Core Viewpoint - China Cinda (01359) is participating in a merger transaction with CICC and Cinda Securities, which is expected to result in a significant change in its shareholding structure and a one-time tax-adjusted gain of approximately RMB 20 billion [1][2]. Group 1: Merger and Shareholding Changes - As of the announcement date, China Cinda holds 2.6 billion shares of Cinda Securities, accounting for approximately 78.67% of its equity. Post-merger, it is expected to no longer hold any A-shares of Cinda Securities and will receive 1.3 billion A-shares of CICC, representing about 16.71% of CICC's equity [2]. - The proposed merger is anticipated to generate a one-time after-tax gain of around RMB 20 billion for China Cinda, primarily due to the change in accounting treatment from cost method to fair value for the merger [2]. Group 2: Business Performance and Asset Management - In the first half of 2025, China Cinda's acquisition of operational non-performing assets increased year-on-year, despite a decline in disposal scale due to economic conditions. The internal rate of return for acquisition operations was 8.7%, slightly down from 8.9% for the entire previous year [3]. - The revenue from acquisition and restructuring business in the first half of 2025 was RMB 676 million, a decline of 65.5% year-on-year, with net assets in this category decreasing from RMB 28.485 billion at the end of 2024 to RMB 24.948 billion by mid-2025, indicating an orderly clearance [3]. - The investment balance for other non-performing asset management was RMB 211.12 billion at the end of 2024 and RMB 208.29 billion by mid-2025, with new investments of RMB 16.16 billion and RMB 30.41 billion in the first halves of 2024 and 2025, respectively [4]. Group 3: Profit Forecast and Investment Recommendations - The company is expected to achieve a net profit attributable to shareholders of RMB 3.7 billion in 2025, representing a year-on-year growth of 21%, with a corresponding book value per share (BVPS) of RMB 4.35. The company is assigned a 0.4x price-to-book (PB) ratio, leading to a target price of HKD 1.89 per share [5].