Bank Of Beijing Co.Ltd(601169) (601169)
We believe that Bank Of Beijing Co.Ltd(601169) fundamentals will continue to improve. With the gradual clearing of stock problems, risk control has been continuously improved, and the provision pressure has been continuously relieved. The management continues to promote the improvement of institutional business, retail transformation and characteristic corporate business. In the future, the company’s regional and customer advantages in Beijing and the core economic belt will continue to be activated, and its profitability is expected to continue to improve. At present, the company’s valuation is close to the bottom of the industry, the dividend rate is close to the top of the industry, there is a large room for valuation improvement, and it continues to be optimistic about the company’s value and stock price performance.
The stock problem continued to be cleared, and the risk control was significantly improved. In the past few years, the scale of write off has been large, and the pressure on provision for subsequent stock problems has been greatly relieved. More importantly, the company has improved its risk management for early risk events: strengthening customer access and adjusting the structure of existing customers; The company strengthened the management of “people”, increased systems and processes, improved the risk prevention and control system, and improved the effectiveness of risk management in multiple dimensions. Risk control will be improved, asset quality will continue to improve in the future, and the company’s provision pressure may continue to decline.
Customer base and network advantages cannot be copied. Since 2020, Beijing’s institutional business has been consolidated and strengthened. The company has a good customer base in stock, and the location advantages of the distribution of national core economic belts cannot be copied. The regional advantages of Beijing are particularly prominent. Especially since 2020, the institutional business department has been established, and the advantages of Beijing may continue to be consolidated and strengthened.
Management promotes business improvement and activates customer base. While resolving the stock problem, the company’s management actively promoted the implementation of strategy and business improvement. Promote institutional business, digital transformation, retail promotion and characteristic public relations, and these strategies correspond to the organizational structure, clarify the promotion of departments, and give preference to investment, manpower and incentive. The company clearly puts forward the customer multiplication plan to expand and consolidate the customer base, and gradually stimulate the potential of location and customers.
The company’s valuation is close to the bottom of the industry, with a dividend yield of 6.8%, close to the top of the industry, implying a very pessimistic expectation. Market concerns may mainly stem from whether the stock problem is cleared and whether the profitability can be improved. We believe that: on the one hand, the stock problem will be gradually solved; on the other hand, the company’s operation and management will be gradually improved, and the business improvement will gradually play a role, and the results may appear from next year.
Valuation
Referring to our previous analysis of the company, the stock problem is improved, the provision pressure is relieved, the business improvement promotes the future credit structure adjustment, deposit growth and medium income increase, and gradually improves the profitability of the company. We raised the company’s profit expectation. We predicted that EPS would be 1.11/1.24 yuan in 2021 / 2022. At present, the corresponding price to book ratio of the stock price is 0.43x/0.38x, giving an overweight rating.
Main risks of rating
The downward pressure on real estate and economy exceeded expectations, resulting in the deterioration of asset quality.
