SEHK:2799

Stock Analysis Report

China Huarong Asset Management

Executive Summary

China Huarong Asset Management Co., Ltd., together with its subsidiaries, provides various financial asset management services.

Rewards

Trading at 61.7% below its fair value

Earnings are forecast to grow 39.29% per year

Risk Analysis

Large one-off items impacting financial results

Profit margins (7.8%) are lower than last year (15.9%)



Snowflake Analysis

Undervalued with high growth potential.

Share Price & News

How has China Huarong Asset Management's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 2799 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.1%

2799

-4.8%

HK Capital Markets

-3.4%

HK Market


1 Year Return

-24.2%

2799

2.3%

HK Capital Markets

-0.4%

HK Market

Return vs Industry: 2799 underperformed the Hong Kong Capital Markets industry which returned 9% over the past year.

Return vs Market: 2799 underperformed the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

2799IndustryMarket
7 Day-4.1%-4.8%-3.4%
30 Day-5.7%2.7%-1.2%
90 Day-0.9%9.8%3.7%
1 Year-23.4%-24.2%5.3%2.3%3.3%-0.4%
3 Year-55.6%-60.8%-10.8%-18.7%20.4%8.2%
5 Yearn/a-7.5%-22.6%19.6%-0.4%

Price Volatility Vs. Market

How volatile is China Huarong Asset Management's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is China Huarong Asset Management undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 2799 (HK$1.31) is trading below our estimate of fair value (HK$3.42)

Significantly Below Fair Value: 2799 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 2799 is good value based on its PE Ratio (13.3x) compared to the Capital Markets industry average (13.9x).

PE vs Market: 2799 is poor value based on its PE Ratio (13.3x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 2799 is good value based on its PEG Ratio (0.3x)


Price to Book Ratio

PB vs Industry: 2799 is good value based on its PB Ratio (0.3x) compared to the HK Capital Markets industry average (0.5x).


Next Steps

Future Growth

How is China Huarong Asset Management forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

39.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2799's forecast earnings growth (39.3% per year) is above the savings rate (1.6%).

Earnings vs Market: 2799's earnings (39.3% per year) are forecast to grow faster than the Hong Kong market (11.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 2799's revenue (25.2% per year) is forecast to grow faster than the Hong Kong market (10.2% per year).

High Growth Revenue: 2799's revenue (25.2% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 2799's Return on Equity is forecast to be low in 3 years time (9.3%).


Next Steps

Past Performance

How has China Huarong Asset Management performed over the past 5 years?

-8.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 2799 has a large one-off loss of CN¥18.6B impacting its June 30 2019 financial results.

Growing Profit Margin: 2799's current net profit margins (7.8%) are lower than last year (15.9%).


Past Earnings Growth Analysis

Earnings Trend: 2799's earnings have declined by -8.2% per year over the past 5 years.

Accelerating Growth: 2799's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 2799 had negative earnings growth (-63.4%) over the past year, making it difficult to compare to the Capital Markets industry average (-25.9%).


Return on Equity

High ROE: 2799's Return on Equity (1.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is China Huarong Asset Management's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: 2799 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 2799's debt is not covered by short term assets (assets are 0.9x debt).


Financial Institutions Analysis

Asset Level: 2799's level of assets compared to its equity is moderate.

Allowance for Bad Loans: Insufficient data to determine if 2799 has a sufficient allowance for bad loans.

Low Risk Liabilities: 2799 reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if 2799 has an acceptable proportion of non-loan assets held.

Low Risk Deposits: 2799 has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if 2799 has an appropriate level of bad loans.


Next Steps

Dividend

What is China Huarong Asset Management's current dividend yield, its reliability and sustainability?

1.17%

Current Dividend Yield


Dividend Yield vs Market

company1.2%marketbottom25%2.2%markettop25%6.2%industryaverage2.9%forecastin3Years9.2%

Current dividend yield vs market & industry

Notable Dividend: 2799's dividend (1.04%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 2799's dividend (1.04%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.02%).


Stability and Growth of Payments

Stable Dividend: 2799 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are stable.

Growing Dividend: 2799 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: 2799 is not paying a notable dividend for the Hong Kong market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 2799's dividend in 3 years as they are not forecast to pay a notable one for the Hong Kong market.


Next Steps

Management

What is the CEO of China Huarong Asset Management's salary, the management and board of directors tenure and is there insider trading?

1.5yrs

Average management tenure


CEO

Xin Li (59yo)

1.3yrs

Tenure

CN¥1,284,461

Compensation

Ms. Li Xin serves as President at China Huarong Asset Management Co., Ltd since September 27, 2018 and serves as its Executive Director since June 29, 2018. She has served as the deputy party committee sec ...


