Guosen Securities Co.,Ltd. has published a research report initiating coverage of CITIC FAMC (02799) with a "neutral" rating. The firm projects the company's net profit attributable to ordinary shareholders at 10.4/10.9/11.0 billion yuan for 2025-2027, representing year-on-year growth of 8.5%/4.1%/1.1% respectively. EPS is expected to be 0.13/0.14/0.14 yuan, corresponding to PE ratios of 7.6/7.3/7.3 times and PB ratios of 1.70/1.38/1.16 times. Based on comprehensive absolute and relative valuations, the fair stock price is estimated at HK$1.16-1.28.

**Revenue and Net Profit Both Increased in First Half** CITIC FAMC achieved operating revenue (including performance of associates and joint ventures) of 40.2 billion yuan in the first half of 2025, up 19.9% year-on-year. Net profit from continuing operations reached 5.5 billion yuan, up 19.7% year-on-year. Net profit attributable to ordinary shareholders of the parent company was 6.2 billion yuan, up 15.7% year-on-year. The annualized ROE for the first half was 21.1%, with ROA at 1.1%.

**Asset Scale Showed Modest Growth from Year-end** The company's total assets reached 1.01 trillion yuan at the end of Q2 2025, up 2.7% from year-end but down 4.2% year-on-year. By business segment, total assets in the non-performing assets business segment increased 2.7% from year-end, while assets in the asset management and investment segment grew 1.6%. During the first half, assets in acquisition and disposal business, distressed asset revitalization business, and equity business increased from year-end, while acquisition and restructuring business assets contracted, mainly due to the company's proactive adjustment of asset structure and continued reduction of acquisition and restructuring business asset scale.

**NPL Business Segment Revenue Growth, Asset Management and Investment Segment Revenue Decline** From a business segment perspective, the non-performing assets business segment revenue increased 58.3% year-on-year in the first half, mainly benefiting from approximately 21.3 billion yuan in revenue recognized from investments in Bank of China and China Everbright Bank. Revenue from the asset management and investment segment decreased 85.1% year-on-year, with its share in total revenue before group elimination falling to 5.6%. Within the NPL segment, acquisition and disposal business revenue and acquisition and restructuring business revenue declined year-on-year, while distressed asset revitalization business and equity business revenue increased year-on-year.

**Credit Costs Rose Year-on-Year, Enhancing Risk Resilience** Using "asset impairment losses/opening balance of debt instruments measured at amortized cost," the calculated credit cost ratio for the first half was 15.3%, up significantly year-on-year. Looking at the breakdown of asset impairment losses, the increase in credit costs was mainly due to increased credit impairment of debt instruments measured at amortized cost. The substantial provision for impairment enhanced the company's risk resilience. As of the end of June 2025, the overall provision coverage ratio for debt instruments measured at amortized cost and debt instruments measured at fair value through other comprehensive income reached 270%, up 44 percentage points from year-end.

**Risk Warnings:** Valuation risks, profit forecast risks, financial risks, market risks, etc.