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Nomura lowers China Huarong (02799) to HK$3.13

  Nomura lowered its target price for China Huarong 
Asset Management (02799) to HK$3.13 from HK$3.45, and downgraded its rating to "reduce"
from "neutral".
  The research house said Huarong's earnings growth eased from 20% y-y in 1H 2017 to 12% 
in FY2017, with fair value gains from distressed assets (+21%) and commissions (+1%) 
turning weaker, while expenses and provisions continued to gain momentum (+38%).
  While ROE was largely stable at 18%, ROA declined from 1.7% in FY2016 to 1.3% according
to Nomura's calculations. It expects Huarong's funding cost to pick up a moderate 25bp for
its loans and bond financing, or overall +13bp in FY2018 to 4.39%. 

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