\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 288 Agricultural Bank Of China Limited(601288) )
Event: on March 31, the company released its annual report for 2021, with an operating revenue of 719915 billion yuan, a year-on-year increase of + 9.4%, and a net profit attributable to the parent company of 241183 billion yuan, a year-on-year increase of + 11.7%; The net interest margin is 2.12%, which is – 8bp compared with the beginning of the year; The non-performing loan ratio was 1.43%, down from – 13bp at the beginning of the year; The provision coverage rate was 299.7%, up from + 33.5pct at the beginning of the year.
Revenue growth rose month on month, and profits remained at a high level. In terms of revenue growth, net interest income provides steady support, and scale expansion is the core force. Net handling fee income grew by 7.8% year-on-year, rebounding after falling for three consecutive quarters, and other non interest income performed well. In terms of profit growth, in addition to the strong support provided by scale expansion and other non interest income, the back feeding of provisions to profits is more significant. By the end of 2021, the contribution of scale expansion to net profit growth was 57.1%, other non interest income was 22.5% and provision was 31.6%.
Strong growth in rural services. By the end of 2021, the company’s County loan balance was 6.2 trillion yuan, with a year-on-year increase of 17.2%. Its proportion in the total loans increased by 1.1pct, and the proportion of county financial business revenue increased by 1.2pct to 40.8%. As the “vanguard” of Rural Revitalization of financial services, the company may be expected to fully enjoy the policy dividend and maintain good expansion.
Strong credit supply, improved asset structure and supported the stabilization of the margin of net interest margin. At the end of 2021, the net interest margin of the company was flat compared with that of 21h1, and the downward trend was stopped. From the perspective of splitting the two ends of negative assets, the slight rise in the yield of interest bearing assets on a month on month basis is the main reason for the marginal stabilization of the net interest margin. Behind it is the support of strong credit supply. In 2021, the year-on-year growth rate of loans was 13.7%, leading the interest bearing assets 4pct.
The non-performing rate continued to decline, and the provision coverage increased by more than 30pct. At the end of 2021, the company’s non-performing loan ratio was – 13bp higher than that at the beginning of the year, and the asset quality continued to be optimized. Among them, corporate business is the core driving force. The leading indicators of non-performing loans show that the good trend of assets is expected to continue. The provision coverage rate rose to the highest level since 2015, leaving room for further back feeding profits.
Investment suggestion: benefiting from the Rural Revitalization Strategy, the credit supply is strong
The performance grew steadily, the county business was strong, the margin of net interest margin stabilized, and the asset quality improved significantly. It is estimated that the EPS of 22-24 years will be 0.75 yuan, 0.84 yuan and 0.94 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 companies. 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.
