Overview of events

On October 17, Hyde shares disclosed its third quarterly report of 2023. In the third quarter of this year, Hyde shares achieved revenue of 399 million yuan and deducted non-net profit of 253 million yuan, up 30.21% and 15.28% respectively over the same period last year, and 4.85% of non-annualized weighted ROE. In the first three quarters of 2023, the company achieved revenue of 950 million yuan, net profit of 769 million yuan, and non-net profit of 582 million yuan, up 20.78%, 41.56% and 7.88% respectively over the same period last year. In the first three quarters of this year, the non-annualized weighted ROE 14.38% recordROIC 10.50%, an increase of 3.32% and 1.37% over the same period last year. By the end of the third quarter of this year, the company had total assets of 9.173 billion yuan and net assets of 5.353 billion yuan, with a leverage ratio of 1.71 times, up from 1.54 times at the end of 2022.

Analysis and judgment:

In the first three quarters of 2023, the non-recurrent profit and loss of Hyde shares was about 187 million yuan. According to the middle of this year, it was mainly from the profit and loss caused by the change in the fair value of investment real estate (about 190 million yuan). According to the record form of customs clearance activities disclosed by the company on August 22 and the announcement of real estate leasing and related party transactions on May 15, the change in the book value of investment real estate comes from the company through judicial means in 2022. The rental rate and rent of some commercial properties in Beijing Guangyao Oriental Center, which are obtained at a price of about 5.6% discount, have been increased after upgrading (including Detai Energy Storage).

Hyde shares in the troubled asset management industry, in the current industrial structure transformation and upgrading stage has practical significance, can help prevent and defuse financial risks. The company distributes three areas: institutional distressed assets, personal distressed assets and high-quality assets. Specifically, 1) the institutional distressed asset management business is divided into three directions: energy, real estate and listed companies, and the business types include acquisition and reorganization, acquisition and disposal, special opportunity investment and management consultants. 2) the non-performing loan business is supported by Xizang Junfeng's "big data + AI technology" to form a full-chain, batch and intelligent process management of "asset acquisition + back-end disposal". Business types include fiduciary asset management (the main way) and acquisition asset management. 3) in terms of quality asset management, relying on Yongtai Group industry, invest in Detai Energy Storage (49% shareholding) energy storage industry dominated by all-vanadium flow batteries.

The Blue Ocean Banking Insurance Regulatory Commission, which attaches equal importance to individual loan non-performing assets management, license plate and financial technology, issued the notice on carrying out the pilot work on the transfer of non-performing loans in January 2021 (2021) No. 26).

Document No. 26 opens up a new path for individual households to comply with the disposal of public non-performing loans and personal non-performing loans, and improve the efficiency of the disposal of non-performing assets.

On October 13, Banking Credit assets Registration and transfer Center Co., Ltd. (referred to as "Bindeng Center") disclosed the transfer of non-performing loans, showing that 840 institutions had opened accounts for the transfer of non-performing loans. According to the data released by the Yindeng Center, in the first three quarters of 2023, a total of 208 individual loan non-performing assets were transferred in bulk, an increase of 362% over the same period last year, with a scale of 49 billion yuan, an increase of 339% over the same period last year. In the third quarter of 2023, the average discount rate of non-performing individual loans was 3.9%, and the average principal recovery rate was 6.1%. The lenders of non-performing loans are mainly national joint-stock banks (44.5%) and consumer finance companies (43.6%), while the transferees are mainly local AMC companies (96.5%).

Individual loan non-performing assets have the characteristics of small single amount, large number of households, large individual differences and high offline disposal cost, so financial technology is needed to assist in systematization, intelligence, batching, credit data support and credit record maintenance. in order to achieve the accurate valuation of front-end acquisition and efficient payback of back-end disposal.

AI+ science and technology empowerment, individual loan non-performing fiduciary disposal and acquisition disposal mode and Haide asset management was approved by Xizang Monetary Bureau in July 2021 to participate in the pilot work of non-performing loan transfer. On August 10, 2022, Haide Capital Management increased its capital by 50 million yuan to Xizang Junfeng Digital Technology Co., Ltd. after the capital increase, it held a 51% stake in Xizang Junfeng and became the controlling shareholder.

