Lanzhou Bank (001227)
The original Lanzhou urban credit cooperative was reorganized, and the equity was decentralized and balanced. 1. On the basis of 55 urban credit cooperatives and one credit union in Lanzhou, Lanzhou bank was established by local finance, legal persons and natural persons through joint-stock reform and asset restructuring. By the end of June 2021, the total assets of the company were 396.269 billion yuan, the shareholders’ equity was 28.016 billion yuan, the balance of loans and advances was 213.992 billion yuan, the total amount of deposits absorbed was 294.185 billion yuan, the non-performing loan ratio was 1.71%, and the provision coverage was 196.70%. 2, Gansu’s one belt, one road and one western region, will further expand the development space of Gansu. Lanzhou bank has regional advantages and strategic opportunities. 3. Rely on geographical advantages and marketing strategy to form regional competitive advantages. The balance of deposits and loans in local and foreign currencies in Gansu Province grew steadily, with network advantages and small and medium-sized positioning. Bank of Lanzhou ranked first in the market share of the banking industry in Gansu Province. 4. The ownership structure of the company is scattered, and the top ten shareholders hold 50.89% in total. By the end of June 2021, there were 5 major shareholders holding 5% or more of the company’s shares, including Lanzhou Finance Bureau, Lanzhou state owned investment and construction group, Huabang holdings, Lanzhou Tianqing real estate and Gansu Shengda.
The company deepens small and micro enterprises, agriculture, rural areas and farmers, and adheres to the market positioning of “serving local, small and medium-sized, private and citizens”. 1. The company’s organizational structure is perfect, and each department performs its own duties. The company has established and improved the organizational structure system of the general meeting of shareholders, the board of directors, the board of supervisors and senior management. The operating management has a separate functional department, inclusive finance department, and the board of directors has a village bank management department. 2. The company has a mature product system and small, medium and micro financial service technology, and multi-party cooperation to promote information sharing and business innovation. Among them, supply chain finance is in a strategic position. 1h21 SME loan balance was 103.918 billion yuan, accounting for 77.41% of public loans. 3. The company actively promoted the strategic transformation of “agriculture, rural areas and farmers” through the construction of rural property right platform and the innovation of “bank support cooperation” mode. In 2020, the balance of agriculture related loans was 33.759 billion yuan, accounting for 17.38% of the bank’s loans.
Strengthen the retail transformation strategy, explore the business model of asset liability business, and put the wealth management business on the right track. 1. The increment of guided loans on the asset side is inclined from the institutional side to the individual side, and personal mortgage loans and consumer loans are the key businesses; The liability side drives the deposit business through “customer layered marketing + improving product system + improving service capability”. 2. Innovative services and business upgrading supported by financial technology are an effective way to effectively promote the development of new retail financial business. Personal mobile banking and Lily life network build a personal online financial service platform. 3. The wealth management business is on track, gradually improve the product system of “Baihe wealth management + e-finance and e-Loan + Baihe Bao + consignment”, and manage customers hierarchically to provide differentiated wealth management service system; The first family trust business was launched in 18 years, and the family wealth management business began to start.
In recent years, profitability has declined slowly, mainly due to the downward drag of interest margin, and non interest and asset pricing have advantages over peers. 1. In recent years, the profitability of Bank of Lanzhou has declined to a certain extent under the superposition of structural adjustment and interest rate. ROA decreased to 0.41% in 1h21 and roe decreased to 5.58% in 1h21. 2. DuPont analysis of profitability: the main drag on the decline of ROA is the narrowing of net interest income and the rise of credit cost, while net non interest income and operating expenses are supported to a certain extent. Compared with the peers, the net interest income is weak, the provision is strong, the net other non interest income has significant advantages over the peers, and the cost end expense is basically the same as the average level of the peers. 3. From the cumulative annualized interest margin, it shows a downward trend and is generally low. From 2019, the overall net interest margin of the company is relatively low among listed urban commercial banks, with 1h21 net interest margin of 1.60%. From the perspective of the separation of negative assets, The asset side loan pricing of the company has significant advantages in comparable urban commercial banks (20-year loan pricing is 6.02%, second only to Bank Of Zhengzhou Co.Ltd(002936) ), but the deposit cost at the liability side is the highest in the industry (20-year deposit cost is 3.28%, which is still 28bp higher than Bank Of Chongqing Co.Ltd(601963) with the second highest deposit cost).
Asset negative structure: the promotion of retail business drives the continuous improvement of asset negative structure. 1. Asset side: the proportion of loans in interest bearing assets and personal loans in loans increased from 49.04% and 23.68% in 2016 to 54.11% and 28.62% in 1h21 respectively. The asset structure continued to be optimized. Compared with peers, the asset structure still has some room for improvement. The proportion of 1h21 loans in interest bearing assets is 48.33% higher than the average of peers, and the proportion of personal loans in loans is 33.01% lower than the average of peers. 2. Further split Loans: corporate loans are mainly loans for manufacturing, construction, real estate and wholesale and retail industries, and credit for leasing and business services is strengthened; Personal loans are mainly mortgages and consumer and operating loans. At present, corporate loans are mainly invested in construction industry, real estate industry, wholesale and retail industry and manufacturing industry. 1h21 construction industry and real estate industry accounted for the highest proportion, and the two industries accounted for 34.41% of public loans for four consecutive years. 2018-1h21 manufacturing loans accounted for 11.15%, 9.02%, 9.87% and 6.37% respectively. 3. Liability side: the growth of deposits slowed down, and the sustained and stable growth of personal deposits played a supporting role. In terms of the proportion of deposits, the absolute value of 1h21 is 63.79%, which is much higher than 33.87% of the average proportion of individual deposits of listed urban commercial banks.
The overall marginal asset quality has improved, and the non-performing pressure is still large. 1. Under the background of stricter recognition of non-performing loans, the non-performing rate and non-performing loan generation rate of Bank of Lanzhou continued to rise from 2016 to 2019, and both decreased in 2020 and 1h21. The non-performing rate of 1h21 company is 1.71%, and the generation of non-performing products is 1.53%. 2. The proportion of concerned loans continues to rise, and the non-performing pressure increases: the proportion of concerned loans in loans continues to rise from 3.79% in 2018 to 6.53% in 2020, and 1h21 drops to 5.16%. The non-performing pressure is still large in the future. 3. The provision coverage rate increased from 176.08% in 2017 to 18 percentage points to 195.70% of 1h21, and the safety margin continued to improve.
Investment suggestion: the company is deeply engaged in Lanzhou and its surrounding areas, and the ownership structure is decentralized and balanced. The company deepens small and micro enterprises, agriculture, rural areas and farmers, adheres to the market positioning of “serving local, small and medium-sized, private and citizens”, and supply chain finance is in a strategic position; Strengthen the retail transformation strategy, explore the business model of asset liability business, get the wealth management business on track, and continue to develop personal mortgage loans and consumer loans. After deducting the issuance expenses, the net amount of funds raised from this public offering is planned to be used to supplement the capital of 1968333481.41 yuan; According to the announcement, the total issuance cost is 65030408.28 yuan; The number of shares to be issued this time is 569569717. Calculated by (net planned supplementary capital + estimated issuance cost) / issued share capital, the expected issuance price is 3.57 yuan / share, corresponding to 21e / 22epb0.79x/0.91x; pe12.19x/10.89x (pb0.91x/0.82x; pe8.12x / 7.26x) of the company. It is recommended to keep an active follow-up.
Risk tip: the risk of macroeconomic and regional economic deterioration. The risk of insufficient bank capital. Risk of policy changes. The risk that the final issuance does not meet expectations.
