\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 128 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) )
Event:
On April 22, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released the first quarterly report of 2022, realizing operating revenue of RMB 2.128 billion, yoy + 19.3%, net profit attributable to parent company of RMB 659 million, yoy + 23.4%. The weighted average return on net assets was 13.05%, yoy + 1.36pct.
Comments:
The performance continues the strong performance in the early stage, mainly benefiting from the “wide volume and price” of asset side expansion. The company’s operating income and net profit attributable to the parent company in the first quarter increased by 19.3% and 23.4% year-on-year respectively, up 3.0 and 2.0 PCT respectively compared with 2021, of which the year-on-year growth rate of net interest income was 24.0%, up 11.8 PCT compared with 2021. Split the year-on-year growth structure, with scale expansion and interest margin improvement as the main contribution sub items, driving the performance growth of 47.6 and 13.3pct respectively. On the whole, benefiting from the “wide range of volume and price” of asset side expansion, the company achieved a good growth in net interest income in the first quarter, supporting the performance to continue the strong performance in the early stage. In the context of insufficient effective demand of the real economy, the company still achieved good epitaxial expansion, highlighting the differentiated advantages of the company as a leading bank of Pratt Whitney small and micro enterprises.
Credit supply has achieved a “good start” and led to obvious asset side expansion. At the end of the first quarter of 2022, the company’s interest bearing assets increased by 17.9% year-on-year, and the growth rate decreased slightly by 0.2pct compared with the beginning of the year. Among them, the interest bearing assets increased by 22.479 billion yuan in the first quarter, an increase of 2.987 billion yuan year-on-year. The company maintained a certain intensity of statement expansion, which formed a good support for net interest income. Structurally, the asset side expansion was mainly driven by credit and financial investment. In the first quarter, new credit and financial investment accounted for 45.9% and 52.7% of new interest bearing assets respectively. Among them, the credit supply remained high, with the growth rate increased by 0.5pct to 24.1% compared with the beginning of the year.
In the first quarter, we focused on corporate loans, and the focus of credit supply continued to be “small and scattered”. In the first quarter, the company’s new loans increased by 10.323 billion, an increase of 2.498 billion year-on-year. The distribution of corporate, retail and bills was roughly 6:3:1. In the first quarter, the credit resources were mainly inclined to the corporate end. Specifically, 1) corporate loans increased by 6.020 billion, an increase of 1.347 billion year-on-year. It is expected that small and micro enterprises will be the main investment objects; 2) Retail loans increased by 3.125 billion, basically the same as that in the same period last year. Personal operating loans are still the focus, accounting for 57.1% of the new retail loans. From the perspective of concentration, the main target of single household credit of less than 10 million (inclusive) is the main target, with a new investment of 5.778 billion, accounting for 56.0% of the new loans, indicating that the company’s credit investment is further “small and scattered”.
The proportion of deposits increased and the debt structure was further optimized. At the end of the first quarter of 2022, the total liabilities and deposits of the company increased by 17.7% and 15.4% respectively year-on-year, and the growth rate changed by – 1.3 and 0.3pct compared with the beginning of the year. Among them, deposits increased by 11.8% over the beginning of the year, far exceeding the increase of loans (+ 6.3%). In terms of structure, the proportion of deposits, bonds payable and inter-bank liabilities in interest payment liabilities was 85.5%, 6.4% and 8.2% respectively, of which the proportion of deposits increased by 1.4pct compared with the beginning of the year, and the liability structure was further optimized. In terms of deposit structure, retail deposits and corporate deposits accounted for 64.1% and 25.3% respectively, and the proportion of retail deposits increased by 0.7pct compared with the beginning of the year.
The interest margin increased by 3bp compared with the beginning of the year, which is expected to benefit mainly from the effective cost control on the liability side. The company’s interest margin level in the first quarter was 3.09%, an increase of 3bp over the beginning of the year and quarterly since the second half of 2021. The improvement of 22q1 interest margin compared with the beginning of the year is expected to mainly benefit from the optimization of debt structure. In the first quarter, the increase of the company’s deposit side is much higher than that of the loan side, and the incremental deposit loan ratio is only 48%. The matching degree between the source of funds and the use of funds in the deposit loan sector has been greatly improved, and the upward pressure on the cost of the liability side is limited. Looking back, the company’s credit resources tilted to the public end in the first quarter due to seasonal factors. With the follow-up company focusing on High-yield retail loans, the superposition of the liability end can effectively control costs, and the company’s net interest margin has a stable foundation.
The non-performing loan ratio remained at 0.81% for three consecutive quarters, and the provision coverage increased slightly. By the end of the first quarter of 2022, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) non-performing loan ratio was 0.81%, unchanged for three consecutive quarters. Under the condition that the non-performing loan ratio continued to operate at a low level, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) provision still maintained a certain intensity, and the provision for impairment loss of credit and other assets in the first quarter was 453 million yuan, 104 million more than the same period last year. By the end of the first quarter of 2022, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) provision coverage was 532.7%, 0.91 PCT higher than that at the beginning of the year, with abundant margin of safety, ranking in the forefront among listed banks.
The capital adequacy ratio decreased slightly. Due to the rapid expansion of the asset side, the company’s capital adequacy ratio decreased slightly. At the end of the first quarter of 2022, the core Tier-1 capital adequacy ratio / Tier-1 capital adequacy ratio / capital adequacy ratio were 10.01% / 10.07% / 11.74% respectively, with a quarter on quarter decrease of 0.20pct/0.19pct/0.21pct respectively.
Earnings forecast, valuation and rating Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) has been deeply engaged in the Pratt & Whitney small and micro market for a long time, focusing on retail and small and micro businesses, with good risk control mechanism. Since the beginning of 2022, the credit supply has been “prosperous in both supply and demand”, the interest margin is expected to be generally stable, the asset quality continues to perform well, and the high provision coverage makes the company have a strong risk offset ability. It is expected that the company will have a good business expectation in 2022. On February 12, 2022, the company’s application for issuing convertible bonds has been accepted by the CSRC. After the issuance of convertible bonds is successfully implemented, it will help to further thicken the core Tier-1 capital and expand the company’s business space. We maintain the company’s EPS forecast of 0.97 yuan / 1.17 yuan / 1.37 yuan from 2022 to 2024, and the corresponding Pb of the current stock price is 1.01/0.90/0.80 respectively, maintaining the “buy” rating.
Risk tip: the downward pressure on the macro economy is increasing, and the credit easing is less than expected
