\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 128 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) )
Matters:
Company announcement: from January to February 2022 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) achieved an operating revenue of 1.668 billion yuan, a year-on-year increase of 27.94%; The net profit attributable to ordinary shareholders of the bank was 481 million yuan, a year-on-year increase of 25.64%.
View of Guosen Bank: Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) has excellent performance, and the growth rate of revenue and net profit has reached a new high since 2017. Since the outbreak, the company has continued to deepen the strategy of small and scattered businesses, enhanced the competitiveness of small and micro businesses, and the net interest margin has stabilized and rebounded since the second half of 2021. The company has excellent asset quality and high provision coverage. It is expected that with the continuous deepening of the strategy, the roe center is expected to rise and maintain the “buy” rating.
Comments:
Excellent performance, and the growth rate of revenue and net profit has reached a new high since 2017
Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) 2022: from January to February, the revenue increased by 27.94% year-on-year, 11.67 percentage points higher than the annual growth rate in 2021. In the same period, the growth rate of net profit attributable to the parent company was 25.64%, an increase of 4.51% compared with the annual growth rate in 2021.
Credit expanded rapidly, and the net interest margin continued to rise. At the end of February, the total assets increased by 8.07% compared with the beginning of the year, and the loans increased by 5.80% compared with the beginning of the year. In the first quarter of 2021, total assets increased by 9.95% and loans increased by 5.94% compared with the beginning of the year. From January to February, the growth rate of credit expansion was the same as that in the first quarter of last year, mainly due to the good regional economy and strong credit demand in Jiangsu. After the epidemic, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) returned to the strategy of reducing and dispersing, and the net interest margin began to stabilize and recover after bottoming in the first quarter of 2021. Under the low base, the net interest margin widened significantly year-on-year, resulting in a significant increase in revenue growth.
It is expected that the non-performing recognition will be further increased from January to February, and the provision coverage will be slightly lower but at a high level. The non-performing rate at the end of February was 0.81%, the same as that at the beginning of the year. The ending loan balance was 1.4 billion yuan, an increase of 5.84% over the beginning of the year. We expect that the company has further increased the recognition of non-performing loans. At the end of February, the company’s provision coverage was 520.98%, down 11 percentage points from the beginning of the year, but it was still high and in the forefront of listed banks. We believe that the company’s asset quality is excellent, and the need to further improve the provision coverage decreases. With the continuous deepening of the strategy, it is expected that the roe center is expected to rise.
The company’s strategy of becoming small and scattered has been continuously deepened, and the competitiveness of small and micro businesses has been enhanced
Since the epidemic, the competition in the small and micro credit market has intensified, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) actively responded to it and made major strategic adjustments. First, further small and scattered, and increase the proportion of credit insurance loans; Second, further expand in other places, and set up four pilot areas of Inclusive Finance in 2021 to develop blank areas, which is also to further deepen the strategy of becoming small and scattered; Third, actively explore the mode of business integration and aim to improve per capita production capacity. With the deepening of the company’s small and scattered strategy, the company’s net interest margin began to stabilize and recover, and its competitiveness in the field of small and micro enterprises continued to increase.
Investment suggestion: high performance and maintain the “buy” rating
The competitiveness of small and micro enterprises of the company has been enhanced, the net interest margin has stabilized and rebounded, and the asset quality is excellent. We maintain the forecast of net profit of RMB 2.66/3.20/3.75 billion from 2022 to 2024, with a corresponding increase of 21.7% / 20.4% / 17.1% and EPS of RMB 0.97/1.17/1.37. The dynamic PE corresponding to the current stock price is 7.4x/6.1x/5.2x, and the dynamic Pb is 0.91x/0.82x/0.73x, maintaining the “buy” rating.
Risk tips
The continued weakening of the macroeconomic situation may have an adverse impact on the quality of bank assets.
