China Huarong’s Shares Drop After Asset Manager Warns of 95% Profit Plunge
Chen Juan
DATE:  Aug 13 2020
/ SOURCE:  Yicai
China Huarong’s Shares Drop After Asset Manager Warns of 95% Profit Plunge China Huarong’s Shares Drop After Asset Manager Warns of 95% Profit Plunge

(Yicai Global) Aug. 13 -- Shares of China Huarong Asset Management, which more than tripled its net profit in the first half of last year, slumped after the financial giant said that its net profit could plummet as much as 95 percent in the first half of this year due to the poor performance of its investments.

China Huarong's stock price [HKG:2799] tumbled 6.12 percent to HK 92 cents (US 12 cents) in the morning session. The all-time high for the shares was CNY3.79 in January 2018 but since then, they have been under selling pressure.

The company's gains could decrease between 90 percent and 95 percent because its income from debt investments, apart from non-performing assets, dropped due to the impacts of the Covid-19 pandemic on capital markets, the Beijing-based firm said in a statement yesterday. The fair value of some assets had fallen amid no advantages of cutting non-core business.

The decline would mean that the firm logs about CNY250 million (USD36.1 million) in net profit in the first half, based on Yicai Global's calculations.

There is more bad news. On Aug. 11, the Tianjin No. 2 Intermediate People's Court held the first public hearing in a case against China Huarong's ex-chairman.

In February 2019, China's highest procuratorial organ charged Lai Xiaomin with bribery, corruption, and bigamy, concluding his six-year career heading one of China's four big bad banks amid the country's war against graft.

Lai received significant benefits in exchange for "aid" and steered the firm to take part in illegal projects, the Supreme People's Procuratorate said earlier. More than CNY104 million of the estimated total sum of CNY1.8 billion (USD259.4 million) has not yet been recovered, based on court documents.

Editor: Emmi Laine

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Keywords:   China Huarong Asset Management Co,Lai Xiaomin