Since the beginning of 2022, the banking sector has continued to strengthen, and individual stocks have risen one after another. Insiders pointed out that, on the whole, the current valuation of the banking sector is low, with a significant pre increase in last year’s performance, banking stocks are expected to usher in valuation repair opportunities.
banking stocks became the “dark horse” in the beginning of the year
On January 20, banking stocks led the rise of A-share sectors, among which Qilu Bank Co.Ltd(601665) once rose by the limit, Ping An Bank Co.Ltd(000001) rose by more than 5%, and Bank Of Hangzhou Co.Ltd(600926) , China Merchants Bank Co.Ltd(600036) rose by more than 3%.
The signal of rising bank stock market did not come suddenly. In fact, after entering 2022, the banking sector changed the decline in 2021 and presented a “dark horse” posture. This year, the bank ETF (512800) rose 6.54%, ranking first in the A-share industry ETF. 41 A-share listed banks have all increased positively this year.
From the performance of individual stocks, excluding Lanzhou bank, which has just been listed this year, as of the closing on January 20, Bank Of Chengdu Co.Ltd(601838) has increased by 22.92% this year, ranking first among listed bank stocks. Seven bank stocks such as Bank Of Jiangsu Co.Ltd(600919) , Industrial Bank Co.Ltd(601166) , Bank Of Hangzhou Co.Ltd(600926) increased by more than 10%.
In addition to the encouraging rise, the performance growth of banks is also commendable. The performance of many banks in 2021 exceeded market expectations. As of January 20, 15 listed banks have disclosed the performance express of 2021. Among them, taking the annual net profit attributable to the parent company as the index, China Merchants Bank Co.Ltd(600036) temporarily ranked first with 119.922 billion yuan, Industrial Bank Co.Ltd(601166) , China Citic Bank Corporation Limited(601998) , Ping An Bank Co.Ltd(000001) , Bank Of Jiangsu Co.Ltd(600919) , Bank Of Ningbo Co.Ltd(002142) net profit attributable to the parent company exceeded 10 billion yuan.
In terms of performance growth, the net profit attributable to the parent company in Bank Of Jiangsu Co.Ltd(600919) 2021 increased by 30.7% year-on-year, ranking first in the growth list, followed by Zhangjiagang bank, Bank Of Ningbo Co.Ltd(002142) , Ping An Bank Co.Ltd(000001) , with growth rates of 29.81%, 29.67% and 25.6% respectively. Except for Shanghai Rural Commercial Bank Co.Ltd(601825) , Bank Of Changsha Co.Ltd(601577) , China Everbright Bank Company Limited Co.Ltd(601818) , China Citic Bank Corporation Limited(601998) , the performance growth of the other 11 banks exceeded 20%. In addition, the provision coverage rate of each bank increased month on month, the risk offset ability was enhanced, and the asset quality continued to improve.
multiple factors contribute to valuation repair
It is worth noting that although bank stocks have made a strong counterattack recently, their overall valuation is still low. Horizontally, up to now, the overall valuation of the banking sector is at the bottom level in all A-share industries. Vertically, the current average p / E ratio of the banking sector is 5.5, with a median of 7, which is the bottom of the past decade.
For the current valuation of the banking sector, people in the industry believe that its safety margin is high and give a positive outlook on the future trend.
Zhongtai Securities Co.Ltd(600918) analyst Dai Zhifeng believes that the current safety margin of the banking sector is relatively high, and the asset quality constructs the safety margin of banking stocks. It is expected that the asset quality of listed banks will be in a stable state in the next few years, which will build the safety margin of bank shares.
Boc International (China) Co.Ltd(601696) analyst Lin Yuanyuan said that at present, the positions and valuations of the banking sector are at historically low levels, and the dividend yield is increasing. With the continuous digestion of negative factors by the market and the acceleration of stable growth policies such as wide credit at the beginning of the year, especially the continuous improvement of real estate policies, the market of the banking sector can be expected.
Zhang Xia, chief strategist of China Merchants Securities Co.Ltd(600999) strategy, believes that in the period of steady growth, the growth rate of social finance will significantly improve and accelerate the upward trend, bringing about a gradual recovery of investment. At this stage, the market style is dominant, and the typical Pro cyclical undervalued industries, such as the banking sector, will perform better.
Everbright Securities Company Limited(601788) Wang Yifeng’s team said in the research report that the bank index is expected to usher in a wave of rebound, and the upward slope will be relatively flat, but the bottom has been relatively clear.
