China Citic Financial Asset Management's (HKG:2799) high debt levels still pose a significant risk despite the company seeing a notable increase in profits in 2024, S&P Global Ratings said in a Tuesday release.
The financial asset management company's net profit surged to between 9 billion yuan and 10 billion yuan last year, while completing the disposal of a majority stake in China Huarong Financial Leasing.
Despite the jump in profits, the company's leverage should remain elevated at above 12x in the next one to two years, exceeding S&P's threshold for weak capital and earnings assessment.
Some factors contributing to the company's difficult operating conditions include weakening profitability from its core business due to China's economic slowdown and its high property exposure in restructured distressed assets.
Continued improvement in developers' funding, policy support, and a rebound in market confidence should anchor a stabilizing China property market, which could happen in H2 of 2025, S&P said.
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