Credit Suisse lowered its target price for China Huarong Asset Management (02799) to HK$3.5 from HK$3.59, and downgraded its rating to "neutral" from "outperform".
The research house notes all the four catalysts that were helping Huarong through the last couple of years seem to be turning around. In most of these, the Big 4 banks are not affected much. Falling interest rates through 2015-16, and lately, pick-up in exports was helping the credit quality of Huarong's 'restructuring distressed asset' borrowers, especially the private sector exporters. But now the shadow lending rates have gone up. In comparison, bank lending rates have not changed, so bank borrowers are not really affected.
Credit Suisse added Huarong expanded aggressively with asset growth of 60% in 2016, especially its financial investment and asset management business. Its stake in Fullshare (00607) as an instance contributed to such growth but it may incur loss in the future due to price correction.
etnet榮獲HKEX Awards 2023 「最佳表現證券數據供應商」大獎► 了解詳情
