...June 15, 2022 HONG KONG (S&P Global Ratings) June 15, 2022--China Huarong Asset Management Co. Ltd.'s capitalization will remain constrained after incorporating an estimated loss of about Chinese renminbi (RMB) 1.3 billion from the sale of its bank subsidiary. The loss will temporarily weigh on China Huarong's (###/Negative/A-2) profitability and its already constrained capitalization. Yet we believe its leverage will likely remain within 12x over the next 12 months. This considers our forecast of a recovery in the company's earnings and moderate asset growth over the next two years. The pending sales of its remaining noncore subsidiaries could also help alleviate pressure on capitalization. On June 9, 2022, China Huarong announced the sale of its 40.53% stake in Huarong Xiangjiang Bank Corp. Ltd. to Hunan Chasing and Central Huijin. Despite selling at a small markup over book value, China Huarong is expecting a loss from the disposal after incorporating the impact of taxation based on...
