\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 988 Bank Of China Limited(601988) )
Event: on March 29, the company released its annual report for 2021, with total assets of 26.72 trillion yuan, yoy + 9.5%; Revenue of 605559 billion yuan, yoy + 7.1%; The net profit attributable to the parent company was 216559 billion yuan, yoy + 12.3%; The non-performing loan ratio was 1.33%, down 13bp from the beginning of the year; The provision coverage rate was 187.05%, up 9pct from the beginning of the year.
Revenue and profit growth increased month on month. In terms of revenue growth, the net interest income rebounded slightly, the growth rate of net handling fee income hit the bottom and rebounded, with a month on month increase of + 0.4pct and other non interest income of + 33.6% year-on-year, mainly due to the contribution of profit and loss from changes in fair value under the environment-friendly interest rate. In addition to the positive contribution of profit and non profit provision, the growth rate of non profit provision reached 65.1% in 2029.
The “Eight finance” breeds new growth. The company takes eight major fields such as science and technology and wealth as its focus, optimizes financial supply, and continuously releases its achievements. By the end of 2021, the company had more than 33000 credit customers for science and technology enterprises, cultivating new growth momentum. Wealth business is a highlight of the company’s development in 2021, with personal AUM exceeding 11 trillion yuan, of which AUM of private banks increased by 16.8% to 2.16 trillion yuan year-on-year, driving the income of wealth financial business to increase by 33% year-on-year.
The net interest margin tends to be stable. In 2021, the net interest margin of the company decreased by only 1bp compared with 21h1, releasing the bottom signal. The company’s asset investment returned to loans, and increased the investment of medium and long-term loans. In 2021, the loans were + 9.3% year-on-year, leading the interest bearing assets by 0.8pct, and the proportion of medium and long-term loans in the total loans (mainland) increased by 1.3pct, driving the yield of interest bearing assets in 2021 down only 1bp compared with 21h1. On the liability side, the overall cost rate remained stable, compared with 21h1 + 1bp, and the increase in the proportion of time deposits may be the main reason.
There is room for improvement in asset quality. The non-performing rate increased slightly month on month, but improved significantly year-on-year. From the internal perspective of loans, the asset quality of retail loans continued to improve. By the end of 2021, the non-performing rate was 0.46%, a decrease of 12bp compared with the beginning of the year. The leading indicators of non-performing assets show that the quality of the company’s assets tends to be better, the proportion of concerned assets has decreased significantly by 52bp year-on-year, and the proportion of overdue assets (1-90 days) has decreased by – 10bp year-on-year, reflecting the substantial consolidation of asset quality.
Investment suggestion: the performance is booming, the interest rate spread is stabilizing, the quality is improving, and the performance growth rate is in the upward range. The “eight major financial” breeds new growth space, the net interest margin may have “bottomed out”, and there is room for further improvement of asset quality. It is estimated that the EPS of 22-24 years will be 0.81 yuan, 0.89 yuan and 0.99 yuan respectively. The closing price on March 31, 2022 corresponds to 0.5 times of the 22-year Pb, which is lower than the average and median value of comparable peers. It will be covered for the first time and given a “recommended” rating.
Risk tip: macroeconomic growth rate declines; The transformation progress is less than expected; Capital replenishment is under pressure.
