\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 128 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) )
Matters:
Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released the annual report of 2021. In 2021, the annual operating revenue was RMB 7.66 billion, with a year-on-year increase of 16.3%, and the net profit attributable to the parent company was RMB 2.19 billion, with a year-on-year increase of 21.3% and roe11.5% 6%, up 1.28pct from last year. At the end of the year, the total assets were 246.58 billion yuan, an increase of 18.2% over the end of the previous year. The profit distribution plan of the company in 2021 is: cash dividend of 2.0 yuan (including tax) for every 10 shares, with a dividend rate of 25.1%.
Ping An View:
Strong profit growth and high growth of personal loans promoted the acceleration of revenue. The company achieved a year-on-year increase of 21.3% (vs + 19.0%, 21q3) in the net profit attributable to the parent company in 2021. We believe that the further increase of the company’s profit growth is mainly due to the acceleration of revenue growth. The company achieved a year-on-year increase of 16.3% (vs + 13.0%, 21q3). In terms of structure: 1) the company achieved a year-on-year increase of 12.2% (vs + 8.1%, 21q3) in net interest income, and the proportion in revenue increased by 0.9pct to 87.4% month on month (Q3). We believe that it mainly relies on the asset side pricing repair brought by the strong growth of retail business, especially micro loan. 2) In terms of non interest income, investment income maintained a rapid growth, with a year-on-year growth rate of 68.2% (vs + 51.5%, 21q3) and a year-on-year growth of 226.6% in Q4. We believe that it is mainly related to the company’s grasp of the opportunity of phased decline of market interest rate in the fourth quarter. The company’s annual revenue performance was brilliant, with a year-on-year increase of 61.0% (vs + 29.9%, 21q3). Q4 continued to increase rapidly, of which the agency business revenue increased by 115.6% year-on-year, which became the main factor driving the growth of revenue.
The interest rate spread rose steadily, and the micro loan business continued to develop. The company’s net interest margin in 2021 was 3.06% (vs3.03%, 21q3). We believe that the repair of the company’s interest margin is mainly due to the stabilization and recovery of the asset side, especially the loan pricing. On the asset side, under the overall downward trend of the asset side yield of the industry, the company measured the quarterly annualized interest bearing asset yield of 5.21% in Q4 at the end of the initial period, which was flat compared with Q3. The company’s annual average loan yield was 6.24% (vs6.22%, 21h), which increased month on month. We think it is mainly related to the continuous optimization of loan structure. The proportion of relatively high-yield retail loans further increased by 2.3pct to 61.0% month on month (Q3). Among them, benefiting from the improvement of regional economy, the company’s personal operating loans increased by 33.5% (vs + 28.3%, 21h) year-on-year. In the second half of the year, the proportion of micro loan business increased by 3.6pct to 39.9% compared with Q2, maintaining a good development trend. On the liability side, the company’s deposit cost rate in 2021 was 2.27% (vs 2.24%, 21h), a slight increase over the first half of the year, but a year-on-year decrease of 6BP compared with 2020.
In terms of scale, the assets maintained steady expansion. At the end of 2021, the total assets increased by 18.2% (vs + 18.9%, 21q3) year-on-year, of which the overall scale of loans increased steadily, with a year-on-year increase of 23.6% (vs + 24.0%, 21q3). In terms of liabilities, the company’s deposits at the end of 2021 increased by 15.1% (vs + 16.0%, 21q3) year-on-year, the growth rate slowed down slightly and remained at the leading level in the industry.
The performance of asset quality is stable, and the level of provision coverage is leading in the industry. The non-performing rate of the company at the end of 2021 was 0.81%, unchanged from Q3, and the asset quality continued to be in the forefront of the industry. We estimate that the annual NPL generation rate of the company in 2021 is 0.32%, which is 45bp lower than that in 2020, and the pressure margin of asset quality is improved. In terms of forward-looking indicators, the concern rate of the company at the end of 2021 was 0.89% (vs0.88%, 21q3), which increased slightly, but the absolute level was low. In general, the asset quality performance of the company continued to maintain an excellent level. At the end of 2021, the provision coverage rate of the company was 532%, increased by 10.5pct month on month Q3, and continued to be at the high level of the industry, with the allocation to loan ratio of 4.33%, increased by 10bp month on month, and the risk offset capacity was continuously consolidated.
Investment suggestion: outstanding performance, optimistic about the long-term development space of small and micro businesses. Combined with the company’s 2021 annual report and the performance express of the first quarter of 2022, the company’s credit supply is active, which promotes the company’s profit growth to further increase. From January to March 2022, the company’s net profit attributable to the parent company and revenue increased by 23% and 19% respectively year-on-year. The interest margin that has dragged down the company’s revenue and profit performance for 21 years has been stabilized and repaired, and the asset quality performance is stable and good Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) deeply cultivate the local county economy and small and micro enterprises. There are obvious differences in the operation of local advantages and small and micro enterprises. Looking forward to the future, with the support of good regional economy, the fundamentals of the company are expected to continue to improve. Considering the interest margin repair and the improvement of asset quality, we raised the company’s 22-year and 23-year profit forecasts and added a new 24-year profit forecast. It is estimated that the company’s EPS in 22 / 23 / 24 years will be 0.99/1.21/1.45 yuan respectively (the original 22 / 23 forecast value is 0.94/1.08 yuan respectively), and the corresponding profit growth rate will be 24.0% / 21.9% / 20.4% (the original 22 / 23 forecast value is 18.2% / 15.1% respectively). At present, the company’s share price corresponds to 0.98x/0.89x/0.80x Pb in 22, 23 and 24 years respectively. We are optimistic about the development space of the company’s small and micro business for a long time and maintain the “strongly recommended” rating.
Risk tips: 1) the economic downturn leads to higher than expected pressure on the quality of industrial assets. 2) The decline in interest rates led to a narrower than expected industry interest margin. 3) The increase of cash flow pressure of real estate enterprises leads to the rise of credit risk.
