China Huarong Total Assets Reached RMB1073.22 Billion; Net Profit Surged to RMB12.85 Billion, Up 30.2%

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Tuesday, 30 August 2016, 21:37 HKT/SGT

To become a leading professional state-owned AMC in PRC

HONG KONG, Aug 30, 2016 - (ACN Newswire) - The largest state-owned asset management company in PRC in terms of market value, China Huarong Asset Management Co., Ltd. ("China Huarong" or the "Company", together with its subsidiaries, the "Group", stock code: 2799), today announced its unaudited interim results for the six months ended 30 June 2016 (the "period under review" ).

During the period under review, China Huarong continued to grow steadily and vibrantly, and reached new highs in total assets, net assets and net profit. For the first time, the Group's total assets exceeded RMB1 trillion. China Huarong has evolved into a state-owned asset management company "that has the highest value of total assets, strongest profitability, highest profits earned, a complete set of financial licenses and the largest market value" in PRC. During the period under review, China Huarong was included on the FTSE China A50 and HS China H-Financials Index, which was a strong testament to the wide recognition of the Group's value.

During the period under review, China Huarong's gross revenue reached RMB40.01 billion and the net profit amounted to RMB12.85 billion, increased by 5.8% and 30.2% respectively compared to the same period last year. The Group's total assets reached RMB1,073.22 billion, representing an increase of 23.9% compared to the end of last year; net assets reached RMB131.65 billion, increased by 10.8% from the end of last year; the annualized ROAE was 21.6% and the annualized ROAA was 2.3%; earnings per share amounted to RMB0.28. The Directors of the Company did not declare the payment of an interim dividend for the six months ended 30 June 2016.

Mr. Lai Xiaomin, Chairman of China Huarong, remarked, "The year 2016 marks the beginning of the PRC government's 13th Five-Year Plan. It is also a year in which China Huarong accomplished its development plan of 'Three Steps in Five Years' and launched its new Five Years' Plan of innovative transformation. In the first half of 2016, global and domestic economic situations were complex and grim; the market was fluctuating; profits decreased for corporate entities; and the growth of profit slowed down for finance organizations and state-owned enterprises. Despite all the negative factors, China Huarong followed its main strategy of 'innovation amidst stability' and 'made progress on top of stability, achieved success despite risks, accomplished innovative transformation, adapted to the growth of economy and regarded cost-efficiency as the first priority'. The Company seized the opportunities brought by the adjustments of economic structure as well as the upgrade and transformation of the sector by focusing on five central missions, namely 'adjusting the structure, facilitating the transformation, strengthening the weaknesses, preventing risks and enhancing quality'. The Company made full use of its 'through-the-cycle' business model, adapted to the "new normal", sought new momentums and achieved synergetic development of its three major business segments: distressed assets management; financial services; and asset management and investment."

During the period under review, China Huarong seized opportunities brought by the growth of market supply, actively implemented the "core client" strategy, designed flexible transaction structures to meet the different disposal demands by commercial banks, accelerated the acquisition of distressed assets and largely increased the scale of acquisition. The net income derived from acquisition-and-disposal business amounted to RMB1.38 billion, increased by 183.3% compared to the same period last year. Income from the Group's distressed asset management segment before inter-segment elimination amounted to RMB20.43 billion; profit before tax for this segment before intersegment elimination increased 46.4% to RMB9.68 billion.

The financial services business is an important and integral part of the Group's integrated asset management business. During the period under review, the Group's financial services segment recorded a steady growth despite the slowdown of economic growth and large fluctuations in the market. The total value of the net assets of the segment reached RMB431.41 billion, increased by 16.4% compared to the end of last year. The total assets of Huarong Xiangjiang Bank increased by 14.3% to RMB241.28 billion compared to the end of last year, generating a net profit of RMB1.29 billion, representing an increase of 11.2% compared to the same period last year. Its growth rate has largely exceeded the average level of the sector. As of 30 June 2016, Huarong Financial Leasing had total assets of RMB102.39 billion, net assets of RMB10,433.9 million and annualized ROAE of 15.1%, ranking eighth, seventh and first among all the 45 operating financial leasing companies, respectively. As of 30 June 2016, the balance of finance lease receivables of Huarong Financial Leasing was RMB80.2 billion. For the first half of 2016, the net profit of Huarong Financial Leasing was RMB1,036.8 million, representing a growth rate of 16.5% compared to the same period last year.

The Group's asset management and investment business is an extension and supplement to its distressed asset management business. It also serves as an important platform for providing the Group's clients with a comprehensive array of diversified asset management, investment and financing services. As of 30 June 2016, the total asset of the asset management and investment business amounted to RMB198.0 billion, accounting for 18.5% of the Group's total asset. During the period under review, the Group's income derived from the asset management and investment segment before intersegment elimination increased by 74.8% to RMB8.88 billion, accounting for 22.2% of the Group's total revenue. Profit before tax for the segment reached RMB3.43 billion, increased by 65.3% compared to the same period last year, accounting for 20.2% of the Group's total profit before tax. The asset management and investment segment remained a strong growth driver of the Group's business performance.

During the period under review, China Huarong issued onshore Renminbi bonds of RMB10.0 billion, updated Medium Term Note Programme to US$11 billion and issued offshore US dollar bonds of US$2.5 billion. The issue featured the lowest cost of capital and received highly positive response from the investors in the market. The move displayed high brand reputation and strong international influence of the Group, and further optimized and enhanced its liability structure.

China Huarong is also committed to enhancing its comprehensive risk management system and achieved positive effects. During the period under review, the Group's risk management and control structure was further improved and the risk management system was refined in order to set up proper risk appetite. The establishment of internal control system and procedure was also optimized. The management of the Group's risk management information and data and the development of risk management system were effectively promoted. Risk management on the whole process of projects proceeded smoothly and all business activities were stable and under controllable risks. Following the philosophy of "proactivity, prevention, utilization, solution and principles" in risk management, the Group adjusted and optimized risk assessment policy; and assigned responsibility of risk management to all levels. These measures ensured all risk indicators of the Group meet the requirements of risk monitoring; and largely enhanced its internal management and control level by constructing "firewalls", "safe nets" and "quarantine zones" against risks.

Looking ahead, Mr. Lai Xiaomin added, "The global economy is expected to remain relatively weak in the second half of 2016, and this rebalancing period will be accompanied by uncertainties. Economic growth in the PRC will remain promising in the long run. In the second half of 2016, the PRC government will continue to pursue steady growth and focus on the structural reform on the supply front and maintain macro-economic policy direction. In light of opportunities and challenges, the Company will capitalise on the demand for financial services arising from the implementation of the PRC government's strategies of 'cutting overcapacity, destocking, deleveraging, reducing cost and shoring up weak growth areas', and from the upgrading and transitioning of traditional industries and the replacement of traditional industry drivers. The Company will also fully leverage its professional advantages of distressed asset management and its comprehensive financial services businesses, to support the enhancement of structural reform of supply front. Firstly, the Company will innovate its business development models, expand and optimise the distressed assets acquisition and disposal businesses with diversified market-oriented methods, while continuing to consolidate its leading position in the industry. Secondly, the Company will enhance its provision of financial services to certain industries pursuant to national development strategies, traditional industries and enterprises under transformation and upgrading, emerging strategic industries, and innovative technology enterprises, by leveraging market opportunities stemming from the major economic strategies and industrial optimisation and restructuring of the PRC. Thirdly, to strengthen the Group's business collaboration, and actively adopt various financial measures to provide customers with financial services covering the full business cycle and the entire industry value chain."

Topic: Press release summary Sectors: Daily Finance, Daily News
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