CEO Compensation Analysis

Compensation vs Market: Xin's total compensation ($USD186.43K) is below average for companies of similar size in the Hong Kong market ($USD547.05K).

Compensation vs Earnings: Insufficient data to compare Xin's compensation with company performance.


Management Age and Tenure

1.5yrs

Average Tenure

56yo

Average Age

Experienced Management: 2799's management team is not considered experienced ( 1.5 years average tenure), which suggests a new team.


Board Age and Tenure

3.9yrs

Average Tenure

57.5yo

Average Age

Experienced Board: 2799's board of directors are considered experienced (3.9 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Maurice Ngai (57yo)

    Joint Company Secretary

    • Tenure: 4.8yrs
  • Yonghua Li

    Head of the Financial Department

    • Zhanfeng Wang (52yo)

      Chairman of the Board

      • Tenure: 1.3yrs
      • Compensation: CN¥1.28m
    • Xin Li (59yo)

      President & Executive Director

      • Tenure: 1.3yrs
      • Compensation: CN¥1.28m
    • Jinglong Wu (55yo)

      Member of the Senior Management

      • Tenure: 1.8yrs
    • Pei Yang (56yo)

      Assistant to the President & Joint Company secretary

      • Tenure: 0.4yrs

    Board Members

    • Juan Dong (66yo)

      External Supervisor

      • Tenure: 4.8yrs
    • Aloysius Tse (71yo)

      Independent Non-Executive Director

      • Tenure: 4.8yrs
      • Compensation: CN¥250.00k
    • Junmin Liu (69yo)

      Independent Non-Executive Director

      • Tenure: 4.6yrs
      • Compensation: CN¥250.00k
    • Ning Zhu (46yo)

      Independent Non-Executive Director

      • Tenure: 0.8yrs
    • Cong Wang (56yo)

      Non-Executive Director

      • Tenure: 7.3yrs
    • Lijia Dai (48yo)

      Non-Executive Director

      • Tenure: 7.3yrs
    • Langlang Zhou (39yo)

      Non-Executive Director

      • Tenure: 2.8yrs
    • Jing Chun Shao (62yo)

      Independent Non-Executive Director

      • Tenure: 3.2yrs
      • Compensation: CN¥250.00k
    • Zhanfeng Wang (52yo)

      Chairman of the Board

      • Tenure: 1.3yrs
      • Compensation: CN¥1.28m
    • Xin Li (59yo)

      President & Executive Director

      • Tenure: 1.3yrs
      • Compensation: CN¥1.28m

    Company Information

    China Huarong Asset Management Co., Ltd.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: China Huarong Asset Management Co., Ltd.
    • Ticker: 2799
    • Exchange: SEHK
    • Founded: 1999
    • Industry: Asset Management and Custody Banks
    • Sector: Diversified Financials
    • Market Cap: HK$45.321b
    • Shares outstanding: 39.07b
    • Website: https://www.chamc.com.cn

    Number of Employees


    Location

    • China Huarong Asset Management Co., Ltd.
    • No. 8, Financial Street
    • Xicheng District
    • Beijing
    • 100033
    • China

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    2799SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDOct 2015
    CHEDB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEUROct 2015
    2799SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDOct 2015
    2799SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDOct 2015

    Biography

    China Huarong Asset Management Co., Ltd., together with its subsidiaries, provides various financial asset management services. It operates through three segments: Distressed Asset Management, Financial Services, and Asset Management and Investment. The company manages, invests in, and disposes financial and non-financial institution distressed assets, including debt-to-equity swap assets. It is also involved in bankruptcy management, and investment and securities dealing activities; provision of financial bonds issuance, inter-bank borrowing and lending, and commercial financing for other financial institutions; asset securitization, financial institutions custody, and closing and liquidation of businesses; consulting and advisory business on finance, investment, legal, and risk management activities; and assets and project evaluation businesses. In addition, the company offers lending services to corporates and individuals, as well as clearing and settlement, financial leasing, securities and futures, fund management and asset management, trust, real estate and industrial investments, and other services, as well as accepts deposits from customers. Further, it provides leasing, futures broking, wealth management, and investment banking services, as well as personal consumption loan. The company operates 31 branches in 30 provinces, autonomous regions, and municipalities in Mainland China, and Hong Kong and Macau. China Huarong Asset Management Co., Ltd. was founded in 1999 and is headquartered in Beijing, the People’s Republic of China. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/28 13:14
    End of Day Share Price2020/01/24 00:00
    Earnings2019/06/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.