Industrial Bank Co.Ltd(601166) (601166)
For high-quality banks with the highest cost performance, the promotion of investment banking strategy of commercial banks is expected to exceed expectations, and convertible bonds will go to the next city first.
Key investment points
Event: on December 6, 2021, Industrial Bank Co.Ltd(601166) convertible bonds were approved by the CSRC.
The progress of convertible bonds is faster than the market expectation
The approval of convertible bonds means that Industrial Bank Co.Ltd(601166) capital replenishment has made substantial progress. It is expected to be issued at the end of the year or early 2022. On this premise, it is estimated that the trigger price for compulsory redemption of convertible bonds is 32.11 yuan. If 50 billion convertible bonds are converted into shares, it can supplement Industrial Bank Co.Ltd(601166) core tier 1 capital by 0.8pc to 10.36%.
The investment banking strategy of commercial banks is expected to exceed expectations
Industrial Bank Co.Ltd(601166) strategy implementation has entered the comprehensive promotion stage from the drawing sample stage, Xingyin International (securities firm) is expected to straighten out the mechanism and achieve better catalytic strategy implementation than expected. On the one hand, the unique business model has gradually explored a set of playing methods through business accumulation and formed a series of typical cases. In the future, the experience of mature models can be promoted to the whole bank by increasing team training and construction. On the other hand, xingyin international (brokerage) license can open up the investment banking and investment ecosystem and give play to the differentiated competitive advantage of Industrial Bank Co.Ltd(601166) resource integration.
High quality bank with the highest cost performance at present
According to the third quarterly report of 2021, Industrial Bank Co.Ltd(601166) profit growth increased steadily, the medium income was strong, exceeding expectations, and the asset quality was stable and good. 21q1-3 Industrial Bank Co.Ltd(601166) net profit attributable to the parent company was + 23.4% year-on-year, and the profit growth in the joint-stock bank was second only to Ping An; The middle income was + 26.3% year-on-year, ranking first in the stock market. The NPLs of 21q3 Industrial Bank Co.Ltd(601166) have decreased twice for four consecutive quarters, with the NPL amount of 21q3 being – 0.2% month on month and the NPL rate being – 3bp to 1.12% month on month, the best level since 2015. As of the latest, Pb in Industrial Bank Co.Ltd(601166) 21 was 0.64 times and Pb in 22 was 0.57 times. Using the valuation of state-owned banks to buy high-quality stock banks is very cost-effective.
Profit forecast and valuation
For the flagship target of “commercial bank + investment bank”, the strategic promotion is expected to exceed expectations, and the approval of convertible bonds catalyzes the performance of stock price. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will increase by 24.33% / 15.10% / 15.24% year-on-year, corresponding to bps28 RMB 74 / 32.21 / 36.23 shares. The current price corresponds to 0.64/0.57/0.51 times of Pb valuation. Maintain the target price of RMB 33.50, corresponding to pb1.5 in 2021 17x, the current price corresponds to pb0.00 in 2021 64x, 81% of the current price space.
Risk tip: macroeconomic stall and significant exposure of adverse.
