20220422-招银国际-远东宏信-03360.HK-1Q22_review__Stable_and_sound_development_under_the__finance_+_industry__strategy_3页_574kb

Far East Horizon Limited (3360 HK) 1Q22 Review Summary

Core Content

Far East Horizon Limited (FEH) reported stable and sound first-quarter results, driven by the continued growth of its financial business and the rapid development of its industrial operations under the "finance + industry" strategy. The company's operating revenue increased by over 15% year-on-year, while net profits grew by approximately 20% YoY. The non-traditional business operations contributed nearly 40% to the income, reflecting the company's diversified revenue streams. The report reiterates a BUY rating with a target price of HK$12.50, indicating an expected upside of +81.2% from the current price of HK$6.92.

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Key Financial Highlights

Revenue Growth

• FY20A: 29,042 RMB mn
• FY21A: 33,644 RMB mn (+15.8% YoY)
• FY22E: 38,210 RMB mn (+13.6% YoY)
• FY23E: 43,649 RMB mn (+14.2% YoY)
• FY24E: 48,301 RMB mn (+10.7% YoY)

Net Profit Growth

• FY20A: 4,576 RMB mn
• FY21A: 5,512 RMB mn (+20.5% YoY)
• FY22E: 6,159 RMB mn (+11.7% YoY)
• FY23E: 6,962 RMB mn (+13.0% YoY)
• FY24E: 7,868 RMB mn (+13.0% YoY)

Earnings Per Share (EPS)

• FY20A: 1.20 RMB
• FY21A: 1.36 RMB
• FY22E: 1.43 RMB
• FY23E: 1.61 RMB
• FY24E: 1.82 RMB

Valuation Metrics

• P/E (FY22E): 4.0x
• P/B (FY22E): 0.5x
• Yield (FY22E): 6.6%
• ROE (FY22E): 14.2%
• ROA (FY22E): 1.8%
• Net Gearing (FY22E): 80.4%

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Main Operational Businesses

Financial Business

• Interest-Earning Assets (IEA): Continued expansion, contributing to increased interest margins.
• Asset Quality: Maintained stable non-performing assets (NPA) ratio and provision coverage ratio, thanks to prudent risk management.
• Funding Sources: Diversified and lower funding costs from new business deliveries.

Industrial Operations

• Horizon Construction Development (HCD): Achieved rapid YoY growth in revenue and profits, reinforcing FEH's position as an industrial leader.
• Horizon Healthcare: Demonstrated steady growth despite the challenges posed by the pandemic.
• Future Outlook: Expected strong growth momentum to continue throughout FY22, supported by improved asset scale and operational efficiency.

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Shareholding Structure

• Sinochem Group: 20.66%
• Kong Fanxing (CEO): 16.79%
• JPMorgan Chase & Co.: 9.41%

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Share Performance

• 1-month: +4.0% (Absolute) / +6.4% (Relative)
• 3-months: +0.1% (Absolute) / +19.3% (Relative)
• 6-months: -7.8% (Absolute) / +15.0% (Relative)

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Market Cap and Trading Data

• Market Cap (HK$ mn): 29,772
• Average 3-month Turnover (HK$ mn): 24.21
• 52-week High/Low (HK$): 9.31 / 5.78

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Analysts and Contact Information

• Analysts: Gigi Chen, CFA; Nika Ma
• Contact Details:
  • Gigi Chen: (852) 3916 3739 | gigichen@cmbi.com.hk
  • Nika Ma: (852) 3916 0805 | nikama@cmbi.com.hk

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CMBIGM Ratings

• Stock Ratings:

  • BUY: Potential return of over 15% over next 12 months
  • HOLD: Potential return of +15% to -10%
  • SELL: Potential loss of over 10%
  • NOT RATED: No rating provided

• Industry Outlook:

  • OUTPERFORM: Expected to outperform the market
  • MARKET-PERFORM: Expected to perform in-line with the market
  • UNDERPERFORM: Expected to underperform the market

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Important Disclosures

• CMBIGM does not provide individually tailored investment advice.
• The report is for informational purposes only and not an offer to buy or sell any security.
• The value of investments is uncertain and may fluctuate.
• CMBIGM may have conflicts of interest and is not liable for any loss or damage arising from reliance on the report.
• The report is intended for specific recipients in the UK, US, and Singapore and may not be distributed to others without consent.