\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 128 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) )
Performance: continue to maintain a rapid growth of about 20%. In 2022q1, the revenue, PPOP and profit were 2.13 billion, 1.31 billion and 660 million respectively, with a year-on-year increase of 19.3%, 23.9% and 23.4%, up 3pc, 5pc and 2pc respectively compared with 21a. It is expected that the growth rate will rank high among listed banks. The annualized ROA and roe increased by 0.03pc and 1.36pc to 1.10% and 13.05% respectively year-on-year, and the profitability rebounded steadily. Specific performance breakdown:
1) Q1 single quarter interest margin declined slightly. The net interest margin increased by 13.3bps (compared with 214bps). Among them: a. the overall expected interest rate of loans has decreased, mainly due to the rhythm. Q1 has relatively more public loans (single quarter + 6 billion, accounting for an increase of 1.4pc to 37%), but the pricing of various products is expected to be basically stable (retail and operating loans have less impact on the public than LPR interest rate reduction); B. The deposit cost rate has increased. Although the interest rate of long-term fixed-term deposits has decreased after the reform of self-discipline mechanism, the trend of fixed-term deposit structure is more obvious this year. Although the interest margin fell month on month, it improved year-on-year in 21q1 (2.97%), and the assets maintained a high year-on-year growth of 17%, which supported the growth rate of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) interest net income (24%) to continue to maintain a high growth, which was basically the same as that in 21q4. Considering the impact of the epidemic this year, the downward pressure on the economy and the fierce competition for deposits, the annual interest margin may be under some pressure compared with 2021. However, it is expected that Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) will increase the proportion of high-yield loans, optimize the structure and maintain a relatively stable interest margin in the future by reducing, dispersing and sinking the credit.
2) the year-on-year growth rate of non interest income (280 million) was – 4.2%. The net income from handling fees and commissions (only 01 million) decreased by 80 million year-on-year, mainly due to the lag in the revenue recognition of the management fee of financial products at the income side. The handling fee income in Q1 was 48 million, a year-on-year decrease of 80 million, while the handling fee expenditure (47 million) was basically the same year-on-year. It is expected that in the future, with the subsequent recognition of income, the growth rate of net income from handling fees and commissions is expected to pick up. 3) The cost income ratio (37.92%) decreased by 2.3pc year-on-year, mainly due to the increase of per capita households and the improvement of scale effect. At the same time, the income grew rapidly, higher than 12.5% of the management expenses.
4) under the condition that the non-performing rate remains stable, we will continue to maintain a high provision (year-on-year + 30%). It is expected that the main reason is to increase the provision for impairment of non credit assets, especially fv-oci and other assets. Business: Q1 micro loan still grew steadily, continued to pay attention to the follow-up epidemic trend, and the proportion of time deposits increased
Q1 assets reached 268.7 billion (year-on-year + 17.1%), of which total loans increased steadily by 10.3 billion (year-on-year + 24.1%) to 173.1 billion, and individual, corporate and discount increased by 3.1 billion, 6 billion and 1.2 billion respectively.
Specifically, despite the impact of the epidemic, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) micro loan business has made steady progress: 1) personal operating loans increased by 1.78 billion (the highest level in Q1 since 2020), of which the parent bank increased by 1.09 billion (+ 2.4%) and rural banks increased by 700 million (3.4%). 2) The number of individual loan customers (382000 households) increased steadily, of which the number of operating loan customers (199000 households) increased by 4.8%, and the average household loan scale was 336000, down from 342000 at the end of 2021, and continued to be small, scattered and sinking. 3) In terms of rhythm, it is expected that the micro loan investment from January to February will be very good. Since March, the epidemic control in various places has become stricter, and the investment may be affected to some extent. In the follow-up, we need to pay attention to the duration of the epidemic. If it can be basically ended in the first half of the year, we expect it to still achieve the annual micro loan growth target (higher than 18 billion last year).
The scale of Q1 deposits reached 208.5 billion, an increase of 11.2% year-on-year (basically the same as the growth rate of Q1 last year). However, structurally, the proportion of demand deposits (26%) decreased 3pc compared with the beginning of the year. Among them, the balance of individual demand deposits in Q1 decreased net, partly due to seasonal reasons. Generally, Q1 is the intensive period of deposit “good start” activities, which mainly increases the promotion of fixed-term products. From Q2, individual current will gradually begin to precipitate and grow. Asset quality: Although the epidemic has a certain impact, it will remain stable at present and in the future.
At the end of March, the non-performing rate (0.81%) was basically the same as that at the beginning of the year. Under the condition of increasing the provision provision provision, the provision coverage rate (533%) was increased by 0.9pc compared with that at the beginning of the year, and the loan allocation ratio remained at a high level of 4.32% (basically the same as that at the beginning of the year)
The proportion of concerned loans (0.94%) increased slightly by 5bps compared with the beginning of the year, mainly due to the impact of the epidemic. Follow up needs to continue to pay attention to the trend of the epidemic. Considering that Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) micro loan business has always adhered to the principle of “small and scattered”, the risk control system has been relatively mature after years of precipitation. Although there is an epidemic impact in the short term, with the gradual end of the follow-up epidemic, its asset quality is expected to remain stable (refer to Q1 in 2020. Although the non-performing rate and overdue rate have been improved, the improvement of various asset quality indicators has been achieved throughout the year).
Investment suggestion: on the whole, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) 22q1 performs well. With high performance growth, the micro loan strategy is advancing steadily, and it is expected to grow into the leader of micro loan business in Jiangsu Province in the medium and long term. In addition, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) 6 billion issuance plan has replied to the feedback of the CSRC and is expected to be implemented gradually in the future. The tentative compulsory redemption proportion of the plan is 130%, and the revised terms are set, which shows Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) positive willingness to convert shares. After the successful issuance, it will bring medium and long-term and low-cost funds, which is conducive to the rapid expansion of micro loan business and seizing the market in the future. In the medium and long term, it is expected to gradually grow into the leader of micro loan business in Jiangsu Province. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 2.652 billion, 3.225 billion and 3.937 billion respectively. At present, the stock price corresponds to only 1.02x and 0.91x of 2022 and 2023pb, maintaining the “buy” rating.
Risk tip: the macroeconomic downturn accelerated, the shift of monetary policy exceeded expectations, the competition of micro loan business exceeded expectations, and the progress of refinancing was less than expected.