In June 2023, Hyde Capital Management was approved to access the credit information system of the people's Bank of China. In October 2023, Haide Capital Management and Junfeng Digital controlled 51% of Guangzhou Huilong Enterprise Management Consulting Co., Ltd. (with business operations, quality inspection, overseas visits to APP, AI phone robot intelligent calling and other systems and five computer software copyrights, and the management scale of entrusted disposal service exceeded 80 billion yuan in 2022).

Relying on the advantages of "AMC license + big data + AI technology", Hyde shares have initially formed the whole chain of "asset acquisition + back-end disposal", litigation and non-litigation, online and offline disposal. In the first half of 2023, the company won 7 non-performing loan asset packages and accepted the commission of more than 34 institutions (23 loan institutions and 11 banks and consumer financial institutions) to dispose of individual loan non-performing assets, achieving a service fee income of 56.4656 million yuan.

To B business is advancing steadily

By the end of the second quarter of 2023, the stock of the company's institutional distressed assets was 7.595 billion yuan. Among them, the stock balance of energy distressed assets is 4.97 billion yuan; commercial real estate is 1.123 billion yuan (distributed in Beijing, Chengdu and other places); the stock balance of distressed assets projects of listed companies is 708 million yuan (involving a number of listed company projects); the balance of special opportunity projects is 794 million yuan. The proportion of investment stock in four directions is 65%, 15%, 9% and 10% respectively.

Not only the plight of asset management, and Yongtai Energy Co., Ltd. jointly invested in the establishment of Detai Energy Storage, the business chain was once again extended to Hyde shares in September 2022 announcement, and Yongtai Energy Co., Ltd. jointly funded the establishment of Beijing Detai Energy Storage Technology Co., Ltd. has completed industrial and commercial registration.

The registered capital of Detai Energy Storage is 1 billion yuan, of which Yongtai Energy contributed 510 million yuan, with a share ratio of 51%; Hyde shares contributed 490 million yuan, with a share ratio of 49%. Detai Energy Storage will focus on investing in electrochemical energy storage projects to promote the development of the whole industry chain in the field of all-vanadium flow battery energy storage, such as energy storage material resource integration, purification and smelting, energy storage new materials, equipment R & D, manufacturing and project integration, and provide a full range of energy storage solutions for new energy and traditional power systems.

Investment suggestion

We recognize the development strategy of "AMC with industrial characteristics", which has industrial resources and management experience in energy (including coal, power, new energy), real estate and other business. 2) actively pilot the bad business of individual loans and light the operation of assets.

The company strives to extend the business chain, restructure (or restructure) the business of listed companies within the To B business, expand the non-performing business of To C, and then expand from distressed asset management to high-quality asset investment and management. Taking into account the prosperity of the energy industry, the need to cultivate new business, the company's quarterly results and other factors, we reduce the company's total operating income forecast of 1.4010 million yuan in 2023-2024 to 1.307 billion yuan, and increase the forecast of total operating income of 1.536 billion yuan in 2025, corresponding to the 2023-2024 EPS forecast of 0.67 million yuan 0.97 yuan to 0.61 million yuan 0.69 yuan, an increase of 0.73 yuan in 2025 EPS forecast. On October 20, 2023, the closing price of 11.66 yuan per share, corresponding to the PE of 19.13, 17.01 and 15.89 times, respectively, maintaining the company's "overweight" rating.

Risk hint

1) the non-performing assets industry in which the company is located is closely related to the real economy, financial risks and regulatory policies. the macro risks include, but not limited to, the economic recovery is not up to expectations, the price of collateral is falling, and the enterprise project management is difficult. it is more difficult to dispose of non-performing assets projects, and the disposal cycle of non-performing assets is lengthened.

2) Business development: with the expansion of the scale of non-performing assets investment, the ability of internal risk control and compliance of the company should be improved accordingly, and attention should be paid to the capital turnover risk of too fast pace of project investment. And because the investors do not know the specific project information, it is difficult to evaluate the income expectation and risk exposure of the project.