Investment points: Xiamen Bank 22Q1 revenue growth accelerated. Net fee growth shows resilience, and asset quality continues to be better than that of the industry. For the first time, the coverage gives it a rating of "better than the market".
Revenue is accelerating and profits are growing. Xiamen Bank's 22Q1 operating income increased by 18.2% year-on-year, significantly higher than the year-on-year growth rate in 21 years. Excluding one-time operating income in 21 years, the year-on-year growth rate was 9.6%. 22Q1's homing net profit increased by 16.5% compared with the same period last year.
Credit is mainly allocated to the public, and securities investment should be increased to cope with the lack of credit demand. In the process of 22Q1 loan delivery, it mainly focuses on public business. 42.2% of the increase came from bills and 35.7% from corporate loans. The ratio of securities investment to total assets increased by 1.4pct to 29.7% at the end of last year. We believe that in the case of insufficient demand for credit, increasing securities investment will help to maintain asset expansion and support asset-side returns.
The growth rate of net fee income has accelerated, and bond underwriting is expected to boost. Net fee income increased by 21.6% over the same period last year, faster than in 21 years. Combined with the general pressure on wealth management and the incremental structure of social finance dominated by government bonds, we expect that the increase in net fee income may come from the fees of bond underwriting business. The company is a member of the three major policy bank financial debt underwriting groups, Xiamen local debt underwriters, Fujian Province and Chongqing local debt underwriting group members, to help the real economy, and actively participate in policy financial bonds, local debt underwriting work.
Asset quality continues to be better than that of the industry. The non-performing loan ratio fell 0.01pct to 0.90% from the end of last year, which continues to be better than the overall bad level of commercial banks. The defect rate has been declining since 1Q19 and has not increased during the 20-year epidemic. The following rate decreased by 8bp to 0.83% compared with the end of last year. The provision coverage rate is 371.63%, which is higher than that at the end of last year by 0.99pct, and the risk offset is more adequate.
Investment advice. We predict that the EPS from 2022 to 2024 will be 0.95,1.06,1.19 yuan, and the growth rate of net profit will be 15.09%, 12.16% and 12.00%. According to the DDM model (see Table 2), we get the reasonable value of RMB 6.90.According to the PB-ROE model, the company's 2022E PB is valued at 0.75x (0.72 times of the comparable company), and the corresponding reasonable value is RMB6.47RMB. Therefore, the reasonable value range is 6.47-6.9 yuan (corresponding to 2022 PE 6.84-7.29 times, peer companies corresponding to PE 5.30 times), maintaining the "better than the big market" rating.
Risk hints: the solvency of enterprises has declined, asset quality has deteriorated significantly, and major changes have taken place in financial regulatory policies.