China Huarong Achieved Strong Results for 1H2017

Total Assets Amounted to RMB1,658.15 Billion
Involved in Constituent Stocks of HS Composite Large Cap & Mid Cap Index

HONG KONG, Aug. 25, 2017 /PRNewswire/ --

Results Highlight 

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The largest 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), announced its unaudited interim results for the six months ended 30 June 2017 (the "period under review").

In the first half of 2017, under the guidelines of supply-side structural reform, China Huarong made full use of their strengths in principal business, distressed asset management and integrated financial services to achieve a synergetic development of three fields, which are distressed asset management, financial services, asset management and investment; continue to maintain the leading position as a large state-owned asset management company "that has the highest value of total assets, strongest profitability, highest profits earned, best return to shareholders, highest total market capitalization, a complete set of financial licenses and the powerful brand" in PRC. The group also further consolidated its sound development tendency of "pouring vitality into a State-owned economy, magnifying functions of state-owned assets, and maintaining or appreciating the values of state-owned assets".

During the period under review, China Huarong's total assets reached RMB1,658.15 billion, representing an increase of 17.4% compared to the end of last year; total equity reached RMB170.06 billion, increased by 13.3% from the end of last year; the Group's total income reached RMB60.81 billion and the net profit amounted to RMB16.40 billion, increased by 52.0% and 27.7% respectively compared to the same period last year. The Group's annualized ROAE was 22.6% and earnings per share amounted to RMB0.34, representing satisfactory returns to shareholders.

Mr. Lai Xiaomin, Chairman of China Huarong, said: "In the first half of 2017, against complicated and ever-changing international environment, the central government, from the perspective of long economic cycle and structural optimization, perfectly grasped the periodical characteristics of economic development, and therefore issued corresponding reform measures, while assuring a healthy and steady development of civil economy. With this, China Huarong, adhering to their motto of 'Innovative, Steady and Healthy' development, complied with the developmental philosophy of 'Innovative Shared, Open, Green and Cordinated' and firmly kept the key factors of 'Advance steadily, live in intensity, improve quality and control risk, and achieve synergetic development' on mind, while focusing on the five primary missions (control aggregate, adjust structure, strengthen the core business, prevent risk, refine classification and improve quality) to push ahead with the work in a manner of innovation, steadiness, healthily and with high-efficiency. Meanwhile, the Group fully exerted its strategic advantages in cross-cycle operation, and continued to strengthen, improve and expand its business, so that its business performance reaches a new record."

The distressed asset management business is the foundation of all the China Huarong product lines and a vital source for their income and profit. China Huarong has seized these favorable opportunities in a consistent basis. From increasing market supplies, and underscoring and strengthening its principal business, in order to keep the developmental orientation in reform and transformation, preserve principal business along with innovation. During period of review, the Group continued to lead the industry of distressed asset management. In the first half of 2017, market share of the Group accounted for 50% of the total. Total income from distressed asset management business was RMB35,277.1 million, representing a significant increase of 72.7% compared to the same period last year, accounting for 58.0% of the total income of the Group; while the balance of acquisition-and-disposal assets increased by 38.7% from the beginning of the year to RMB82.65 billion, income from disposal business was RMB2.25 billion, representing a year-on-year growth of 63.3%. Net gain on DES Assets disposed increased significantly to RMB1.18 Billion, the year-on-year increase rate reached up to 279.2%. The market oriented DES platform, Huarong Ruitong, was set up and projects touched down. Profit before tax from distressed asset management business was RMB14,565.2 million, representing an increase of 50.4% compared to the same period last year, accounting for 66.6% of the total profit before tax of the Group.

By leveraging the Group's multiple financial licenses, the Group provides its clients with flexible, customized and diversified financing channels and financial products through a comprehensive financial services platform composed of Huarong Securities, Huarong Futures, Huarong Financial Leasing, Huarong Xiangjiang Bank and Huarong Consumer Finance. This creates a comprehensive financial service system which covers different business life cycles and the entire industry value chain. During the period under review, total income from financial services business increased by 29.8% to RMB 14,684.0 million, accounting for 24.1% of the total income of the Group, among which, the total income of Huarong Consumer Finance increased from RMB17.0 million in the first half of 2016 to RMB250.1 million in the first half of 2017, representing an increase of 1,371.2%. The total assets of Huarong Consumer Finance amounted to RMB5,824.5 million, representing an increase of 212.8% compared to the end of 2016, the balance of loans was RMB5,382.1 million, representing an increase of 224.5% compared to the end of 2016.

