Incidents:
The company released its 2023 annual report and 2024 quarterly report on April 24, 2024: in 2023, the company achieved operating income of 1,230 million yuan, an increase of 15.69% over the previous year, and achieved net profit of 880 million yuan to mother, an increase of 25.68% over the previous year. In the first quarter of 2024, we achieved operating income of 345 million yuan, an increase of 13.17% year on year, and realized net profit of 233 million yuan to mother, an increase of 21.49% year on year.
Comment:
The company's annual report and quarterly report performance grew steadily. The size of distressed assets is related to factors such as economic size, growth rate, and structural adjustment. China's huge total economic base determines the huge scale of distressed assets. By the end of 2023, the balance of non-performing loans of commercial banks in China was about 3.2 trillion yuan, with a non-performing ratio of 1.59%; non-financial enterprises conservatively estimated the size of non-performing assets of about 1.19 trillion yuan. Considering enterprises in financial difficulties, operating difficulties, and troubled enterprises that are on the verge of bankruptcy but have not yet met the standard of non-performing assets, and distressed assets held by AMC that have not yet been disposed of, the stock of non-performing assets in China may reach 10 trillion yuan.
Actively expand the field of managing non-performing assets in technology personal loans. In 2021, Hyde Asset Management was approved as a personal loan non-performing asset acquisition and disposal business qualification; in 2022, the capital was increased to hold Junfeng Technology, using “big data+AI technology” to carry out personal loan non-performing asset management business. In October 2023, it obtained 51% of the shares of the established electronics company Guangzhou Huilong through acquisitions and capital increases. The company provides 100 billion yuan of assets for fiduciary disposal services every year; it has newly established Tibet Guiqing Technology Co., Ltd., which focuses on centralized judicial litigation, judicial mediation and other disposal services, further improved the disposal methods for non-performing personal loan businesses and formed “AI+ justice, telephone, and mediation ” A diversified, full-chain, and efficient intelligent disposal platform.
The company has an industrial background, and the advantages of the asset business in institutional difficulties are obvious. China's economy is in a critical period of transformation and upgrading, and many enterprises need the help of AMC and other external institutions to help them resolve their difficulties and transform and upgrade. Relying on the advantages of shareholders' industrial backgrounds and own resource endowments, the company focuses its business on the three major fields of energy, listed companies and real estate that it is familiar and good at. It has formed a differentiated competitive advantage and is expected to benefit from huge market opportunities with struggling institutional assets.
Investment advice: We adjust the profit forecast based on the annual report. The company's revenue for 2024-2026 is estimated to be RMB 14.57/18.11/2.53 billion yuan, respectively, and net profit to mother of RMB 9.74/12.13/1.492 billion yuan, corresponding EPS of 0.72/0.9/1.11 yuan, corresponding to PE 12.96/10.4/8.45X, maintaining a “buy” rating.
Risk warning: Product delivery falls short of expectations, profit forecasts and valuations fall short of expectations