Incident: Yuandong Hongxin disclosed an operating summary for the third quarter of 2024. 9M24 Yuandong Hongxin's revenue declined slightly year-on-year, and the net profit decline was basically the same as in the medium term (1H24 -32% year over year).

Financial business progressed steadily, the size of interest-bearing assets shrank slightly, and net interest spreads remained flat compared to the beginning of the year. 9M24 Yuandong Hongxin adheres to a steady management strategy and the financial business remains stable; in terms of scale, the company continued the steady and prudent development strategy of financial business since 2024 to ensure the orderly investment of interest-bearing assets. At the end of the 3Q period, the company's interest-bearing asset balance declined slightly compared to the beginning of the year; in terms of net interest, during the reporting period, the company's net interest spread was basically the same as at the beginning of the year (3.98% in '23). Considering the 3.95% net interest spread at the end of 1H24, the company's net interest spread is expected to remain high mainly due to lower costs on the financing side and maintaining high return pricing on the asset side. In terms of asset quality, during the reporting period, the quality of the company's assets was stable, the balance of non-performing assets was stable, and the provision coverage rate was steady and prudent.

HORIZON CD: The steady expansion trend continues, the scale of aerial work platform equipment is growing steadily, and the overseas market layout is accelerating. During the reporting period, HORIZON CD continued to optimize the equipment category structure, increase coverage of various new operating scenarios, and continued to consolidate its leading position in the domestic market through the subleasing model, and achieved a year-on-year increase in 9M24 revenue. At the end of the period, the company reached 563 global business networks/69 more than at the beginning of the year, and the holding scale of aerial work platforms reached 0.215 million units/an increase of 0.037 million units over the beginning of the year.

In terms of overseas layout, at present, HORIZON CD has set up 44 overseas outlets in 7 countries in Southeast Asia, the Middle East, etc. Currently, the original value of overseas assets exceeds 2.7 billion yuan, and the utilization rate of overseas equipment has effectively increased; during the reporting period, HORIZON CD's overseas business revenue has rapidly declined, and since August '24, it has achieved monthly profits in overseas business.

Hongxin Jiankang: Adhering to the established strategy, profit margins are rising steadily. In 2024, in the face of stricter health insurance regulations and declining willingness to pay, Hongxin Health actively promoted a strategic upgrade. On the one hand, it increased the number of patients to hedge the pressure to control medical insurance fees, and on the other hand, expanded new businesses such as consumer medicine and health services, and continued to focus on improving business quality and promoting cost reduction and efficiency. Profit margins increased steadily during the reporting period.

Investment analysis opinion: Leading financial leasing company, high dividends continue to give back to shareholders and maintain a “recommended” rating.

The company's net profit for 2024-2026 is estimated to be 4.94, 5.34, and 5.71 billion yuan, respectively, -20.2%, +8.0%, and +7.0% year-on-year. The PB corresponding to the current closing price is 0.43, 0.40, and 0.38 times, respectively, and the 24-year dividend rate corresponding to the current closing price will reach 11%.

Risk warning: Domestic macroeconomic recovery falls short of expectations; tightening liquidity has led to rising corporate financing costs; risk of policy changes.