Komo lowered Yuandong Hongxin's (03360) profit forecast for the 2024 and 2025 fiscal years by 3% and 11%.
The Zhitong Finance App learned that J.P. Morgan Chase released a research report stating that it maintained the “gain” rating of Far East Hongxin (03360) and lowered its profit forecast by 3% and 11% for the 2024 and 2025 fiscal years. However, the company has been working hard to increase shareholder returns, and the target price has been lowered by 5% to HK$8.9 from HK$9.4. The company's profit for fiscal year 2023 was 6.2 billion yuan, an increase of 1%, which was basically in line with expectations. The revenue momentum was weaker than expected, but was offset by lower credit costs. A dividend of HK$0.5 per share, with a dividend payout ratio of 31% (if dividends from Hongxin Construction (03390) are not included).
According to the report, the company reduced credit costs, supported by the recovery of assets and industrial operations. Management said that although the macro outlook remains highly uncertain, they are more confident in controlling asset quality over the next 12 months, so they have more flexibility in releasing excess reserves (excess reserves) and keep credit costs relatively low. However, the negative factor was that net interest rates and portfolios contracted slightly, mainly due to a decline in the leverage ratio of negative asset production statements. Management, on the other hand, anticipates that a drop in net interest rates in 2024 may be inevitable.