\u3000\u3000 Industrial Bank Co.Ltd(601166) (601166)
Key investment points
Matters:
On January 10, 2022, Industrial Bank Co.Ltd(601166) released the performance express. In 2021, it realized an operating revenue of 221.24 billion yuan, a year-on-year increase of 8.91%, and a net profit attributable to shareholders of the Bank of 82.68 billion yuan, a year-on-year increase of 24.10%, and roe of 13.94%, an increase of 132 PCT over last year.
Ping An View:
Profits continued to increase and revenue improved slightly. 1) Industrial Bank Co.Ltd(601166) in 2021, the annual revenue increased by 8.9% (vs8.1%, 21q1-3), the profit before provision increased by 6.7% (vs7.8%, 21q1-3) and the net profit attributable to the parent increased by 24.1% (vs 23.4%, 21q1-3) year on year. In addition to the recovery of revenue growth, we expect that the release of provision provision is also the main factor driving the company's profit growth upward. 2) In terms of asset negative structure, the company achieved a year-on-year increase of 9.0% in total assets in 2021, with a slowdown (11.5%) compared with the end of the third quarter. Loans maintained a stable expansion, with a year-on-year increase of 11.7% in total loans at the end of the year, the growth rate being the same as that at the end of the third quarter (11.7%), and the total deposits at the liability end increased by 6.6% year-on-year, with an increase of 6.2% compared with the end of the third quarter.
Asset quality continued to improve and provision coverage continued to consolidate. The company's non-performing rate at the end of 2021 was 1.10%, down 2bp month on month Q3, continuing the downward trend and maintaining the best level since 2015. We estimate that the non-performing rate of Q4 in 2021 is 1.03%, down 5bp month on month, and the pressure margin of asset quality is improved. At the end of 2021, the provision coverage rate of the company was 269%, increased by 5.7 percentage points month on month Q3, the loan allocation ratio was 2.96%, increased by 2bp month on month Q3, and the risk offset capacity continued to be consolidated.
Investment suggestion: the convertible bonds consolidate the capital, maintain excellent profitability, and continue to be optimistic about the valuation and repair space. The company's system and mechanism are flexible. Focusing on the layout of "commercial banks + investment banks", the company continues to promote business transformation in the direction of light capital, light assets and high efficiency. At present, the company's on balance sheet and off balance sheet businesses have developed in a balanced way, and roe has always been in the forefront of joint-stock banks. In 2021, the company proposed to build three golden business cards of green bank, wealth bank and investment bank in the future, focusing on green finance, wealth management and direct financing markets. The long-term growth space is worth looking forward to. In addition, the company's 50 billion convertible bonds were efficiently issued by the end of 2021. According to the static calculation of the third quarterly report, if all convertible bonds are converted, the core tier 1 capital adequacy ratio can be increased by about 0.8 PCT, which is expected to provide sufficient capital support for the company's future expansion.
In combination with the company's performance express, we maintain the company's performance forecast unchanged. It is estimated that the company's EPS in 2022 and 2023 will be 4.59/5.27 yuan respectively, and the corresponding profit growth rate will be 15.2% / 14.9% respectively. At present, the company's share price corresponds to 0.72x/0.65x Pb in the year of 21 / 22, and the valuation is still at a historical low with sufficient margin of safety. Based on the company's advantages in interbank business, intermediary business and asset quality, we continue to maintain the "strongly recommended" rating.
Risk tips: 1) macroeconomic downturn leads to higher than expected pressure on industry asset quality; 2) The strength of financial supervision increased more than expected; 3) The escalation of Sino US friction has led to an increase in external risks.
