The combination of steady growth policies continued to work, which was conducive to the improvement of the valuation of the banking sector. In the last week, the real estate sector has received positive signals, including the lower limit of the first house interest rate cut by 20bps + interest rate cut (the five-year LPR cut by 15bps to 4.45%), and the policy is directly oriented to the demand side, which is expected to reduce residents’ house purchase costs and boost market confidence. If the housing market can recover in the future, it will benefit the relevant credit demand of banks, improve asset quality and support valuation repair.
On the whole, the current valuation of the banking sector is only 0.55 times Pb, which is basically at the lowest level in history. It has reflected pessimistic expectations on the economy and the downward interest margin. The impact of the subsequent epidemic has gradually subsided and the steady growth policy has been implemented and reflected the effect, which is conducive to the expectation of economic stabilization in the future and the fundamentals of banks. Extremely undervalued value + low position level (Q1 is only 4.02%, which is at the position of 1 / 3 in recent 10 years, and it is expected to rise to the level of 5% – 6% in the stage of wide credit) + the performance of high-quality banks has increased steadily, and the banking sector has great room for repair.
Recommendations for individual stocks: 1) elastic small and medium-sized banks with excellent fundamentals or benefiting from steady growth and good performance: Ningbo, Chengdu, Nanjing, Hangzhou, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) ; 2) Large banks with undervalued value, steady growth and strong safety margin: Postal Savings Bank Of China Co.Ltd(601658) , Industrial And Commercial Bank Of China Limited(601398) . 3) Post cycle varieties benefiting from the relaxation of real estate policy and the recovery of consumption after the epidemic is stable: China Merchants Bank Co.Ltd(600036) , Ping An Bank Co.Ltd(000001) . The specific impact of the interest rate cut on the bank’s net interest margin is detailed in the report “5-year LPR” interest rate cut “: the favorable credit environment is improved, and the interest margin of small and medium-sized banks has little impact.
The president of China Merchants Bank landed and the short-term uncertainty was eliminated. This week, China Merchants Bank announced the appointment of Mr. Wang Liang as the president. He has joined China Merchants Bank since 1995 and was officially appointed as the former executive director, executive vice president (presiding over China Merchants Bank Co.Ltd(600036) work), financial director and Secretary of the board of directors of China Merchants Bank. Mr. Wang Liang has joined CMB for 27 years. He has experienced the retail transformation of CMB and is very familiar with financial operation, business development and strategic planning. As president, he is expected to minimize the negative impact and help CMB maintain its existing stability and continuity in development. In the medium and long term, the company has formed a virtuous circle of “low cost consumption – low risk preference – high yield – endogenous supplementary capital”, with roe stable at 15% – 17%, and the dividend proportion has continued to be more than 30% for 12 years, with fundamentals leading the industry. It is expected that after the short-term disturbance is eliminated, the valuation is expected to be repaired (currently 22pb is only 1.22 times, basically at the lowest level in nearly three years).
Regular data tracking:
Equity market tracking:
1) trading volume: the average daily turnover of stocks this week was 815139 billion, a decrease of 20.193 billion from last week.
2) two financing: the balance is 1.53 trillion yuan, a decrease of 0.01% over last week.
3) fund issuance: this week’s non monetary fund issued 19.545 billion shares, a decrease of 9.53 billion from last week. Since May, a total of 53.262 billion shares have been issued, a year-on-year decrease of 22.426 billion. Among them, the stock type was 3.899 billion, a year-on-year decrease of 8.818 billion; Hybrid 2.604 billion, a year-on-year decrease of 37.559 billion. Interest rate market tracking:
1) interbank certificates of deposit: A. volume: according to wind data, the issuance scale of interbank certificates of deposit this week was 494080 billion yuan, a decrease of 116.35 billion yuan compared with last week; At present, the balance of interbank certificates of deposit is 14.41 trillion yuan, a decrease of 75.9 billion yuan compared with the end of April; B. Price: the issuing interest rate of interbank certificates of deposit this week was 2.17%, a decrease of 10bps compared with last week; Since May, the issuing interest rate has been 2.23%, a decrease of 18bps compared with April.
2) Bill interest rate: the 3-month discount rate of bank notes of large state-owned banks + joint-stock banks this week was 1.26%, an increase of 12bps compared with last week; The average interest rate in May was 1.22%, down 39bps from April. The three-month bank note discount rate of urban commercial banks was 1.38%, an increase of 5bps compared with last week, and the average interest rate in May was 1.37%, a decrease of 36bps compared with April.
3) yield of 10-year Treasury bonds: the average yield of 10-year Treasury bonds this week was 2.80%, a decrease of 1bp from last week.
4) issuance scale of local government special bonds: 79.532 billion new special bonds were issued this week, a decrease of 95.813 billion from last week. Since the beginning of the year, a total of 1.86 trillion yuan has been issued, and the annual budget of local special bonds in 2022 is 3.65 trillion yuan.
Risk warning: the risk concentration of real estate enterprises breaks out; The epidemic spread beyond expectations and the macro-economy went down; The promotion of capital market reform policy was less than expected
