\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 036 China Merchants Bank Co.Ltd(600036) )
Summary of quarterly report: China Merchants Bank Co.Ltd(600036) 2022 the net profit attributable to the parent company in the first quarter was 36 billion yuan. Among them, the net interest income, the net fee income and other non interest income increased by 10.0%, 5.5% and 10% year-on-year, and the operating income increased by 8.5% year-on-year; Total assets increased by 1.8%, loans increased by 3.4% and deposits increased by 5.3% over the beginning of the year. The non-performing rate is 0.94%, the provision coverage rate is 462.88%, and the core Tier-1 capital adequacy ratio is 12.71%.
Key points supporting rating
The net profit of China Merchants Bank in the first quarter increased by 12.5% year-on-year, and the growth rate was lower than that of last year. After the disturbance of the epidemic, the profit growth rate returned to normal, and the absolute levels of profitability, capital and provision of the company’s statements were still excellent.
1. The quarterly profit growth mainly comes from the feedback of scale growth contribution and provision, and the marginal non interest and provision contribution decreased compared with the previous reporting period. First, the interest margin and deposits continued to perform well: the net interest margin rebounded slightly for three consecutive quarters, and the performance of the net interest margin remained stable; The growth of deposits was good and the advantages of deposits were strengthened. Second, the negative growth of wealth income is 11%, or there is no need to worry too much. The overall fluctuation of the capital market exists objectively, especially for companies with larger volume, it is impossible to leave the market. At the same time, the handling fee maintained a positive growth of 5.5%, the business was decentralized and the income was resilient. Third, the marginal trend of asset quality and provision is slightly weak, and the risk buffer capacity is still strong. The real estate problem gradually appeared, the non-performing related indicators increased slightly, the range was small, the provision coverage decreased, and the stock was still high.
In the short term, market sentiment may still be suppressed by sudden changes in management. In the long run, we believe that among the three core factors affecting the bank, the shareholder and customer base have not changed, and the company’s comparative advantage in the industry is still unshakable. Whether the management can strengthen the advantages of retail wealth business and consolidate the corporate customer base and operation in the future may be the core affecting the valuation premium. Reviewing the changes of the company’s management in 2013, changes in strategy and changes in the quality of the company’s assets may be the main factors affecting the changes in the relative valuation of China Merchants Bank. From the perspective of industry development trend, shareholders and customer base, it is less likely that the general direction of China Merchants Bank‘s strategy will change significantly at this stage. The impact of management changes on specific operation and management still needs to be observed at this stage. The possible impact of real estate has been expected by the stock price and the market since the second half of last year. We pay attention to the impact of the continuous improvement of real estate policies on the quality of real estate assets and actual losses.
Valuation
We give the company’s EPS of 5.33/5.92 yuan in 2022 / 2023. At present, the share price corresponds to 1.24/1.05 times of Pb in 2022 / 2023, and give the overweight rating.
Main risks of rating
Real estate pressure intensified and the economic downturn exceeded expectations.
