Far East Horizon’s 1H26 attributable net profit (NP) was RMB2,222mn (+2.68% YoY). Revenue from the financial and consulting segment reached RMB12,165mn (+9.69% YoY), while net interest-earning assets at period-end amounted to RMB282,472mn (+3.83% vs end-2025). Asset quality remained broadly stable, with the NPL ratio at 0.99%, down by 0.04pp from end-2025. The net interest margin was 5.04%, up by 0.98pp YoY. Inclusive finance expanded rapidly, with period-end interest-earning assets reaching RMB35,634mn (+26.5% vs end-2025) and interest income reaching RMB2,710mn (+86.75% YoY). Industrial operations were still under pressure: revenue from Horizon Construction declined by 7.49% YoY, while overseas revenue and net profit increased by 54.7% and 38.4%, respectively; revenue and net profit from Horizon Healthcare declined by 6.48% and 74.29%, respectively. The company declared an interim dividend of HKD0.25/share for 1H26 and indicated that it is to maintain generous shareholder returns for the full year. Maintain BUY, given the improvement in its financial business and sustainable dividend policy.
The 1H26 DPS was HKD0.25. The company expects to maintain generous shareholder returns for the full year, with future dividend payments supported by a stable foundation and potential upside. Considering the steady development of the financial business, we slightly raise our 2026/2027/2028 attributable NP forecasts by 1/1/1% to RMB4.0/4.2/4.3bn, and maintain our DCF-based target price of HKD8.90 (CoE: 13.3%, previous: 15.79%).