Headquartered in Haikou, Hainan Province, Hainan Haide Equity Investment Fund Management Co., Ltd. (hereinafter referred to as "Haide Equity") is a private equity fund management company approved by the China Securities Investment Fund Association. With a registered capital of 200 million yuan, the company is mainly engaged in the management of private equity funds, focusing on the investment and management of non-performing assets. In recent years, Haide Equity has actively expanded into the field of non-performing assets, leveraging its professional advantages and market opportunities. The company has established a comprehensive non-performing asset investment and management system, integrating resources from various sectors to form a unique business model. This strategic move not only enhances Haide Equity's market competitiveness but also contributes to the optimization of the financial market environment. Haide Equity's foray into non-performing assets is a significant step in its strategic development. By focusing on this high-potential market, the company aims to achieve sustainable growth and create long-term value for its investors.
On a certain date, Haide Co., Ltd. (Hainan Haide Capital Management Co., Ltd.) released its quarterly report, showing a significant decline in key operating indicators. This marks another dip after the company's mid-year report for the current year indicated a downward trend. What changes have occurred in the distressed asset market? Does the fluctuation in Haide Co., Ltd.'s indicators carry deeper implications?
Profitability Weakening? As the only listed company in the domestic securities market primarily engaged in the business of non-performing asset management (), Haide Co., Ltd. has seen its total profit continuously rise on an annual basis since the start of the year. In 2017: 0.22 billion yuan; in 2018: 0.35 billion yuan; in 2019: 0.51 billion yuan; in 2020: 0.72 billion yuan; in 2021: 1.03 billion yuan. From 2017 to the third quarter of 2021, Haide Co., Ltd.'s total profit also reached 1.42 billion yuan. However, while its performance has been on a steady rise, signs of weakening profitability seem to have emerged in this year's financial report. The 2021 Q3 report shows that during the reporting period, Haide Co., Ltd.'s total operating revenue was 2.03 billion yuan, a year-on-year decrease of 19.7%; the total profit reached 1.03 billion yuan, a year-on-year decrease of 19.7%; and the net profit attributable to the parent company was 0.72 billion yuan, a year-on-year decrease of 20.3%. Looking at Haide Co., Ltd.'s 2021 half-year report, the total operating revenue was 3.03 billion yuan, a year-on-year increase of 10.3%; the total profit reached 1.51 billion yuan, a year-on-year decrease of 10.3%; and the net profit attributable to the parent company was 1.03 billion yuan, a year-on-year decrease of 10.3% (net profit attributable to the parent company after deducting non-recurring gains and losses increased by 10.3%). In terms of earnings per share (EPS), the 2021 half-year report showed a year-on-year decrease of 10.3%; the 2021 Q3 report showed a year-on-year decrease of 10.3%. Additionally, the total profit for the third quarter of 2021 was approximately 0.51 billion yuan, ranking as the second lowest among all quarters since 2017, only higher than the approximately 0.35 billion yuan in the first quarter of 2017 and the approximately 0.22 billion yuan in the first quarter of 2018.
The significant changes in financial data in the quarterly report on non-performing assets were not extensively explained by Haide Co., Ltd., but some explanations for the data changes were provided in the financial statements. For example, as of the date, Haide Co., Ltd.'s cash and cash equivalents decreased from RMB 1 billion at the end of the year to RMB 10 million, a decrease of 10%; its trading financial assets increased from RMB 1 billion to RMB 1.1 billion, an increase of 10%; and its accounts receivable increased from RMB 1.1 billion to RMB 1.2 billion, an increase of 9.09%. Haide Co., Ltd. explained that these changes in data were related to the increased investment and disposal efforts in non-performing assets. Comparing the mid-year report—as of the date, the net cash flow from operating activities decreased from RMB 1.1 billion to RMB 1 billion compared to the same period last year, a decrease of 9.09%; as of the date, the net cash flow from operating activities increased from -RMB 1.1 billion to RMB 1 billion compared to the same period last year, an increase of 190.91%. These significant changes in data were also due to Haide Co., Ltd.'s increased investment and disposal in non-performing assets. In other words, Haide Co., Ltd. is telling us that it is making significant investments and actively trading, with its steps into non-performing assets growing larger. According to the mid-year report, the proportion of non-performing asset disposal in Haide Co., Ltd.'s revenue increased from 10% in the same period last year to 11%, a growth of 10%. The financial report also showed a set of favorable figures—Haide Co., Ltd.'s operating costs decreased by 10% as of the date and by -10% as of the date. Haide Co., Ltd. stated that this was due to the decrease in disposal costs for individual loan non-performing assets during the reporting period.
Challenges and Opportunities: Individual Loan Non-Performing Asset Disposition is a Key Focus Area for Haide Co., Ltd. In its mid-year report, Haide Co., Ltd. analyzed that with the further opening of the non-performing individual loan market and the digital centralized disposition through the Yindeng Center, a nationwide disposition network based on big data and technology has been formed. More specialized platforms have improved efficiency, reduced costs, and strengthened cooperation. Haide Co., Ltd. has already connected with the People's Bank of China's credit system and is expanding its market share in the non-performing individual loan market. In the mid-year report, Haide Co., Ltd. also detailed its understanding of the current non-performing asset market environment and its own strategy. Haide Co., Ltd. believes that the current non-performing asset market faces three major benefits: national policy support, a huge market during economic transformation (trillion-dollar distressed asset market), and the emergence of a new blue ocean in the non-performing individual loan market. At the same time, Haide Co., Ltd. itself also faces good development opportunities: increasing asset distress, a buyer's market becoming stronger, better integration of its model with the market, and advantages emerging in some areas, and technological empowerment allowing the company to seize new opportunities in the non-performing individual loan market. Haide Co., Ltd. has strategically positioned itself around market opportunities, with major sectors including: energy (such as coal mines), with distressed asset project balances of . billion yuan; listed companies, with distressed asset project balances of . billion yuan and multiple reserve projects in progress; special opportunity areas, with project balances of . billion yuan; commercial real estate, with distressed asset project balances of . billion yuan, distributed in cities like Beijing and Chengdu; and technology-driven non-performing individual loan asset management business, establishing a " + judicial, telephone, mediation" disposition platform, forming a "asset acquisition + back-end disposition" capability in technology-driven non-performing individual loan asset management, "gaining a first-mover advantage in the non-performing individual loan asset management field". From Haide Co., Ltd.'s business composition, it is clear that it has heavily invested in traditional non-performing asset areas. While seizing industry opportunities, Haide Co., Ltd. will inevitably face pressure from the downturn in the relevant industry environment, which is another reminder of the fluctuations in financial indicators.
