Core Viewpoint - Far East Horizon reported a decline in revenue for the first half of 2025, but a growth in net profit, indicating a mixed performance in its financial results [1][2]. Group 1: Financial Performance - In 1H25, the company achieved operating revenue of 17.336 billion yuan, a year-on-year decrease of 3.9%, while net profit attributable to shareholders was 2.164 billion yuan, an increase of 3.8% [1]. - The average return on equity for the first half of 2025 was 8.66%, up by 0.17 percentage points year-on-year [1]. Group 2: Business Segments - The financial and consulting business remains a key pillar, generating revenue of 11.090 billion yuan (up 2.1% year-on-year), while equipment operation and industrial operation revenues were 4.350 billion yuan (down 10.7%) and 1.797 billion yuan (down 15.5%), respectively [2]. - The gross margins for these segments were 57.5%, 21.6%, and 18.0%, reflecting changes of +1.7, -10.4, and -3.9 percentage points year-on-year [2]. Group 3: Asset Management - The company maintained a stable interest-earning asset scale of 266.626 billion yuan, with a quarter-on-quarter increase of 2.3% [2]. - The average yield on interest-earning assets rose to 8.08%, while the cost of interest-bearing liabilities decreased to 4.02%, leading to a net interest margin increase to 4.51% [2]. Group 4: Inclusive Finance - The inclusive finance business saw significant growth, with interest-earning assets reaching 22.192 billion yuan, a quarter-on-quarter increase of 28.7%, and revenue of 1.451 billion yuan, a year-on-year increase of 124.1% [3]. - The yield for this business segment was 14.72%, notably higher than the overall financial business yield of 8.1% [3]. Group 5: Asset Quality - The non-performing loan ratio and attention ratio were 1.05% and 5.51%, respectively, both showing a decline from the previous year [3]. - The provision coverage ratio remained stable at 227.33%, indicating good asset quality [3]. Group 6: Dividend and Future Outlook - The company has a high cash dividend payout ratio of 56% for 2024 and 50% for 1H25, with potential for stability and further increases [3]. - Projected net profits for 2025 to 2027 are 4.01 billion yuan, 4.23 billion yuan, and 4.48 billion yuan, reflecting year-on-year growth rates of 3.8%, 5.5%, and 5.9% respectively [3].

Investment Rating - The report maintains a "Buy" rating for the company [4][6]. Core Views - The company reported a 3.9% year-on-year decline in revenue for the first half of 2025, totaling 17.336 billion yuan, while net profit attributable to shareholders increased by 3.8% to 2.164 billion yuan [1]. - The financial and consulting business remains a key revenue driver, with a revenue increase of 2.1% year-on-year, while equipment and industrial operations saw declines of 10.7% and 15.5%, respectively [1][17]. - The company has focused on the development of inclusive finance, achieving a 28.7% growth in the asset scale of this business, with revenue soaring by 124.1% year-on-year [3][38]. Summary by Sections Financial Performance - In the first half of 2025, the average return on equity was 8.66%, an increase of 0.17 percentage points year-on-year [1]. - The company’s interest-earning assets stood at 266.626 billion yuan, reflecting a 2.3% increase from the end of the previous year [2]. - The average yield on interest-earning assets rose to 8.08%, while the cost of interest-bearing liabilities decreased to 4.02%, leading to a net interest margin of 4.51% [2][25]. Business Segments - The financial and consulting segment generated 110.90 billion yuan in revenue, accounting for 64.0% of total revenue, with a gross margin of 57.5% [1][19]. - The inclusive finance business achieved a revenue of 14.51 billion yuan, significantly contributing to overall growth [3][38]. Asset Quality - The company reported a non-performing loan ratio of 1.05% and a watchlist ratio of 5.51%, both showing a decline from the previous year [3][36]. - The provision coverage ratio remained stable at 227.33%, indicating solid asset quality [3]. Future Outlook - The company is expected to maintain a high cash dividend payout ratio, with projections for net profit attributable to shareholders of 4.01 billion yuan, 4.23 billion yuan, and 4.48 billion yuan for 2025, 2026, and 2027, respectively [4][5].