Investment Rating - The report does not explicitly state an investment rating for the local asset management company (AMC) industry [2] Core Insights - The demand for resolving non-performing assets (NPAs) has increased due to fluctuations in the domestic macroeconomic environment, providing significant growth opportunities for the NPA management industry [4] - The local AMCs play a crucial role in the diversified market structure of the NPA management industry, primarily focusing on the acquisition, management, and disposal of NPAs [9][10] - The regulatory environment has evolved, with the establishment of a unified regulatory framework aimed at promoting the healthy development of the local AMC industry [12][20] Summary by Sections Industry Overview - The NPA management industry is characterized by a supply chain that includes upstream sources of NPAs, midstream management companies, and downstream investors [4][6] - The primary sources of NPAs include banks, non-bank financial institutions, and non-financial institutions, with banks being the traditional and largest source [5] Market Dynamics - The local AMCs have stabilized in number since 2021, with 59 recognized by regulatory authorities as of mid-2025, predominantly state-owned [9][10] - The development of local AMCs is closely correlated with the scale and quality of NPAs in their respective regions, influenced by local economic and regulatory environments [10] Regulatory Environment - The regulatory framework has shifted from a lenient approach to a more stringent one since 2019, with the introduction of the "153 Document" and the recent "Interim Measures for the Supervision and Management of Local Asset Management Companies" [11][12] - The new regulations emphasize compliance, risk management, and a return to core business functions for local AMCs, establishing specific quantitative indicators for monitoring [12][21] Business Trends - The local AMC industry is experiencing diversification in market supply, disposal methods, and financing channels, with a growing emphasis on "investment banking" style asset processing [15][16] - There is a noticeable internal differentiation within the industry, with state-owned AMCs receiving more support compared to their private counterparts, which face increasing operational challenges [17][18] Future Outlook - The local AMC industry is expected to continue evolving, with opportunities arising from economic recovery, real estate risk resolution, and financial institution reforms, despite facing significant competitive and regulatory pressures [20][21]

Core Viewpoint - China Cinda's plan to reduce its stake in Founder Securities has once again ended without execution, indicating potential issues with the stock price not meeting expectations [2][9]. Summary by Sections Reduction Plans - China Cinda announced a plan to reduce its holdings by up to 82.32 million shares, approximately 1% of the total share capital, between April 29 and July 28, with a potential market value exceeding 600 million yuan at the time [2][3]. - As of July 28, the deadline for the reduction plan, China Cinda did not sell any shares and continues to hold 7.2% of Founder Securities [4]. Historical Context - China Cinda has made five reduction plans since becoming a shareholder of Founder Securities, with only three being executed, and two plans remaining unfulfilled [6]. - The first reduction attempt was in November 2022, which did not result in any sales by the deadline in May 2023 [7]. - The second attempt in July 2023 resulted in a 1% reduction, raising 784 million yuan, with the share price ranging from 8.65 to 10.06 yuan per share [7]. - The third attempt in April 2024 also failed to meet the target, with only a 0.15% reduction achieved [8]. Market Conditions - The failure of the latest reduction plan is attributed to changes in market conditions, particularly the stock price of Founder Securities not reaching the expected levels [9][10]. - During the planned reduction period, the stock price fluctuated between 7.28 yuan and 8.63 yuan, which is lower than the prices during previous successful reductions [10]. Financial Performance - Founder Securities is expected to report a net profit of 2.296 billion to 2.432 billion yuan for the first half of 2025, reflecting a year-on-year increase of 70% to 80% [11].

