\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 009 Bank Of Nanjing Co.Ltd(601009) )
Event:
Bank Of Nanjing Co.Ltd(601009) year to date, the cumulative increase has reached 15.5%, of which the cumulative increase from March 1 to 7 was 6.0%, ranking first among A-share listed banks. In the same period, Shanghai and Shenzhen 300 increased by – 5.0%. The company’s stock price performance recorded good absolute and relative returns at the same time.
Comments:
The “steady growth” policy continues to work, and the market of bank stocks is expected to continue
Monetary and fiscal policies made concerted efforts, and the process of “broadening credit” continued to advance. The 2022 government work report defined the GDP growth target of about 5.5%, emphasizing the need to “strengthen the implementation of prudent monetary policy and expand the scale of new loans”. We judge that the credit supply will switch from “steady increment” to “steady growth” in 2022. It is expected that the scale of new RMB loans will reach 22 trillion, with a growth rate of about 11.5%, which is basically the same as that in 2021. At the same time, the credit supply will “push forward”, which will be roughly implemented in accordance with the rhythm of “4321” throughout the year. It is not ruled out that the new scale in the first quarter increased by nearly trillion year-on-year. This means that there will still be a series of “steady growth” policies in the follow-up to promote the realization of this year’s economic growth target, the process of “wide credit” will continue to be promoted, and the monetary and financial environment will become friendly, which is conducive to the performance of bank stocks.
Real estate regulation has entered the “stable sales” link, and the risks have been mitigated in an orderly manner. Recently, the real estate regulation policy has gradually shifted from supply side correction to demand side stimulation. Some non purchase restricted cities have reduced the down payment ratio. The mortgage interest rates of Guangzhou, Shenzhen, Hangzhou, Suzhou and other cities have been reduced. Zhengzhou, Ningbo and other cities have implemented the policy of “recognizing loans but not houses”. It is expected that the growth rate of real estate sales is expected to stabilize at the bottom of Q2, It helps to slow down the cash flow pressure and credit risk of real estate enterprises and form support for “steady growth”.
Subsequently, the cost control of bank liabilities will be strengthened, and the net interest margin is expected to be stable. Judging from the interest rate spread level of the banking industry in 2022, there is pricing pressure on the asset side this year, and it is expected to continue to strengthen the control of debt cost in the later stage. Strengthening the control of debt cost is very important to stabilize the bank’s Nim and risk prevention and control ability. Recently, the self-discipline mechanism has put forward normative requirements for banks to absorb agreed deposits. The main focus of subsequent debt cost control lies in the “volume and price regulation” of active liabilities, especially the “limit management” of demand deposits such as notice and agreement. It is expected that the bank’s credit yield and deposit cost rate may face a “double drop” pattern, and the interest margin has a stable operation foundation.
Bank Of Nanjing Co.Ltd(601009) features obvious advantages and is expected to obtain more excess returns
Reason 1: Bank Of Nanjing Co.Ltd(601009) is deeply cultivated in Jiangsu, with obvious location advantages and “prosperous supply and demand” of credit supply. China’s regional economic differentiation has further increased after the epidemic. Jiangsu has a high degree of economic recovery. The year-on-year growth rate of GDP in 2021 quickly recovered to 8.6% after the epidemic, ranking fifth in all provinces and cities in China. The regional differentiation of economic growth has also led to the differentiation of the layout of financial resources. In 2021, the year-on-year growth rate of RMB loans of financial institutions in Jiangsu Province was 15.2%, higher than the national 3.6pct, which is the “highland” of the concentration of credit resources at this stage.
Since 2022, the export trade of Jiangsu Province has maintained a high momentum, and the loan supply of manufacturing industry has been rapid. Bank Of Nanjing Co.Ltd(601009) “bathed” in the positive cycle of “rising effective demand – credit expansion – profit release”, the credit supply is “prosperous in both supply and demand”, the interest rate spread is tenacious, and the non-performing rate continues to operate at a low level, with strong performance certainty.
Reason 2: the financial investment business will benefit from the downward dividend of bond interest rate. After two interest rate cuts, the steepness of the yield curve has further deepened since this year. Although the yield of 10Y treasury bonds is basically flat compared with that at the beginning of the year, the yield of 1y treasury bonds has decreased significantly. From January 4 to March 7, the yield of 1y treasury bonds fell by nearly 17bp, while it rose by nearly 16bp in the same period last year. Considering that the company has been deeply engaged in financial market business for a long time and the proportion of financial investment is relatively high, it will significantly benefit from the revaluation of bond asset value caused by the decline of bond market yield, which is expected to obtain better capital gains and support 1q’s non interest income.
Reason 3: the company obtained the controlling equity of Suning consumer finance and added a “new force” to the comprehensive operation. On March 7, the company announced that it planned to acquire 41% equity of Suning Consumer Finance Co., Ltd. (hereinafter referred to as “Suning consumer finance”) through agreement transfer, with a total investment amount of 388 million yuan. After the completion of this acquisition, the proportion of Suning Xiaojin equity held by the company increased from 15% to 56%. In recent years, the regulatory authorities have gradually tightened the control over the remote exhibition industry of local corporate banks. This Bank Of Nanjing Co.Ltd(601009) obtained the license of consumer finance company, which will help the C-end business break through the restrictions of region and capital layout, and the retail business exhibition space and service customers can be expanded to the whole country. Meanwhile, Bank Of Nanjing Co.Ltd(601009) has previously arranged the cross regional operation of b-end business by holding shares in Jiangsu financial leasing. We believe that the company’s holding of Suning Xiaojin will change its business expansion model to a quasi National Bank.
Earnings forecast, valuation and rating Bank Of Nanjing Co.Ltd(601009) the financial report of 2021 will be released soon, and the performance is expected to grow well. In the future, benefiting from the geographical advantages of Jiangsu, the company’s credit supply has been “prosperous in both supply and demand” since the beginning of the year, the net interest income has a stable operation foundation, and the non interest income is also expected to benefit from the downward dividend of the bond market yield. Superimposed on the fact that the company’s convertible bonds have entered the stock conversion period, the performance in 2022 is expected to continue its strong performance. Since the beginning of the year, the company’s share price has performed well, with a cumulative increase of 15.5% since the beginning of the year, including a cumulative increase of 6.0% from March 1 to 7, ranking first among A-share listed banks. In the same period, Shanghai and Shenzhen 300 increased by – 5.0%. The company’s share price has recorded good absolute and relative returns at the same time. Up to now, the company’s PB valuation (2022e) is only 0.85 times, with outstanding performance price ratio. We maintain the company’s EPS forecast of 1.54/1.81/2.10 yuan from 2021 to 2023, and the corresponding Pb valuation of the current stock price is 0.95/0.85/0.75 times respectively. Considering the strong uncertainty of the company’s performance and the large rebound space of the valuation, we raised it to the “buy” rating.
Risk tip: the downward pressure on the macro economy has increased, the credit extension is less than expected, and the progress of this acquisition is less than expected.
