[ET Net News Agency, 28 June 2018] Morgan Stanley cut its target price for China Cinda
Asset Management (01359) to HK$2.98 from HK$3.64, and maintained its "equal-weight"
rating.
The research house noted Cinda's group platform provides more flexible channels to meet
client funding needs, and has a more stable funding base than other non-bank financial
institutions. However, Cinda is still exposed to macro and country risks, particularly
given its focus on the high-yield lending market. It also highlights potential negative
impact from closer regulatory scrutiny on asset management company's business model.
Morgan Stanley believes Cinda will likely see some pullback in less transparent other
financial assets, albeit benefiting from higher market share in distressed asset
management in the near term. It forecasts lower but potentially higher quality revenue and
profit growth trends for Cinda in 2018-2020, as it refocuses more on its core traditional
NPL business and rising opportunities related to corporate restructuring amid financial
cleanup process in China. It believes Cinda may see slower growth in the less transparent
other financial assets, while benefiting in terms of market share and pricing of
traditional NPL business. It believes focusing on distressed asset management is conducive
for long-term development albeit posing challenges to its near-term earnings. (HL)