\u3000\u3000 Bank Of Nanjing Co.Ltd(601009) (601009)
Key investment points:
A city commercial firm with significant regional advantages, vitality and clear vision. The total assets of Bank Of Nanjing Co.Ltd(601009) ranked fifth among urban commercial banks, and the total assets showed an accelerated expansion trend in recent two years. The regional economy of Jiangsu Province is dominated by manufacturing and service industries. The growth momentum of advanced manufacturing is good, and the proportion of emerging industries has increased steadily. The amount and growth rate of per capita disposable income in Nanjing, the provincial capital, are higher than that of urban residents in Jiangsu, Bank Of Nanjing Co.Ltd(601009) is rooted here, radiates the Yangtze River Delta economic belt and Beijing, and has obvious regional advantages. The dynamic regional economy has become a first-class financial service provider among small and medium-sized banks, with good growth.
Outstanding profitability and excellent asset quality. Bank Of Nanjing Co.Ltd(601009) in the past four years (2016-2020), the compound annual growth rate of net profit attributable to parent reached 12.22%, and the year-on-year growth rate of net profit attributable to parent reached 22.36% in Q3 in 2021. The corresponding roe ranked third among listed urban commercial banks, with outstanding profitability. At present, the net interest margin is at a low level among comparable urban commercial banks, and there is good room for improvement in the future, boosting the expectation of interest margin income. The middle income has increased rapidly, accounting for the second place in the revenue of urban commercial banks. As of Q3 in 2021, the non-performing rate is 0.91%, ranking the third place in the listed urban commercial banks. The non-performing rate has remained stable and low in recent five years, showing excellent risk control ability.
The reform of large retail and private banking 2.0 stimulated the accelerated development of wealth management business, and enabled the addition of public business and the characteristic business of Pratt & Whitney small and micro enterprises. Bank Of Nanjing Co.Ltd(601009) in the past four years, the growth of consumer loans and credit card loans has promoted the high growth of retail revenue. The annual compound growth rate of consumer loan balance has reached 46.23%, and the annual compound growth rate of credit card loans has reached 26.57%. While the volume has increased rapidly, the asset quality has remained stable and good. Private banks started the 2.0 reform, and the number of high net worth customers and AUM achieved high growth. Since 2020, the growth rate of corporate loans has increased, accounting for more than 70% of the total loans. We will focus on inclusive small and micro loans, and launch a new investment and loan linkage model of “government bank park investment”. The small and micro product system is perfect, covering multiple fields and meeting the needs of enterprises. The proportion of scientific, technological, cultural and financial services in Nanjing is more than half, and will continue to replicate the successful model.
Profit forecast: combined with the background of Bank Of Nanjing Co.Ltd(601009) increasing business investment and retail business reform, it is estimated that the compound growth rate of net profit attributable to parent company from Bank Of Nanjing Co.Ltd(601009) 2021 to 2023 will be 20.38%, and the predicted BVPs in 2022 will be 12.60 yuan / share. Based on the comprehensive valuation of comparable companies, we give a Pb valuation of 1.1x in 2022, the corresponding reasonable price is 13.86 yuan / share, and give a “strongly recommended” rating for the first coverage.
Risk tips: market risk, credit risk, liquidity risk, operational risk, etc.
