\u3000\u3000 Wuxi Rural Commercial Bank Co.Ltd(600908) (600908)
Roe promotion path is clear - revenue should be driven
Judging from the trend of roe in recent five years, Wuxi Rural Commercial Bank Co.Ltd(600908) has a stable performance and is at the leading level among comparable listed peers. Although affected by the epidemic in 2020, the company's roe remained at a high level, slightly decreased by 0.38pct compared with 2019, ranking first among comparable listed peers, showing strong profitability and outstanding operating level. Moreover, we believe that there is still room to improve the profitability of the company, which is mainly due to the great room for the improvement of the company's interest margin business structure. With corporate loans, especially infrastructure loans, the credit structure has a certain suppression on the company's net interest margin. Conversely, the optimization of credit structure will help to improve the profitability of the company. Referring to the supporting effect of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) Pratt & Whitney loan business on the overall net interest margin, Wuxi Rural Commercial Bank Co.Ltd(600908) developing Pratt & Whitney small and micro business will open up new growth space for roe improvement.
Turning to Pratt & Whitney microenterprises, Wuxi Rural Commercial Bank Co.Ltd(600908) is bound to win
First of all, in the context of the current banking macroeconomic downturn, the policy encourages and supports the development of small and micro enterprises. At this time, the development of Pratt & Whitney small and micro businesses can be described as a "time of day". Secondly, Wuxi is the core city in southern Jiangsu, with active private economy and strong credit demand for small and micro enterprises, which is "favorable location". Finally, relying on years of localization and intensive cultivation, the company has formed a strong brand effect and a huge customer base locally. By the end of 21h1, the number of Wuxi Rural Commercial Bank Co.Ltd(600908) citizen cards (including provincial social security cards) was nearly 5.1 million, and the penetration rate reached about 70% of the local permanent population, which is "Renhe". For the construction of Inclusive Finance team, the company also puts forward clear goals. It plans to recruit about 20 people locally in 2022 and set up new teams in three remote branches to recruit 30-40 people. On the premise that the total amount is controllable, mobilize the enthusiasm of customer managers from all dimensions.
A clean balance sheet is the foundation to enhance risk appetite
Benefiting from the good social credit environment and stable operation, the asset quality of the company has maintained a good trend for a long time. By the end of 21q3, the company's non-performing + concern loans accounted for only 1.22%, the lowest level among comparable listed peers. In addition, the company's provision coverage has reached 459.33%, showing a strong risk offsetting ability. On the whole, the company's excellent asset quality has higher security in the current credit environment.
Investment suggestion: develop small and micro enterprises to help roe to a higher level and maintain the "buy" rating
Fali microenterprises can effectively support the company's profitability and continue to maintain its leading edge. At present, the company has firm determination to develop Pratt Whitney microenterprises business and obvious internal and external advantages. At the same time, external capital supplement is on the way to lay a good lead for the expansion of the company's assets. We are optimistic about the company's future performance growth. It is expected that the year-on-year growth rate of net profit attributable to the parent company from 2021 to 2023 will be 19.68%, 15.62% and 15.13% respectively. As of the closing on February 23, 2022, the corresponding Pb (MRQ) of the company's share price is 0.89 times, and we give the company a target pb1.5% for 2022 05 times, corresponding to the target price of 8.61 yuan, maintaining the "buy" rating.
Risk warning: weak macro economy and insufficient effective credit demand; Debt cost optimization is less than expected; The State supports the banking industry to carry out inclusive small and micro businesses, and the horizontal competition intensifies; Credit risk fluctuation.
