GTHT has released a research report forecasting that FE HORIZON (03360) will see net profit attributable to shareholders rise by 7.9%, 11.3%, and 10.3% year-on-year to 42.0 billion yuan, 46.7 billion yuan, and 51.5 billion yuan for the 2026-2028 period. This corresponds to a book value per share (BVPS) of 11.69 yuan, 12.66 yuan, and 13.73 yuan, respectively. Based on comparisons with peer companies, the firm applies a 0.7x price-to-book (PB) valuation for FE HORIZON in 2026E, which translates to a target price of HK$9.51 at an exchange rate of 1 HKD = 0.86 CNY. The "Outperform" rating has been maintained.

For the first half of 2026, the company reported revenue of 18.039 billion yuan, a 4.1% increase year-on-year. Net profit attributable to ordinary shareholders reached 2.222 billion yuan, up 2.7% from the same period last year. FE HORIZON is progressively building a diversified ecosystem covering finance and industry, driving long-term stable growth through a "triple-pillar" strategic synergy. While maintaining prudent operations, the company prioritizes shareholder returns and upholds a high dividend policy.

The key points from GTHT's report are as follows:

2026 Interim Results: Steady Revenue Growth and a Significant Boost in Pre-Provision Profit

FE HORIZON released its 2026 interim results. In the first half of 2026, the company achieved revenue of 18.039 billion yuan, up 4.1% year-on-year. Pre-provision profit was 5.359 billion yuan, a 24.4% increase. Net profit attributable to ordinary shareholders was 2.222 billion yuan, a 2.7% rise. Within this, the finance and consulting segment reported revenue of 12.165 billion yuan, and segment profit of 2.424 billion yuan, representing year-on-year increases of 10.2% and 16.2%, respectively. The equipment operation segment posted revenue of 4.024 billion yuan, a 7.5% decrease, and a segment profit of 37 million yuan, a 3.1% increase. Share dilution from convertible bonds reduced basic earnings per share to 0.47 yuan.

Asset-Side Growth in Both Volume and Yield, with Inclusive Finance as the Primary Driver

At the end of the period, the net balance of interest-earning assets before provisions stood at 282.472 billion yuan, a 3.8% increase from the start of the year. The inclusive finance balance grew by 26.5% to 35.634 billion yuan, raising its share to 12.62%. This contributed to a 30 basis point (bp) year-on-year increase in the average asset yield to 8.38%. The non-performing loan (NPL) ratio decreased by 4 bps to 0.99%, while the over-30-day delinquency rate fell to 0.81%. For inclusive finance, all loans overdue by 30 days are fully written off, with 1.051 billion yuan written off in the first half, accelerating the cleanup of legacy risks.

Notable Liability-Side Cost Reduction Provides the Strongest Support for Profit Improvement

The average cost of interest-bearing liabilities for the finance and consulting segment fell by 68 bps year-on-year to 3.34%, leading to a 15.3% reduction in interest expenses. Combined with the 30 bp increase in asset yield, the net interest spread widened by 98 bps to 5.04%. The total interest-bearing financing scale remained broadly stable, with the proportions of domestic, renminbi, and direct financing rising to 79.62%, 79.83%, and 31.51%, respectively, indicating a continued improvement in the financing structure.

Significant Improvement in Operational Efficiency for Hongshi Construction, with Gross Margin Recovery Laying the Foundation for Future Profit Release

The equipment operation segment reported revenue of 4.024 billion yuan, a 7.5% year-on-year decline, but its gross margin improved by 6.22 percentage points to 27.84%. Net profit increased by 3.1% year-on-year to 37 million yuan. The company has expanded its overseas network to 77 locations across 10 countries, deepening its global footprint. If rental rates and equipment utilization stabilize, the segment's earnings potential could be further unlocked.

Continued Stable Dividend Distribution Enhances Shareholder Returns, Maintaining a High Dividend Yield

The company declared an interim dividend of HK$0.25 per share, unchanged from the first half of 2025. Risks include downward pressure from the macroeconomic environment, stricter-than-expected regulatory oversight, and international geopolitical risks.