\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 919 Bank Of Jiangsu Co.Ltd(600919) )
Ping An View:
The development potential in the province is huge, and the local excellent structure is deeply cultivated. We believe that the good economic environment of Jiangsu Province provides a guarantee for the sustained and rapid development of Bank Of Jiangsu Co.Ltd(600919) and with the opening of the 19-year new five-year strategic plan, Bank Of Jiangsu Co.Ltd(600919) for the deep cultivation of local land has entered a new stage. In the past 2-3 years, the structure of Bank Of Jiangsu Co.Ltd(600919) negative assets at both ends has been significantly improved, the asset side has continuously increased the number of supporting entities, and the proportion of credit in total assets has increased from 40% in 16 years to 52% in 21 years. Although the debt side structure has some room for improvement compared with peers, the improvement trend is obvious. The debt cost has dropped by more than 20bp in the past two years. We believe that Bank Of Jiangsu Co.Ltd(600919) has obvious advantages in network layout in the province. Looking forward to the next 2-3 years, with the continuous deep cultivation of Jiangsu, there is still room for the optimization of the structure at both ends of the company’s capital burden, which will become a ballast to promote the improvement of the company’s profitability.
Fully develop retail business and create a new profit engine. As a long-term bank focusing on corporate business, the company’s transformation pace in the retail field is also accelerating. In the past few years, the company has made new breakthroughs in the scale and mode of retail business by adhering to the strategic goal of “expanding retail business and focusing on wealth management”. On the one hand, the asset side increased credit supply, nearly doubled the proportion of retail credit assets (40%) at the end of 21 compared with 16 years, vigorously promoted the development of credit products such as credit cards and consumer loans, and continuously optimized the asset portfolio and yield. On the other hand, the company made great efforts in wealth management. At the end of 21, the company’s retail AUM reached 922.7 billion, keeping ahead of the benchmarking industry.
Asset quality continued to improve and profitability grew steadily Bank Of Jiangsu Co.Ltd(600919) in recent years, efforts have been made to improve asset quality and risk resilience, and the stock risk has been gradually cleared out. In 2021, Bank Of Jiangsu Co.Ltd(600919) non-performing loan ratio was 1.08% (yoy-24bp) and concern rate was 1.34% (yoy-2bp), achieving double decline for five consecutive years. Under the background of improving asset quality, the company’s risk resistance ability has been continuously strengthened, and the provision coverage rate has increased for five consecutive years, reaching 308% at the end of 21. Thanks to the superposition of three factors: regional development dividend, steady progress of retail transformation and stable improvement of asset quality, Bank Of Jiangsu Co.Ltd(600919) ‘s profitability has been repaired rapidly, and the net profit has increased year-on-year
Investment suggestion: be optimistic about the continuous release of the company’s location bonus and transformation bonus Bank Of Jiangsu Co.Ltd(600919) is ranked in the first echelon of China City Commercial Bank. Its good location has laid a good foundation for the rapid development of the company’s business. In the past two years, with the steady progress of the company’s new five-year strategic plan, Bank Of Jiangsu Co.Ltd(600919) on the one hand, it has made solid efforts to cultivate the local market, on the other hand, it has actively promoted the retail transformation, and comprehensively improved its profitability and profit quality, ranking in the forefront of the benchmarking industry. We expect that the company’s EPS in 22-24 years will be 1.60/1.91/2.26 yuan respectively, and the corresponding net profit growth rate will be 19.6% / 19.7% / 18.4% respectively. At present, the company’s share price corresponds to 0.65x/0.58x Pb in 22 / 23 years respectively. We are optimistic about the continuous release of the company’s location dividend and transformation dividend, and give a “recommended” rating for the first time.
Risk tips: 1) the economic downturn leads to higher than expected pressure on the quality of industrial assets. 2) The decline in interest rates led to a narrower than expected industry interest margin. 3) The increase of cash flow pressure of real estate enterprises leads to the rise of credit risk.
