\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 128 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) )
Event: on March 30, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released its annual report for 2021. In 2021, it realized an operating revenue of 7.655 billion yuan, a year-on-year increase of 16.31%, and a net profit attributable to the parent company of 2.188 billion yuan, a year-on-year increase of 21.34%.
Comments:
Revenue and profit increased. In 2021, the year-on-year growth rates of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) revenue and net profit attributable to parent company were 16.31% and 21.34% respectively, which were 3.35 and 2.30pct higher than that of 1-3q respectively. In Q4 of 2021, the growth rates of single quarter revenue and net profit attributable to parent company were 26.78% and 29.2% respectively, with a month on month increase of 2.4 and 4.4pct respectively. From the perspective of performance splitting: (1) the contribution of scale to performance in 2021 is as high as 46.52%, an increase of 2.67pct compared with the first three quarters. The drag margin of interest margin on performance improved by – 9.08% in 2021, an improvement of 10.46pct compared with the first three quarters. (2) The contribution of non interest income to the performance was 17.7%, a slight decline of 0.7pct compared with the first three quarters. (3) The contribution of provision to performance was – 12.53%, down 10.74pct from the first three quarters, mainly related to the company’s increased provision in the fourth quarter. Loans are “prosperous in both supply and demand”, and personal business loans are further strengthened. At the end of 2021, the loan growth rate was 23.6%, a slight decrease of 0.4 percentage points compared with 1-3q, and the overall growth rate was still at a high level. Although the downward pressure on the macro economy increased in the second half of last year, and there was a sporadic epidemic in Jiangsu, Changshu was not significantly affected, and the credit supply was “prosperous in both supply and demand”. In terms of credit structure, in the fourth quarter, the company’s credit resources further tilted to the retail end, focusing on increasing the layout of personal operating loans. In the fourth quarter, retail loans increased by 4.087 billion, a year-on-year increase of 2.55 billion, while corporate loans increased by – 2.37 billion, a year-on-year decrease of about 1 billion. In the second half of 2021, personal operating loans increased by 9.92 billion, an increase of 4.14 billion year-on-year. By the end of 2021, the company’s personal operating loans accounted for nearly 40%, ranking first among listed banks in Jiangsu.
The intensity of exhibition in other places has been gradually increased. Since the second half of 2021, the company has gradually adjusted the regional allocation structure of credit, which is shown as follows: first, the credit supply in very familiar areas has increased. In the second half of 2021, new loans in Jiangsu province outside Changshu increased by 9.267 billion, a year-on-year increase of 2.893 billion, accounting for 55.14% at the end of 2021, an increase of about 2 percentage points over the end of the first half of the year. Second, the credit supply of rural banks has been strengthened. In the second half of 2021, rural banks outside Jiangsu increased credit by 2.645 billion, an increase of 1.296 billion year-on-year. It can be seen that with the saturation of business in Suzhou and Changshu and the increasingly fierce competition pattern, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) has begun to strengthen the exhibition industry in other places, increased the investment of credit insurance loans through appropriate credit sinking, and continued to highlight the advantage of differentiated “track” in the field of Pratt & Whitney microenterprises.
Interest rate spreads continued to improve, and loan pricing rose steadily. In 2021, the growth rate of the company’s net interest income was 12.2%, an increase of 4.1pct compared with the first three quarters. The interest margin was 3.06%, an increase of 4bp compared with the first half of the year. The loan yield was 6.24%, an increase of 2bp over the first half of the year. That is, the “simultaneous rise in volume and price” of the company’s credit has laid a good foundation for performance growth. Especially in the environment of macroeconomic pressure and insufficient effective demand in the second half of 2021, the interest rate of newly issued loans has a certain downward pressure. However, through the further adjustment of credit supply structure and regional structure, the company has made the overall loan yield and interest margin show a stable and positive trend.