Asset management and investment business is not only a natural extension and supplement of the distressed asset management business of the Group, but also serves as an important platform by providing the clients of the Group with diversified asset management, investment and financing services. During the period under review, total income from asset management and investment business of China Huarong increased by 60.4% compared to the same period of 2016 to RMB14,241.6 million, accounting for 23.4% of the total income of the Group; profit before tax increased by 55.6% to RMB5,330.6 million, accounting for 24.4% of the total profit before tax of the Group. The steady growth of asset management and investment business is mainly due to the advantages on assets, customers and technical knowhow accumulated from the distressed asset management business and financial services business of the Group. As a overseas investment and financing platform, In the first half of 2017, Huarong International took advantage of Hong Kong's developed capital markets and established legal environment, recorded an income of RMB6,993.6 million for the Group. The asset management and investment business of China Huarong includes trust and other asset management business, financial investments, international business and others; it primarily generates commission and fee income, as well as investment income. The Group's asset management and investment business will enhance the overall profitability of its distressed asset management business and improves the business and income structure of the Group.

During the period under review, China Huarong made headway by getting listed on the A-share market, and performed steadily on the H-share market. China Huarong stock has been involved in Constituent Stocks of HS Composite Large Cap & Mid Cap Index, which will take effect on 4 September. After getting selected into FTSE China 50, HS China H-Financials Index, and MSCI China Index, China Huarong stock was again ranked as one of the essential indexes in the Hong Kong stock market, implying that the investors have extensively recognized the Group's value and development potential. In addition, the Group continued improving its ability market value management, for example, it was ranked 90th in "China's Top 500 Listed Enterprises in Market Value" with a market value of RMB102.7 billion.

Besides, in the first half of 2017, China Huarong through its constant efforts in issuing bonds at home and abroad, normalized bond financing, and steered the group towards a bond management entity. China Huarong has been listed into the 11 outstanding bond-issuing companies by National Development and Reform Commission. Meanwhile, it issued bonds three times both at home and abroad, of which, one of its bonds total amount was worth US$2.6 billion, which set a record as the first Chinese-funded institute to issue overseas high-grade perpetual bond and high-grade unsecured bond simultaneously, and the bond value of US$3.4 billion based on the world's S rule set several records in bond issuance of non-banking Chinese-funded financial institutes, which further exemplified the Group's strong brand strength and international influence. In addition, the Group for the first time issued Tier-2 Capital Bond worth RMB10 billion, which attracted several financial institutes to subscribe and effectively replenished the Group's capital funds.

China Huarong lays great emphases on risk control. It also upholds the philosophy of "proactivity, prevention, utilization, solution and principles" to carry out all-around risk control measures, actively implement the central and regulatory authorities on increasing the intensity of financial risk prevention and control requirements, as well as continuously enrich the risk appetite indicator dimension and further strengthen the management of requirement of the risk control, urging the subsidiaries to seriously take, prudently determine and strictly implement the risk appetite. Besides, through the activity of "enterprise management year", the Group focused on source governance and process control and attached importance to risk prevention and efficiency improvement to further strengthen the internal control process and consolidate the risk management foundation.

As to the future development, Mr. Lai Xiaomin said, "It is expected that the factors conducive to stable economic growth will increase in the second half of 2017, and the momentum of global economic growth will be strengthened. China Huarong will capitalize on China's government's demand for financial services in the process of structural reform of the supply side, the implementation of national development strategies, such as the Belt and Road Initiative, fully leverage our professional advantages of distressed asset management and comprehensive financial services businesses, and better maintain financial security and promote economic development. Firstly, we will, based on the main business of distressed asset management, provide services and safeguards for deepening the structural reform of the supply side around the four major financial functions including asset holding, asset restructuring, asset transfer and financial factoring and sticking to the five tasks of 'three eliminations, one reduction and one improvement', that is, 'cutting overcapacity, destocking, deleveraging, reducing cost and shoring up weak growth areas'. Secondly, we will keep abreast of the national development strategy and market demand, continue to increase product and business innovation, coordinate the development of three business segments including 'distressed asset management, financial services, asset management and investment', and strive to enhance the quality and level of service for substantial economy. Thirdly, we will target major risks in the current financial market, pay close attention to the impact of environmental changes such as cutting overcapacity in substantial economy, destocking in real estate, deleveraging in economical sector on our business and actively guard against all types of market and credit risks. Looking forward, we will take the strategic advantage of distressed asset management and strive to grow ourselves as a first-class AMC, create value to the nation, society, shareholders, customers and employees!"

Source: China Huarong Asset Management Co., Ltd.
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