\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 926 Bank Of Hangzhou Co.Ltd(600926) )
The transfer price of the shares held by Australia’s largest shareholder (CBA) to Hangzhou was 10.97 yuan, i.e. the transfer price of the shares held by CBA was the first 30 day before the announcement of the transfer agreement. After the transfer, Hangzhou Finance Bureau became the largest shareholder, CBA held 5.56% and promised to lock in for three years. Hangzhou Chengtou and Hangzhou Jiaotou promise that their shares will not be transferred within 5 years.
We believe that the equity transfer of CBA under this agreement is more affected by its own operation and the realization of investment purposes, has nothing to do with Bank Of Hangzhou Co.Ltd(600926) fundamentals, and has limited impact on Bank Of Hangzhou Co.Ltd(600926) strategy and business development. The shareholding of Hangzhou government holding enterprises highlights the municipal government’s confidence in Bank Of Hangzhou Co.Ltd(600926) development and is expected to strengthen cooperation and business support.
Key points supporting rating
The equity change is mainly due to CBA’s own reasons and has limited impact on Bank Of Hangzhou Co.Ltd(600926) operation
The main reasons for the transfer of this Agreement may include: (1) the Commonwealth Bank of Australia has bought and increased its capital for many times from 2005 to 2014 Bank Of Hangzhou Co.Ltd(600926) , and the purchase cost is low Since Bank Of Hangzhou Co.Ltd(600926) was listed, it has achieved excellent performance, leading the valuation industry, and the stock price performance has been continuously positive. CBA’s investment in Bank Of Hangzhou Co.Ltd(600926) has achieved very good returns. (2) Under the impact of the epidemic, the operating pressure of overseas banks has increased, and the funds have been withdrawn to better support the development of local economy. CBA has adjusted its own business strategy and focused more on personal and enterprise business. Since 2018, CBA has successively sold the equity of BOCOM Kanglian, Australian investment exchange and other companies, and its own life business in Indonesia and Australia. (3) CBA still holds 5.56% of the shares, and its board seat is expected to remain.
The admission of new shareholders will help deepen business cooperation
The controlling shareholders of the transferee Hangzhou urban investment and Hangzhou Jiaotou are all Hangzhou municipal government. We believe that the shares of municipal government enterprises, first, contribute to the stability of the ownership structure; Second, demonstrate Hangzhou municipal government’s confidence and recognition in Bank Of Hangzhou Co.Ltd(600926) development, or bring more development opportunities to it; Third, refinancing and other support may be more active Bank Of Hangzhou Co.Ltd(600926) has excellent profit performance and maintains the leading level of urban commercial banks.
Pay attention to the process of convertible bond to equity conversion, and the impact of shareholding reduction on upward elasticity is limited
By the end of the third quarter, the company’s core tier 1 capital adequacy ratio was 8.51%. The company had issued 15 billion yuan of convertible bonds, and the share price continued to exceed the share price. It is suggested to pay attention to the process of the company’s share conversion. Reviewing the impact of several shareholder reduction on the stock price performance last year, in the upward stage of the stock price performance of the industry, even if the reduction of shares, the company still has good flexibility and has excess returns relative to the industry; In the pressure stage of the industry’s share price, the reduction has a negative impact on the share price.
Valuation
We maintain the company’s forecast of EPS of 1.48/1.81 yuan in 2021 / 2022, corresponding to a year-on-year increase in net profit of 23.1% / 21.8%. At present, the corresponding price to book ratio of stock price is 1.22x/1.11x, maintaining the buy rating.
Main risks of rating
The deterioration of asset quality caused by economic downturn exceeded expectations; Regulatory control exceeded expectations.
