\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 577 Bank Of Changsha Co.Ltd(601577) )
Event:
On April 28, Bank Of Changsha Co.Ltd(601577) released the annual report of 2021 and the first quarterly report of 2022: 1) in 2021, the operating revenue was 20.868 billion yuan, yoy + 15.8%, and the net profit attributable to the parent company was 6.3 billion yuan, yoy + 18.1%. The weighted average return on net assets was 13.26%, yoy-0.5pct. 2) In the first quarter of 2022, the operating revenue was 5.387 billion yuan, yoy + 12%, and the net profit attributable to the parent company was 1.82 billion yuan, yoy + 13.1%. The weighted average return on net assets was 14.6%, yoy-1.9pct.
Comments:
The performance growth was steady, and the profit growth rate returned to the pre epidemic level. Affected by the widening margin dragged down by interest margin, the company’s revenue growth slowed down in 2021, but the profit growth remained high supported by provisions and expenses; In the first quarter of 2022, as the growth of non interest income slowed down, the growth of the company’s performance narrowed further, and the profit growth returned to the pre epidemic level. The year-on-year growth structure of 22q1 was carefully dismantled. The scale and non interest income were the main contribution sub items. The interest margin, provision and expense side still had a negative drag on the performance, but the drag degree was narrowed.
The speed of table expansion slowed down and the proportion of loans increased. In 2021 and 22q1, the year-on-year growth rate of the company’s total assets was 13.1% / 12.5% respectively. Since 21q1, it has slowed down quarter by quarter, which has a certain drag on the net interest income. The year-on-year growth rate of credit in 2021 and 22q1 was 17.3% / 16.5% respectively, and the overall growth rate also slowed down. However, it was noted that the credit supply in the fourth quarter of last year was stronger than seasonally, and the new credit in 21q4 accounted for 29% of the new credit in the whole year, significantly higher than the average level of 15% in the past three years. Therefore, the growth rate of credit in 22q1 slowed down compared with the beginning of the year, and there was a certain base effect. Due to the increased allocation of credit, the proportion of credit assets in interest bearing assets has increased quarter by quarter since 21q3. From 21q3 to 22q1, the proportion of credit is 44.9% / 46.3% / 46.8% respectively, and the asset structure has been further optimized.
Credit resources are inclined to the public sector. The company’s new loans in 21 years were 54.618 billion, basically the same as that in 2020. The new corporate loans, retail loans and bills accounted for 56.5% / 41.1% / 2.4% of the new loans respectively. Specifically, 1) corporate loans increased by 30.854 billion, an increase of 3.615 billion year-on-year. Corporate credit resources focused on leasing, business services and manufacturing. The new scale of both accounted for 23.7% / 20.5% of the new loans respectively, followed by construction, water conservancy and environment and public facilities management, The proportion of newly added is 12.5% / 11.3% respectively; 2) Retail credit increased by 22.462 billion, a year-on-year decrease of 4.9 billion. The new personal loans were mainly concentrated in consumer loans, business loans and housing mortgages. The new proportion of 22q1 was 36.7% / 29.9% / 32.1% respectively. From the first quarter of 2022, the scale of new loans was 18.147 billion, an increase of 418 million year-on-year. The scale of new loans accounted for 59.3% of the new interest bearing assets. The expansion of asset side was significantly driven by credit expansion, and the proportion of loans in interest bearing assets increased by 0.5pct to 46.8% compared with the beginning of the year.
The proportion of market liabilities increased. At the end of 22q1, the year-on-year growth rate of the company’s total liabilities and deposits were 12.7% / 13.5% respectively, an increase of 0.4pct/2.6pct respectively compared with the beginning of the year, and the growth rate of deposits increased for two consecutive quarters. Structurally, the proportion of deposits, bonds payable and interbank liabilities in interest bearing liabilities at the end of 22q1 was 69.3% / 19.7% / 11.0% respectively, of which the proportion of deposits and bonds payable decreased by 0.7pct/0.3pct compared with the beginning of the year, and the proportion of interbank liabilities increased by 1PCT compared with the beginning of the year.
Nim operation is expected to be under pressure. In 2021, the NIM of the company was 2.40%, a decrease of 1bp compared with 1h21. In 22q1, the company’s net interest income in a single quarter increased by 2.1% month on month, lower than the month on month growth rate of 3.8% of interest bearing assets. It is expected that the company’s Nim will decline quarter on quarter. The measured value shows that the company’s 22q1 interest margin decreased by about 10bp compared with the beginning of the year. At this stage, the pressure on interest margin is a common pressure point faced by the industry as a whole: on the one hand, the continuous reduction of LPR quotation and the large amount of refinancing tools since the end of the 21st century have made the loan interest rate face great downward pressure; On the other hand, the pressure of stabilizing and increasing deposits keeps the debt cost of the banking system relatively rigid.
The growth of non interest income slowed down, and the proportion of non interest income has remained stable at about 23% since 21q2. In 2021, the year-on-year growth rate of the company’s net handling fee and commission income increased by 7.2pct to 33.4% quarter on quarter, recording a year-on-year high, mainly driven by the high growth of financial management handling fee, while the year-on-year growth rate of net other non interest income narrowed slightly and continued to maintain a high of more than 60%; In 2022, the growth rate of the company’s non interest income slowed down as a whole. The year-on-year growth rate of 22q1 net handling fee and commission income and net other non interest income were 18.9% / 26.7% respectively, and the quarter on quarter growth rate decreased by 14.5pct/36.4pct respectively.
The asset quality was stable, and the provision coverage rate rose to 301%. In 2021, the company’s non-performing loan ratio was basically maintained at the level of 1.20%, and the concern rate showed a quarterly trend in the second half of the year. The concern rate of 21q4 company decreased by 0.38pct to 1.98% quarter on quarter, the best level since 2019, and the overall pressure on non-performing loans was further reduced. Overdue / non-performing loans, overdue for more than 90 days / non-performing loans were 134.8% and 72.9% respectively, down 8.6pct/4.7pct respectively compared with 1h21. The company further tightened the recognition of non-performing loans. The provision coverage rate was stable at about 298% in the second half of the year, while the loan allocation ratio was stable at 3.56%, and the risk offset ability remained stable. In 22q1, the company’s non-performing loan ratio dropped to 1.19%, the attention rate increased by 1bp quarter on quarter, the provision coverage increased by 3.2pct to 301% compared with the beginning of the year, and the loan allocation increased by 1bp to 3.57% compared with the beginning of the year. The overall asset quality operation was stable and good.
Earnings forecast, valuation and rating. In recent years, Bank Of Changsha Co.Ltd(601577) has maintained a high credit growth rate, the financial management business has given a strong boost to the middle income, and the asset quality has been continuously consolidated. County market expansion is expected to further open the company’s profit space. In the future, considering that the “steady growth” policy is expected to continue to be introduced to promote the realization of the economic growth target, we raised the EPS forecast for 20222023 to 1.76 (up 1.7%) yuan / 1.96 (up 0.5%) yuan, and increased the EPS forecast for 2024 to 2.15 yuan. The current Pb valuation corresponding to the stock price is 0.54/0.48/0.43 times respectively, maintaining the “buy” rating.
Risk tip: if the macro economy goes down more than expected, it may increase the potential risk of large risk exposure.
