\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 166 Industrial Bank Co.Ltd(601166) )
Abstract of the annual report: Industrial Bank Co.Ltd(601166) 2021 net profit increased by 24.1% year-on-year. The net income of handling charges increased by 13.2% year-on-year, other non interest income increased by 50.0% year-on-year, and the operating income increased by 8.91% year-on-year. At the end of the year, total assets increased by 8.98% over the beginning of the year, total loans increased by 11.7% and total deposits increased by 6.6%. The year-end non-performing rate was 1.10%, the provision coverage rate was 269%, the allocation loan ratio was 2.96%, and the core tier 1 capital adequacy ratio was 9.81%.
Industrial Bank Co.Ltd(601166) annual report performance increased, roe and ROA improved, and the core tier 1 capital adequacy ratio increased. Non interest income performed well, and the non-performing rate continued to decline. The company has made great efforts to strengthen the off balance sheet, build an investment banking + investment ecosystem, and the income structure has become more diversified. Continue to be optimistic about the investment value of the company and maintain the buy rating.
Key points supporting rating
The profit growth rate was at the forefront of comparable peers, and the non interest income increased brightly
Industrial Bank Co.Ltd(601166) 2021 net profit achieved a year-on-year high growth of 24.1% (vs the first three quarters, + 23.4%), the growth rate remained at the forefront of the stock industry, driving the annual roe and ROA to increase by 1.32 and 0.12 percentage points year-on-year to 13.94% and 1.02% respectively. Among them, the revenue increased by 8.91% year-on-year, which was further improved compared with the first three quarters (+ 8.08%, YoY); Net non interest income / net interest income increased by 26.7% / 1.51% year-on-year respectively. With the improvement of asset quality, the provision continued to contribute positively to the performance. The annual provision for impairment loss was 67 billion yuan, a year-on-year decrease of 8.4 billion yuan, a year-on-year decrease of 11%. Among them, loan and non loan losses decreased by 8% and 18% respectively compared with 2020.
The non-performing rate and generation speed decreased, and the quality of public real estate assets was tracked
The company’s non-performing rate continued to decline, and the rate of non-performing loans improved significantly year-on-year. However, the proportion of concerned loans increased in the second half of the year, which is related to the adjustment of overdue recognition of credit cards and the pressure of real estate. We believe that the asset quality is generally controllable under the conditions of real estate stability maintenance policies and prudent recognition of the company. We suggest tracking the real estate sales data and the dynamics of public real estate asset quality.
Valuation
Considering the pull of the company’s off balance sheet force on the medium income and the improvement of asset quality, we raised the company’s EPS to 4.63/5.30 yuan in 2022 / 2023 (formerly 3.82/4.15 yuan). At present, the stock price corresponds to 0.62/0.55 times of Pb in 2022 / 2023. The valuation is lower than that of comparable peers, so we maintain the buy rating.
Main risks of rating
The economic downturn led to the deterioration of asset quality exceeding expectations and financial supervision exceeding expectations.
