Guojin Securities has maintained a "Buy" rating on FE HORIZON (03360). The company's financial operations remain stable, and the contribution from FE HORIZON Construction's overseas business is expected to increase. Projected year-on-year growth rates for net profit attributable to shareholders for 2026-2028 are 4%, 5%, and 5% respectively, with book value per share (BPS) estimated at RMB 10.97, RMB 11.13, and RMB 11.28.
Key points from Guojin Securities' analysis are as follows:
**Performance Overview** On March 11, 2026, FE HORIZON released its annual results for 2025. Total revenue for 2025 was RMB 35.785 billion, a decrease of 5.2% year-on-year, primarily due to a decline in industrial operation revenue. Net profit attributable to shareholders reached RMB 3.889 billion, a slight increase of 0.7% year-on-year. The weighted average return on equity (ROE) was 7.71%, down 0.09 percentage points year-on-year, with overall performance meeting expectations.
**Interest Income** The company's interest income grew 3% year-on-year to RMB 21.807 billion, accounting for 61% of total revenue. 1. **Interest-earning Asset Scale:** The average balance of interest-earning assets saw a modest increase of 1.4% year-on-year to RMB 266.4 billion. Notably, the inclusive finance business expanded steadily, with the scale of interest-earning assets growing 55% year-on-year to RMB 22.5 billion. 2. **Net Interest Spread:** The net interest spread for 2025 increased by 0.39 percentage points year-on-year to 4.39%. This improvement was mainly driven by a 0.12 percentage point rise in the yield on assets to 8.18%, while the funding cost rate decreased by 0.27 percentage points year-on-year, benefiting from interest rate cuts domestically and internationally. 3. **Asset Quality:** The non-performing loan ratio at the end of 2025 was 1.03%, down 0.04 percentage points year-on-year. The "30+ ratio" decreased by 0.08 percentage points year-on-year to 0.82%, and the provision coverage ratio remained stable at 228%, indicating sustained asset quality.
**Industrial Operation Revenue** Revenue from industrial operations decreased by 18% year-on-year, accounting for 37% of total revenue. 1. **FE HORIZON Construction:** Revenue reached RMB 9.359 billion, a decrease of 19% year-on-year, primarily impacted by declining domestic equipment rental prices and a strategic scaling back of materials-related business. Overseas operations showed rapid growth. By the end of 2025, the company operated 562 service outlets globally, including 77 overseas outlets covering seven countries. Overseas business contributed approximately 15% to revenue and about 92% to profit. 2. **FE HORIZON Health:** Revenue was RMB 3.572 billion, down 13% year-on-year. The segment controls 25 hospitals with approximately 10,000 open beds.
**Dividend Payout** An interim dividend of HKD 0.25 per share was declared, with a proposed final dividend of HKD 0.31 per share, resulting in a total dividend of HKD 0.56 per share for the year. This corresponds to a dividend payout ratio of approximately 61%.
**Risk Warning** Potential risks include a significant downturn in the macroeconomy and substantial fluctuations in interest rates.
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