Report summary:
As a comprehensive group spanning financial and industrial fields, the company is backed by state-owned enterprises. Major shareholders include Sinochem Capital Investment Management (21.29%), Idea Prosperous Limited (20.11%), and Capital Rise Limited (7.29% shareholding ratio), etc., with a stable shareholding structure.
The core management members all have more than 20 years of experience in the company and have always maintained their strategic strength.
Starting with the initial leasing business, the company gradually optimized and expanded its scope of business, and has now developed into a comprehensive operating service provider. Currently, the company's main business covers three major sectors: financial and consulting services, equipment operation, and hospital operation. In 2024, the three major businesses accounted for 57.5%, 30.68%, and 10.84% of revenue, respectively, with corresponding gross margins of 56.7%, 32.6%, and 20.0%, respectively.
In terms of finance and consulting business, the company is the largest independent commercial leasing service provider in China.
Its interest-bearing assets are mainly distributed in the economically developed regions of East China and central China, focusing on nine basic industries, including healthcare, machinery manufacturing, chemicals and pharmaceuticals. The interest-bearing assets amount to 260.64 billion yuan. The company's net interest spread is 4.48%. Against the backdrop of declining loan interest rates, its business model is more resistant to interest rate fluctuations than traditional banks. The quality of the company's assets is stable, and the provision coverage rate is sufficient. The long-term match between financial assets and liabilities is good, and the liquidity risk is low; the leverage ratios of the company and major subsidiaries are lower than regulatory requirements, and the overall financial risk is manageable.
In terms of equipment operation business, the company holds 41.7% of HORIZON CD (stock code: 9930.HK). HORIZON CD has formed a parallel business layout in the three major regional markets of China, Southeast Asia, the Middle East and North Africa, continuously optimizing asset allocation, improving store operation efficiency, and continuously expanding product lines. In overseas markets, the company has achieved large-scale operations in many countries and has taken a leading position in the market in some regions. In 2024, the company's overseas business revenue reached 0.389 billion yuan, and is expected to exceed 4 billion yuan by 2027.
In terms of hospital operation business, the company carries out related business through Hongxin Health. Hongxin Health's business network covers the whole country and has built a large health industry ecosystem covering health services, medical services, medical care services and supporting services. In 2024, the total assets of the company's hospital operating sector increased 2.5% year on year to 6.55 billion yuan, achieving operating income of 4.093 billion yuan, a year-on-year decrease of 3.4%; thanks to optimization of operating costs, gross profit increased 7.5% year over year to 0.809 billion yuan.
Investment advice: (1) Since its launch in 2011, Yuandong Hongxin's dividend rate has stabilized at around 30%.
After the first interim dividend was paid in 2024, the dividend rate reached 56.2%, which is at a high level. In recent years, the company's dividend ratio has continued to be above the industry average, which was 9.7% in 2024, compared to the industry average of 6.2%.
(2) The company's revenue from 2025 to 2027 is estimated to be 38.54 billion yuan, 39.82 billion yuan, and 41.79 billion yuan, respectively, up 2.1%, 3.3% and 5.0% year-on-year; net profit to mother of 4.01 billion yuan, 4.23 billion yuan and 4.48 billion yuan, respectively, up 3.8%, 5.5% and 5.9% year-on-year respectively, and EPS of 0.87 yuan, 0.92 yuan and 0.97 yuan respectively, covering the first time.
Risk warning: The company's performance growth fell short of expectations, and asset-side interest rates declined beyond expectations, etc.
