In the early morning of March 29, China Huarong (02799.HK) released its 2021 results. In 2021, the total revenue is 93.067 billion yuan, a year-on-year increase of 23.4%; the net profit is 1.986 billion yuan, and the profit attributable to shareholders is 378 million yuan, a loss in the same period last year; basic earnings per share are 0.01 yuan.
Specifically, the non-performing assets operating segment realized a total revenue of 51.747 billion yuan, a decrease of 14.3% over the previous year, and a pre-tax profit of 7.206 billion yuan, an increase over the previous year Among them, the acquisition and disposal business has realized income of 8.396 billion yuan, an increase of 1.8% over the previous year; the debt-to-equity swap business has realized income of 6.861 billion yuan, an increase of 140.7% over the previous year. Subsidiaries in the asset management and investment segment reduced losses, achieving a total revenue of 14.378 billion yuan, an increase of 225.0% over the previous year, and a pre-tax loss of 5.244 billion yuan, a decrease of 93.3% over the previous year.
As of the end of 2021, China Huarong’s total assets were 1,568.421 billion yuan, a year-on-year decrease of 4.4%; total liabilities were 1,464.437 billion yuan, a year-on-year decrease of 7.2%. It is worth noting that China Huarong’s distressed debt assets will decrease by 17.2% from 352.954 billion yuan in 2020 to 292.354 billion yuan in 2021, and the income from distressed debt assets will decrease from 34.121 billion yuan in 2020 to 28.077 billion yuan in 2021. 17.7% .
In addition, China Huarong’s asset-liability ratio in 2021 will drop from 96.1% in the previous year to 93.4%, a year-on-year decrease of 2.7 percentage points. The capital adequacy ratios in 2020 and 2021 are 4.16% and 12.95%, respectively. As at 31 December 2020 and 2021, Huarong’s leverage ratio was 1330.00:1 and 14.20:1, respectively.
On March 29, another announcement issued by China Huarong showed that in order to optimize the layout of state-owned financial capital, the Ministry of Finance of China plans to invest 2.407 billion in the company it holds. Domestic shares (accounting for 3% of the company’s total issued shares) increased capital to CITIC Group. After the equity change, the Ministry of Finance will hold 24.76% of the shares; CITIC Group will hold 26.46% of the company’s shares, becoming the company’s largest shareholder. 
In November last year, Huarong issued a non-public offering Domestic shares and non-public issuance of H shares introduce strategic and financial investors, issueNot more than 39.216 billion domestic shares, not more than 1.961 billion H shares, and respectively with investors CITIC Group, China Insurance Investment (before the completion of industrial and commercial registration of China Insurance Rongxin Fund, the agreement signing and other related matters), China Credit Dalian, China Life and ICBC Investment signed a share subscription agreement. And on December 30, 2021, the non-public issuance of domestic shares and H shares will be completed. The number of shares in this non-public issuance is 41.1 billion shares, and the issue price is RMB 1.02 per share. Before the issuance of the shares, the largest shareholder of China Huarong was the Ministry of Finance, with a shareholding ratio of 57.02%. After the issuance is completed, the shareholding ratio of the Ministry of Finance in China Huarong will be diluted to 27.76%, and it will still be the largest shareholder; CITIC Group and China Insurance Rongxin Fund will also be among the important shareholders, with shareholding ratios of 23.46% and 18.08% respectively. %. In addition, China Cinda and ICBC Investment will hold 4.89% and 2.44% respectively.
It is worth mentioning that in 2020, China Huarong postponed the release of its annual report until the end of August 2021, and confirmed asset impairment losses as high as 107.755 billion yuan in 2020 , resulting in a net loss of 106.274 billion yuan for the group and a net loss attributable to shareholders of the company of 102.903 billion yuan.