Macquarie lowered Dai Sing Financial's (00440.HK) net profit forecast for the 2016 and 2017 fiscal years by 1% (excluding sales proceeds) and 3%, and is expected to record sales revenue of 3.6 billion yuan in fiscal year 2016. The target price was lowered from 76.7 yuan to 71.16 yuan, maintaining the “outperform the market” rating.

Macquarie pointed out that Daxin Financial's performance in the first half of the year was 5% better than the bank's expectations, but 7% lower than market expectations. The market's attention is still on the company's sale of life insurance business and potential special interest allocations. It is believed that the transaction will be completed in the next few months, that is, within 2016. The bank expects that the sale will result in an annual distribution of $3.62 per share from 2016 to 2018, which is lower than the previous forecast of $5.82.

In terms of operations, Macquarie believes that although the company's profit margin improved and loan growth was higher than expected, the market's main concern for Dah Sing Financial was asset quality. The bank believes that the focus of its performance in the first half of the year was the widening of net interest spreads to 1.94%, with loans up 2.1% compared to the second half of last year; asset quality deteriorated and the impairment loan ratio rose to 1.03%. The company pointed out that the reason was that Hong Kong's SMEs faced challenges in their business in the Mainland.