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].