Morgan Stanley pointed out that the joint venture contributions of China Cinda (01359.HK) and China Huarong (02799.HK) and other financial assets are increasing, making the balance sheet increasingly complex. The bank believes that if the two companies slow down the pace of asset expansion and focus more on traditional non-performing loan business, the market will respond positively.

Daimo lowered China's Huarong target price from 3.4 yuan to 3.13 yuan, rating “in sync with the market”; the bank tends to recommend Cinda because its traditional non-performing asset business position is stronger and its valuation is lower. The current prices of the two companies were reasonable, and they resumed watching Cinda. The target price was 2.87 yuan, and the rating was “in sync with the market.”

The bank pointed out that other financial assets of Cinda and Huarong accounted for 21% and 28% of the total in 2015 respectively, up 60% and 88% from year to year respectively. The related assets were non-standard credit assets with relatively high returns, such as trust beneficiary rights, and a significant portion was held by the asset management division. The bank believes that these assets make it more difficult for the two companies to analyze, so if more details are disclosed and investment in such assets is slowed down, the market will take a more positive view. The bank believes that the bank's continued high level of non-performing loan formation will provide better opportunities for Cinda and Huarong's traditional non-performing asset business, and that piloting asset-backed securities and local asset management companies will not present a major threat in the short term.

However, in the second half of 2015, Cinda and Huarong both slowed down the development and restructuring of non-performing asset businesses. The bank believes that Huarong's slowdown was partly due to capital restrictions. The bank believes that during the economic restructuring period in the mainland, there will be more non-performing loans in this business, and at the same time, falling interest rates will reduce the risk-reward ratio of this business. The bank is cautious about this business.