The non-performing rate continued to operate at a low level, and the provision coverage was further thickened. The non-performing loan ratio at the end of 2021 was 0.81%, unchanged from the end of the third quarter and remained at a low level. The non-performing + concern rate was 1.7%, a slight increase of 1bp compared with the end of the third quarter. The provision coverage rate was 531.82%, about 10 PCT higher than that at the end of the third quarter. In the fourth quarter, the credit impairment loss increased by 530 million, an increase of 215 million year-on-year. In the case of more provision for impairment, the growth rate of the company’s single quarter net profit in the fourth quarter was still more than 4 percentage points higher than that in the third quarter, indicating that the company’s performance growth was relatively excellent.
High credit growth did not change, and the capital adequacy ratio was further improved. By the end of 2021, the company’s core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio were 10.21%, 10.26% and 11.95% respectively, up 0.09, 0.09 and 0.07pct respectively compared with the end of the third quarter. Despite the rapid growth of corporate credit, the credit structure dominated by personal operating loans, coupled with better profit growth, has further improved the safety margin of the company’s capital adequacy ratio and laid the foundation for the subsequent high growth of credit. On September 3, 2021, the company’s general meeting of shareholders deliberated and approved the 6 billion convertible bond issuance plan. If the subsequent convertible bond issuance is successfully implemented, it will help to further thicken the core Tier-1 capital.
Earnings forecast, valuation and rating Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) has been deeply engaged in Pratt Whitney small and micro market for a long time, focusing on retail and small and micro business. We continue to be optimistic about the excellent performance of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) :
First, the company has a clear strategic positioning, adheres to “small and scattered”, and has begun to strengthen the layout of credit insurance business in recent years, which is conducive to improving the yield of credit assets and realizing the continuous improvement of NIM. The management of the company is stable. Chairman Zhuang Guangqiang and President Xue Wen are excellent leading cadres trained by Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) and can lead the bank’s strategy to a stable and far-reaching future. Second, the location advantage is obvious. More than 85% of the company’s credit is invested in Jiangsu Province, and the asset quality is strongly guaranteed. The new non-performing loans to the public were basically cleared, the non-performing rate of retail loans remained below 0.8%, the non-performing rate of personal operating loans remained below 1%, and the non-performing rate is expected to remain at a low level in the follow-up. At the same time, in recent years, the company began to increase the investment of credit insurance business and expand the differentiated customer base through credit sinking, which helps to maintain the steady and good interest margin.
Third, the company’s Pratt & Whitney small and micro business has a deep history, the cross verification of risk control model data is relatively mature, and the customer portrait is accurate. With mature IPC and credit factory risk control technology and strong customer manager team, the company has realized the “high growth and low non-performing” of micro loan business.
Fourth, a unique rural bank model. In recent years, the regulatory authorities have further strengthened the supervision of the remote operation of local corporate banks, while Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) unique investment management Rural Bank model has opened up space for its remote expansion, and the contribution of rural banks in the group sector is also increasing year by year. At the same time, the overall quality of micro bank loans is controllable, and the overall quality of micro bank assets is also ensured.
Fifth, in March and September, the company issued the announcement on the main business conditions from January to February 2022. From January to February of 22, the year-on-year growth rate of the company’s revenue and net profit attributable to the parent company was as high as 27.94% and 25.64% respectively, which was further better than that in 2021. From January to February, the new loans increased by 9.503 billion, an increase of 1.678 billion over Q1 in 2021. Under the condition of generally poor credit supply prosperity of small and medium-sized banks this year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) still maintained the “prosperity of supply and demand” of credit supply. According to the performance forecast for the first quarter of 2022 released on March 28, the year-on-year growth rates of 1q22 company’s revenue and net profit attributable to its parent were 19% and 23% respectively, maintaining a high growth trend.
To this end, we raised the EPS forecast for 20222023 to 0.97 yuan (up 4.3%) / 1.17 yuan (up 8.3%), increased the EPS forecast for 2024 to 1.37 yuan, and the corresponding Pb of the current stock price was 0.93/0.83/0.74 respectively, maintaining the “buy” rating.
Risk tip: the downward pressure on the macro economy is increasing, and the credit supply and asset quality are under pressure.
