\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 919 Bank Of Jiangsu Co.Ltd(600919) )
Good location conditions help build a high growth benchmark Bank Of Jiangsu Co.Ltd(600919) was established in 2007. The company’s main business network is located in Jiangsu Province, with a leading market share among local regional banks. The strong momentum of economic development in Jiangsu Province, the developed private economy and a large number of small and micro enterprises have provided a good regional environment for the development of the company’s financial business. The compound growth rate of the company’s deposit / loan has reached 9.9% / 16.6% respectively in the past five years.
Focusing on the characteristics of regional development, small and micro enterprises and retail are driven by two wheels. 1) Since its establishment, the company has focused on the customer needs of small and medium-sized enterprises. With channel advantages and continuously upgraded product service system, the company is currently in the leading position in small and micro businesses in the province. By the end of the 21st century, the balance of small and micro loans had exceeded 480 billion. 2) In 2013, the company began to put its retail business in a prominent position, in which wealth management and consumer finance are important breakthrough directions. At present, it has made good progress in ecological construction and customer expansion. By the end of the first quarter, retail AUM had taken the lead in breaking through RMB 1 trillion in urban commercial banks.
The asset quality has been steadily improved, and the incremental risk in the future is controllable. By the end of the first quarter, the company’s non-performing rate / concern rate was 1.08% / 1.34% respectively, and the provision coverage rate was 330%. The overall asset quality performance has been at an excellent level among listed urban commercial banks. Since February, Jiangsu Province has been seriously affected by the epidemic, and the market is worried about the marginal pressure on the asset quality of the company’s small and micro businesses. However, we believe that relying on the high-quality customer resources and the adjustment and optimization of credit structure, the company’s future incremental risk is controllable, and the asset quality is expected to remain stable.
There is room to improve profitability, and pay attention to the process of debt to equity swap. In 2021, the company’s roe was 12.6%, and its profitability was slightly inferior to that of the benchmark bank. The drag was mainly from the cost of liabilities and credit cost. Looking to the future, we believe that the company’s roe has room for continuous improvement: 1) the active economic environment in Jiangsu is expected to provide sustainable development momentum for the company’s asset side credit growth, and the small and micro enterprises and retail business are expected to continue high growth; 2) Accelerate the retail wealth management business, and the medium income contribution is expected to increase; 3) The pressure on asset quality is controllable, and there is room for back feeding profits; 4) The company’s 20 billion convertible bonds have not been converted into shares, and the current stock price is only 16.8% away from the strong redemption price. The conversion of convertible bonds into shares is expected to alleviate the company’s capital pressure and support the future asset expansion speed to maintain a high level.
We expect the company’s EPS to be 1.62/1.94/2.32 yuan and BVPs to be 11.37/12.85/14.62 yuan in 22-24 years. We use the relative valuation method to value Bank Of Jiangsu Co.Ltd(600919) and select 6 companies in Beijing, Shanghai, Ningbo, Nanjing, Hangzhou and Suzhou as comparable banks in combination with asset size and main business areas. Give the company 0.75 times of dynamic Pb in 22 years, with the corresponding target price of 8.58 yuan, and give a buy rating for the first time.
Risk tips
The economic downturn exceeded expectations; The liquidity risk of real estate enterprises continues to spread; The strength of financial supervision increased more than expected; Changes in assumptions affect the measurement results.
