Hyde Co., Ltd. is the only AMC target for A-shares. Relying on the industrial advantages of the controlling shareholder, the company's traditional non-performing asset management business is growing steadily, and the leverage ratio is currently relatively low, so there is room for future management scale growth. At the same time, the company actively lays out the bad asset management business of personal loans, which is expected to bring new profit growth points in the medium to long term. Furthermore, the company is actively participating in investment in new energy industry chains such as vanadium batteries. A diversified non-performing asset management layout is expected to continue to drive the company's growth and enhance its resilience to risks.

The non-performing asset management business has expanded in a variety of ways, and hard work has been successful. The company obtained a non-performing asset management license in 2016, cleared the real estate business, and successfully transformed its main business into a non-performing asset management business. After developing in recent years, the company has been successful: in terms of traditional institutional asset management, it relies on the controlling shareholders' industrial advantages in the energy and real estate fields to focus on asset management business in specific industries, and profits have continued to grow; in the equity field of listed companies, the company successfully helped Helenzie reverse the plight in 2022; in terms of personal non-performing loan management, the company actively expanded its asset scale using technological means, which may become a new profit growth point in the future.

In terms of high-quality asset management, the company participated in investments in new energy fields such as the vanadium battery industry chain. The company's multi-field and multi-type asset management layout is conducive to long-term performance growth and enhanced resilience to risks.

The traditional asset management business is operating steadily and its performance is growing rapidly. The company's traditional asset management business mainly focuses on bad asset management for troubled institutions. In 2023, Q1 credit-type assets reached 6.678 billion yuan, and the CAGR of assets managed from 2017 to 2022 was 14.74%. Relying on the controlling shareholders' management experience and technical accumulation in coal mines, commercial real estate and other fields, the company's asset management earnings continued to increase. In 2022, the company achieved net profit of 702 million yuan, an increase of 83.20% over the previous year. Furthermore, there is still room for the company's leverage to rise. The company's overall leverage multiplier in 2022 was only 1.53 times, far below the level of mainstream non-performing asset management companies in the industry. There is still room for long-term business expansion and revenue growth.

The rapid deployment of personal loan bad asset management business is expected to become a new growth point for medium- to long-term profits. In July 2021, Hyde Asset Management was approved to carry out personal non-performing loan acquisition and disposal business nationwide. The company increased the capital of Tibet Junfeng Digital Technology Company in August 2022 to develop personal loan bad loan disposal business using “big data+AI technology”. The company plans in its 2022 annual report that the cumulative asset management scale in the next 1 year will not be less than 100 billion yuan, and the cumulative asset management scale for the next 3 years will not be less than 400 billion yuan. We expect that based on a recovery rate of around 20%, every 100 billion yuan of management scale or contribution of 250 million yuan in equity net profit is expected to become a new profit growth point for the company.

Participate in vanadium battery industry chain projects and reserve long-term high-quality investments. The company set up Detai Energy Storage with its brother company Yongtai Energy in the second half of 2022, actively laying out businesses such as upstream vanadium ore, midstream vanadium battery production lines, and downstream energy storage power plant peaking. The first phase is to build a battery production line with an annual capacity of 300 MW. Construction is expected to begin in June 2023. Hyde accounts for 49% of the joint venture's shares. We estimate that if the entire industrial chain layout of the joint venture is put into operation, Hyde Co., Ltd. is expected to receive an investment income of 205 million yuan.

Risk factors: A slowdown in economic growth or a decline in return on assets may make it more difficult to dispose of non-performing assets, thereby reducing the company's return on asset disposal. The scale of the personal loan non-performing asset disposal business fell short of expectations. The progress of the vanadium flow battery project in which the company participated fell short of expectations, affecting investment returns. The growth in the scale of traditional institutional distress asset businesses is limited. Competition in the personal loan bad disposal business has intensified.

Profit forecast: Considering the steady development of the company's non-performing asset business, the plan of the personal loan non-performing asset business, and the investment income contributed by the vanadium battery business, it is expected that the company's performance growth in the next 3 to 5 years is highly certain. We expect the company's 2023/24/25 EPS to be 0.90/1.22/1.53 yuan, the current price is 18.13 yuan, corresponding to 2023-2025 PE 20/15/12 times.