JP Morgan maintains its "overweight" rating on FE HORIZON (03360) with a target price lowered to HK$8.9.

J.P. Morgan released a research report stating that they maintained an "overweight" rating for FE HORIZON (03360), lowered their profit forecast for the fiscal years 2024 and 2025 by 3% and 11% respectively. However, the company has been making efforts to improve shareholder returns, with the target price being reduced by 5% to 8.9 Hong Kong dollars from 9.4 Hong Kong dollars. The company's profit for the fiscal year 2023 was 6.2 billion RMB, a 1% increase, which is basically in line with expectations. The revenue momentum was weaker than expected, but this was offset by the decrease in credit costs. The company issued a dividend of 0.5 Hong Kong dollars per share, with a payout ratio of 31% (excluding dividends from Homex Construction (03390)). The report mentioned that with the support of the recovery in assets and industrial operations, the credit costs of the company have decreased. Management indicated that despite the high degree of uncertainty in the macroeconomic outlook, they have more confidence in controlling asset quality over the next 12 months, thus having greater flexibility in releasing excess reserves and maintaining credit costs at relatively low levels. However, the negative factors are that net interest margins and investment portfolios are slightly shrinking, mainly due to the decrease in leverage on the balance sheet. Management expects that a decrease in net interest margins in 2024 is unavoidable.