Core Viewpoint - Hebei Asset Management Co., Ltd. has submitted an application for an IPO on the Hong Kong Stock Exchange, aiming to enhance its competitive position in the non-performing asset management industry and capitalize on strategic opportunities arising from the economic transformation in Hebei Province [1][5]. Company Overview - Hebei Asset is the only local asset management company in Hebei with the qualification to acquire and dispose of non-performing financial assets in bulk [1]. - The company is controlled by Hebei Provincial Government's State-owned Assets Supervision and Administration Commission, with Hebei Construction Investment Group holding 56.5% of the voting rights [1]. Market Position - In 2024, Hebei Asset ranks second in the province for newly acquired non-performing assets by original value, with a market share of 24.4% [1]. - The company leads the market with a 47.2% share of non-performing assets acquired from small and medium-sized banks in Hebei [1]. Financial Performance - The company's non-performing asset management revenue for 2022, 2023, and 2024 is approximately RMB 424 million, RMB 222 million, and RMB 512 million, respectively [2][3]. - Net profit for 2022 was about RMB 98 million, while 2023 saw a net loss of RMB 145 million due to fair value losses on non-performing assets; the company is expected to return to profitability in 2024 with a net profit of RMB 204 million [2][3]. Industry Insights - The market for non-performing asset management services in China is projected to reach RMB 5.8 billion in 2024, with a compound annual growth rate of 28.0% from 2024 to 2029 [2]. - Non-performing asset management involves acquiring distressed assets at a discount and enhancing their value through management and restructuring [2]. Risks and Challenges - The supply of non-performing assets is influenced by macroeconomic conditions, asset quality, and the willingness of financial institutions to sell [4]. - The company faces operational risks related to the quality of its asset portfolio, with a significant fair value loss recorded in 2023 [4]. - High concentration risk exists, with the top five clients contributing 66.6% of revenue and the top five suppliers accounting for 69% of purchases in 2024 [4].

Core Viewpoint - The introduction of the "Interim Measures for the Supervision and Administration of Local Asset Management Companies" is a significant step in enhancing the regulatory framework for local asset management companies (AMCs) in China, aimed at improving risk management and compliance within the industry [1][2]. Summary by Sections Regulatory Framework - The new measures establish a unified regulatory framework for local AMCs, clarifying their business scope, operational regions, and primary responsibilities [1][3]. - The measures emphasize the importance of corporate governance, internal control systems, and risk management frameworks for local AMCs [1]. Business Operations - Local AMCs are permitted to engage in various activities, including the acquisition, management, and disposal of non-performing assets, as well as acting as bankruptcy administrators and providing consulting services [2]. - The measures set clear operational boundaries, prohibiting local AMCs from engaging in practices such as guaranteeing principal and fixed returns, facilitating false asset reporting, and creating hidden local government debts [2]. Industry Trends - The introduction of these measures is expected to lead to a higher level of industry standardization and a return to core responsibilities for local AMCs, focusing on the management of non-performing assets [3]. - The measures are anticipated to drive local AMCs to innovate their business models and enhance their internal and compliance management capabilities, thereby playing a unique role in revitalizing assets and supporting the real economy [3].

Core Viewpoint - The article discusses the implementation of the "Interim Measures for the Supervision and Administration of Local Asset Management Companies" by the Financial Regulatory Bureau, aimed at standardizing the operations of local asset management companies (AMCs) and enhancing their focus on core responsibilities while effectively serving local needs [1][2]. Regulatory Framework - The new measures are a significant step in establishing a unified regulatory framework for local AMCs, addressing previous issues of fragmented management and regulatory oversight [3][4]. - The provincial financial management institutions are designated as the primary supervisory bodies for local AMCs, ensuring accountability and coordination with the Financial Regulatory Bureau [4]. Business Scope and Restrictions - The measures delineate the business scope for local AMCs, allowing them to engage in the acquisition, management, and disposal of non-performing assets, while prohibiting activities outside this scope [7][8]. - Five key operational restrictions are established, including prohibitions against guaranteeing principal and fixed returns, facilitating false reporting for financial institutions, and engaging in illegal debt recovery practices [9][10]. Risk Management Requirements - The measures introduce specific risk management requirements, including limits on concentration risk, liquidity risk, and related party transactions [11][12][14]. - Local AMCs are required to maintain a minimum level of high-quality liquid assets to cover net cash outflows for the next 30 days [13]. Industry Outlook - The importance of local AMCs is highlighted, with projections indicating that the scale of non-performing asset management will reach RMB 16,877 billion by 2029, with a compound annual growth rate of 14.8% from 2024 to 2029 [6].

