Incident Overview

Hyde & Co., Ltd. published its 2024 interim report. In the first half of 2024, the company achieved operating income of 0.59 billion yuan, a year-on-year increase of 7.17%; net profit to mother of 0.378 billion yuan, a year-on-year decrease of 26.63%; deducted non-net profit of 0.35 billion yuan, an increase of 6.66%; basic earnings per share of 0.1,934 yuan/share, a year-on-year decrease of 26.63%; and a weighted average ROE of 6.69%, a year-on-year decrease of 2.83 percentage points.

Analytical judgment:

Institutional difficulties in asset management: ballast stone business, steady performance.

The institutional crisis asset management business is the company's cornerstone business. In the first half of 2024, the company achieved revenue of 0.548 billion yuan from disposal of non-performing assets, an increase of 11.94% over the previous year, accounting for 92.83% of revenue. As of the end of the reporting period, the stock balances of the company's energy-class/listed companies/special opportunity/commercial real estate distressed asset projects were 45.7/0.55/2.293/1.095 billion yuan respectively, accounting for 54%/6%/27%/13% of the company's institutional distressed asset management business stock balance, respectively.

Personal distress asset management: Technology empowers companies to explore the blue ocean market.

With the gradual liberalization of policies, the batch transfer market for individual loan non-performing assets is becoming more and more active. From January to June 2024, a total of 135 individual loan non-performing asset transfer asset packages were sold at the Yindeng Center, an increase of 13% over the previous year. The transaction amount reached 32.15 billion yuan, an increase of 128% over the previous year. The company has adapted to market development and actively expanded the field of personal loan non-performing asset management. AMC Hyde Asset Management, which is a wholly-owned subsidiary of the company, has been approved to carry out personal loan non-performing asset acquisition and disposal business nationwide, using “big data+AI technology” to form a full chain of “asset acquisition+back-end disposal”, and initially built a personal loan non-performing asset investment and management capability. Currently, the company's personal loan non-performing asset management scale ranks at the leading level in the domestic AMC market share in the industry.

Investment advice

The company relies on shareholders' industrial advantages in energy and real estate, the restructuring and management experience of listed companies, and scarce license qualifications to deeply cultivate difficult institutional businesses; adapt to market development and actively expand the blue ocean of the personal loan non-performing asset industry. Based on the interim report data, we maintained the previous forecast value of 2024-2025 revenue of 1.397/1.536 billion yuan, added the 2026 revenue forecast of 1.625 billion yuan; maintained the previous forecast value of 2024-2025 net profit of 0.924/0.989 billion yuan, and added the 2026 net profit forecast of 1.004 billion yuan. Accordingly, maintaining the previous forecast value of EPS of 0.69/0.73 yuan for 2024-2025, adding EPS of 0.75 yuan in 2026, corresponding to the closing price of 4.55 yuan/share on September 13, 2024. PE was 17.01/15.90/15.65 times, and PB was 2.85/2.82/2.81 times, respectively, maintaining the company's “gain” rating.

Risk warning

The expansion of the poor personal loan business fell short of expectations, stricter regulatory policies, and macroeconomic changes.