[ET Net News Agency, 4 June 2018] HSBC Global Research trimmed its target price for
China Huarong AMC (02799) to HK$2.9 from HK$4, and retained its "hold" rating.
The research house said Huarong's share price is down 25.5% from its March high,
underperforming Cinda (01359). New president Wang Zhanfeng was appointed to replace Lai
Xiaomin. New management planned to focus on sustainability and key partnering banks and
rating agencies, although there is still limited clarity on the company's mid-/long-term
strategy.
In terms of segments, HSBC expects Huarong to keep focusing on distressed asset
management (DAM) businesses and the research house expects it to make adjustments to its
financial services (FS) and asset management and investment (AMI) businesses.
HSBC cut its 2018/19 earnings forecasts by 14/20%, and assumed a lower ROE of 11%
(versus previous 11.8%) for DAM. (KL)