Investment Rating - The investment rating for the industry is "Outperform the Market" (maintained) [1][29] Core Viewpoints - The report highlights the competitive landscape of China's non-performing asset management industry, which consists of "5 national AMCs + 59 provincial AMCs + non-licensed institutions" [2][8] - The overall diluted ROE for the AMC industry in 2024 is projected to be 3.4%, indicating general profitability issues [2][9] - The report notes that while provincial AMCs have shown stable growth, the net profit for these institutions has declined, reflecting a trend of "increment without profit" [16] Summary by Sections Industry Overview - The non-performing asset management industry in China has evolved over two decades, establishing a competitive structure with national and provincial AMCs [2][10] - The report discusses the different types of non-performing asset management businesses, including acquisition and disposal, restructuring, and debt-to-equity swaps [3][5] Financial Performance - The financial overview indicates that the largest four AMCs have total assets exceeding 500 billion, while provincial AMCs generally have total assets under 100 billion [9] - The report provides detailed financial data for major AMCs, showing that most have a diluted ROE below 10% [11][9] Market Trends - The report identifies a trend where provincial AMCs are experiencing stable asset growth at approximately 5% annually, while the four major AMCs are facing asset contraction [16] - The profitability of provincial AMCs is declining, with a noted decrease in ROE over the years [16][21] Specific Company Analysis - Hebei Asset Management Co., Ltd. is highlighted as the only provincial AMC in Hebei, with a market share of 24.4% in the province [24] - The financial data for Hebei Asset shows total assets increasing from 67.9 billion in 2022 to 75.6 billion in 2024, with a net profit recovery in 2024 [26]

Core Viewpoint - Hebei Asset Management Co., Ltd. has officially submitted its listing application to the Hong Kong Stock Exchange, marking a significant step as the first local Asset Management Company (AMC) aiming for a public listing in Hong Kong [2][4]. Company Overview - Hebei Asset was established on November 24, 2015, as a state-owned enterprise approved by the Hebei provincial government, and it became the first local AMC in Hebei with qualifications for bulk acquisition and disposal of financial non-performing assets [4][5]. - The company is primarily engaged in the acquisition and disposal of non-performing assets, restructuring, custody services, and related consulting services [4]. Financial Performance - As of the end of 2024, Hebei Asset's total assets reached 7.556 billion yuan, with non-performing asset operating income of 512 million yuan, reflecting a year-on-year growth of 130% [4][5]. - The revenue from non-performing asset operations has consistently accounted for over 99% of total revenue in the past three years, with the income from disposal and restructuring of non-performing assets showing significant fluctuations [4]. Market Position - In the context of China's AMC landscape, Hebei Asset holds a market share of 24.4% in the acquisition of non-performing assets within Hebei province, ranking second in terms of original value of newly acquired non-performing assets in 2024 [2][4]. - The current market structure includes 59 local AMCs, with Hebei Asset positioned in the middle to lower tier in terms of asset scale [5]. Listing Context - The listing application was submitted on June 27, 2024, with joint sponsors being Jianyin International and Shanzheng International [4]. - The local AMCs face stringent regulatory restrictions for listing on the A-share market, making the Hong Kong market a crucial avenue for expanding financing channels and enhancing corporate credibility [2][6]. Industry Trends - The non-performing asset management industry in China has seen rapid growth, with the original book balance increasing from 4.9 trillion yuan in 2020 to 5.8 trillion yuan in 2024, reflecting a compound annual growth rate of 4.4% [9]. - The local AMC sector is experiencing a trend of differentiation, with the top five local AMCs accounting for over 40% of the total asset scale, while smaller institutions are facing marginalization [9].