As the largest state-owned AMC in PRC, China Huarong Asset Management Co., Ltd. (“China Huarong” or the “Company” , together with its subsidiaries, the “Group”, stock code: 2799), today announced its audited annual results for the year ended 31 December 2016 (the “year under review” ).
In 2016, China Huarong continued 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,high ROE, a complete set of financial licenses and the powerful brand” in PRC.
The company continued to pursue sound growth and development by implementing the principles of “energetic development of the state-owned economy, maximizing the value of state-owned capital, and preserving and increasing the value of state-owned assets”.
In 2016, all operating indicators of China Huarong were sound and stable, the asset size and profitability were continually enlarged and strengthened.
Net profit of the Company amounted to RMB23.11 billion, representing an increase of 36.3%compared to 2015.Total assets as at the end of the year amounted to RMB1,411.97 billion, representing an increase of 62.9% compared to the end of 2015.
The total equity amounted to RMB150.08 billion, representing an increase of 26.3% compared to the end of 2015. The ROAA, ROAE and earnings per share for 2016 were 2.0%, 18.4% and RMB0.50 respectively, creating satisfactory returns to our shareholders.
Mr. Lai Xiaomin, Chairman of China Huarong, remarked, “2016 was an extraordinary year for China Huarong. The Company successfully implemented it ‘three steps in five years’ plan and commenced the implementation of its new five-year development strategy of innovation and transformation. It was also the year during which the Company closely followed the national development strategy, fully implemented the ’13th Five-Year’ development plan, and effectively supported and served the real economy. During the year, China Huarong adhered to the key principle of ‘making progress while maintaining stability, achieving the success against challenges, transforming innovatively, growing moderately and prioritizing profitability’ and conducted its operations innovatively, prudently and efficiently. Our operating results reached a record high with total assets exceeding RMB1 trillion for the first time”.
During the year under review, China Huarong seized the favorable opportunities of the increasing supply in the distressed asset market to further reinforce the expansion of the core business of distressed asset management business.
The revenue from the distressed asset management business, and the asset size of the distressed assets as a proportion of the industry reached a record high.
The total assets of the distressed asset management business as at the end of the year reached RMB628.71 billion, representing an increase of 71.8% compared with the end of 2015, and the total income from the distressed asset management business amounted to RMB50.70 billion, contributing to 53.2% of total income, new investments in the distressed asset management business were RMB348.02 billion, representing an increase of 55.1% compared with 2015.
In 2016, profit before tax of our distressed asset business amounted to RMB15.89 billion, representing an increase of 33.1% compared with 2015, among which, the scale of new investments in the acquisition-and-disposal model increased 83.8% compared with 2015.
New investments in the acquisition-and-restructuring model were RMB241.35 billion, and the revenue reached RMB28.51 billion during the year. The revenue from assets of debt-to-equity swap(s) amounted to RMB3.14 billion in the year.
In 2016, financial services segment overcame unfavorable factors, such as the slowdown of economic growth and market fluctuation.
The total assets of the financial services business reached RMB515.15billion, and total income from financial services amounted to RMB24.45 billion, representing an increase of 39.1% and 4.2% respectively. The pre-tax ROAE remained stable in general.
By leveraging the Group’s multiple financial licenses, the Company 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 the different business life cycles and the entire value chain of clients.
Asset management and investment business is a natural extension and supplement of the distressed asset management business of the Company and serves as an important functional platform for providing the clients with diversified asset management, investment and financing services.
During the year under review, the Company achieved a relatively rapid growth in the asset management and investment business. Total income rose 80.8% from a year earlier to RMB21, 701.7 million. Profit before tax increased by 148.6% to RMB7, 678.7 million. Pre-tax ROAE increased from 22.7% in 2015 to 36.2% in 2016.
As the company’s main platform for international business, Huarong international business performance increased significantly. For the year ended 31 Dec 2016, Huarong international assets amounted to RMB134.87 billion, representing an increase of 123.1% compared with the last year. Profit before tax amounted to RMB4.52 billion, representing an increase of 53.6%.
Moreover, in 2016, the Company continually enhance the domestic and foreign debt issuances. The domestic bonds issuances amounted to RMB35 billion and the foreign bonds issuances amounted to USD6 billion, which were over-subscribed by investors with positive evaluation.
This represented the firm confidence of the international financial market on the development of the Chinese economy, China’s economic policy and the strength of the China Huarong brand.
Meanwhile, China Huarong’s risk management was significantly enhanced and its internal management and compliance management were enhanced continuously. In 2016, the allowance to distressed debt assets ratio and impaired distressed debt assets coverage ratio were 8.8% and 444.35% respectively.
The liquidity was in good condition under effective management. Business operations ran smoothly, the risk indicators met regulatory requirements.
In addition, the company’s brand value and influence at home and abroad have been significantly improved. China Huarong was successfully recognized as one of the “2016 Top 500 Enterprises in China” , “Top 500 Enterprises in China” by Fortune China Magazine, becoming one of the “40 Most Profitable Enterprises in China”.
Besides, China Huarong (stock code: 2799) was enrolled into the Three Major Indexes, being the FTSE China 50, the Hang Seng China H-Financials Index and MSCI China. The Company was also granted the “Best Listed Company” by the Sixth China Securities Golden Bauhinia Awards.
As to the future development, Mr. Lai Xiaomin said, “Looking at 2017, the future is expected to create significant opportunities for the development of the asset management industry. China Huarong will take the strategic advantage of distressed asset management and leveraging the advantage of our comprehensive financial services under our ‘one body, two wings’ framework, grow ourselves as a first-class AMC. We will effectively support real economic development with improved operating results and superior financial services. We will continue to create value to the nation, society, shareholders, customers, corporate clients and employees.” – BusinessNewsAsia.com