Highlights Review & focus next week – important news last week: 1) on behalf of the State Council, Li Keqiang made a government work report to the fifth session of the 13th National People’s Congress. The report set the economic growth target of about 5.5% in 2022. The report stressed the need to give full play to the dual functions of the total amount and structure of monetary policy tools, and called for “expanding the scale of new loans”, Keep the growth rate of money supply and social financing basically match the nominal economic growth. In terms of real estate, the report proposes to “explore a new development model” and “implement policies for the city to promote the virtuous circle and healthy development of the real estate industry”. 2) The CBRC and the Central Bank jointly issued the notice on strengthening new citizens’ financial services, supporting and encouraging banking and insurance institutions to improve the availability and convenience of new citizens’ financial services and do a good job in new citizens’ financial services. 3) The State Information Office held a press conference on promoting a virtuous cycle of economy and finance and high-quality development. At the conference, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, focused on reviewing the work of the banking industry in 2021 and looking forward to the key work direction in 2022. Announcements of important companies: Bank Of Chongqing Co.Ltd(601963) , Bank Of Shanghai Co.Ltd(601229) release the performance express of 2021 Bank Of Chongqing Co.Ltd(601963) 13 billion A-share convertible bond project was approved by the issuance and Examination Committee Bank Of Shanghai Co.Ltd(601229) wealth management sub branch is approved to start business Bank Of Chengdu Co.Ltd(601838) 8 billion convertible bonds were successfully issued. Next week’s focus: the National Bureau of statistics will release February price statistics on Wednesday, the central bank will release February financial data on Thursday, and the European Central Bank will announce the interest rate resolution.
Market and valuation review – the excess return market of banks continued last week. (1) In the last week, the Shenwan bank index rose 0.03%, while the Shanghai and Shenzhen 300 index fell 1.68% in the same period. The banking sector outperformed the Shanghai and Shenzhen 300 index by 171bps, ranking 10th among 31 Shenwan level industries; (2) Among the sub sectors, urban commercial banks performed the best, with the index rising 2.13%; The performance of stock banks was the worst, with the index falling 1.43%; (3) In terms of individual stocks, the top three gainers are Bank Of Nanjing Co.Ltd(601009) (5.40%), Bank Of Chongqing Co.Ltd(601963) (5.34%), Bank Of Suzhou Co.Ltd(002966) (4.80%). The top gainers are Bank of Lanzhou (- 6.26%), Ping An Bank Co.Ltd(000001) (- 3.58%), China Merchants Bank Co.Ltd(600036) (- 2.23%). The valuation of bank stocks is still at an all-time low. Over the weekend, the overall Pb of the banking sector was 0.63 times and the CSI 300 component stocks were 1.58 times. From the deviation degree of the long-term trend, the valuation of the banking sector was deeply undervalued compared with the CSI 300 component stocks.
Last week, the interest rate fell and the exchange rate remained liquid. The 7-day repo rate in the inter-bank market decreased by 41bps to 4.41%, the overnight Shibor rate decreased by 32.9bps to 1.90%, and the 7-day Shibor rate decreased by 27.4bps to 2.05%. The central bank did not conduct MLF operation last week. In terms of exchange rate, the US dollar against RMB (CFETS) closed at 6.3210 last weekend, up 68 points from the previous weekend; The US dollar closed at 6.3267 against the offshore RMB, up 158 points from the previous weekend; The offshore / onshore RMB spread decreased by 90 points to – 57 points.
Investment proposal and investment object
The government work report sets the GDP growth target of about 5.5% in 2022, and the steady growth target is clear. Considering the pressure of the current economic environment outside China, it can be predicted that more steady growth policies are expected to continue in 22 years to help improve economic expectations. At present, the static Pb valuation level of the sector is only 0.63x, which is still at a historical low. Under the background of the steady growth policy, we are optimistic about the opportunity to repair the valuation of the sector and continue to maintain the “optimistic” rating of the industry.
In terms of individual stocks, it is suggested to pay attention to: 1) value targets with excellent historical profitability and leading asset quality represented by China Merchants Bank Co.Ltd(600036) ( China Merchants Bank Co.Ltd(600036) , Unrated) and Bank Of Ningbo Co.Ltd(002142) ( Bank Of Ningbo Co.Ltd(002142) , Unrated); 2) Undervalued targets represented by Industrial Bank Co.Ltd(601166) ( Industrial Bank Co.Ltd(601166) , not rated) and Postal Savings Bank Of China Co.Ltd(601658) ( Postal Savings Bank Of China Co.Ltd(601658) , not rated); 3) Represented by Shanghai Rural Commercial Bank Co.Ltd(601825) ( Shanghai Rural Commercial Bank Co.Ltd(601825) , not rated), Bank Of Chengdu Co.Ltd(601838) ( Bank Of Chengdu Co.Ltd(601838) , not rated), Bank Of Nanjing Co.Ltd(601009) ( Bank Of Nanjing Co.Ltd(601009) , not rated)), urban rural commercial banks with strong regional economic advantages.
Risk tips
The economic downturn exceeded expectations, resulting in higher than expected pressure on the asset quality of the industry.
The liquidity risk of real estate enterprises continues to spread, disturbing the asset quality of banks.
The strength of financial supervision rose more than expected.
