 1.01 trillion yuan, marking a 2.7% increase from the beginning of the year but a 4.2% decrease year-on-year. The total assets in the non-performing asset management segment grew by 2.7% compared to the beginning of the year, while the asset management and investment segment saw a 1.6% increase [2] Segment Performance - The non-performing asset management segment reported a revenue increase of 58.3% year-on-year, primarily due to approximately 21.3 billion yuan in income from investments in China Bank and Everbright Bank. Conversely, the asset management and investment segment experienced an 85.1% decline in revenue, with its share of income before group offsets dropping to 5.6% [3] Credit Cost and Risk Management - The credit cost rate for the first half of the year was 15.3%, significantly up year-on-year, attributed to increased credit impairment on debt instruments measured at amortized cost. The substantial provisioning has enhanced the company's risk resilience, with the overall provision coverage ratio for debt instruments measured at amortized cost and those measured at fair value, with changes recorded in other comprehensive income, reaching 270% by the end of June 2025, an increase of 44 percentage points from the beginning of the year [4]