Jinwu Financial News | According to Ping An Securities Research, Yuandong Hongxin (03360) is a leading independent financial leasing company in China. It has long been deeply involved in nine major industries, including urban public use and healthcare. The strategic focus is shifting towards regions with safer and higher returns in East China and Huazhong, complete wind control systems, stable and moderate asset quality, and strong interest spread management capabilities. It is expected to maintain its leading position in the context of stricter regulation of the leasing industry.
According to the bank, the revenue contributions of the financial division and industrial division in 2023 were 61% and 39% respectively. Among them, the financial division mainly contributed financial leasing, with revenue contributions of 53%; the industrial division mainly focused on equipment operation (mainly equipment operation and leasing) and hospital operations, with revenue contributions of 25% and 11%, respectively. The bank believes that Yuandong Hongxin's core strengths are mainly its leading position in the industry, steady performance, and long-term stable and rich shareholder returns. Since 2014, Yuandong Hongxin's ROE has remained around 14%, and the dividend rate has basically remained around 30%. Shareholder returns were further enhanced through share repurchases and in-kind distribution in 2023. After considering the special dividend in kind, the dividend payout rate reached 42%. The valuation is also more cost-effective than its peers, with a dividend ratio of over 8%, leading among comparable banks and leasing companies.
The bank said it expects net profit of 65/71/76 billion yuan from 24-26, a year-on-year growth rate of 5%/8%/7%. Referring to comparable companies, give the company PB (2024E) 0.46x, with a target price of HK$6.43. The company's financial leasing business is steady, industrial operations are growing rapidly, and the dividend ratio is leading. For the first time, coverage was given a “recommended” rating.