The president connects smoothly, and the escort strategy is the same.
China Merchants Bank issued a notice on May 19 that the board of directors agreed to appoint Mr. Wang Liang as president. We believe that Mr. Wang Liang is an "old recruiter" who has been working in China Merchants Bank for 27 years, and has an in-depth grasp of the company's strategy and business operation. The selection of the president is conducive to the smooth transition of the company's business and escort the steady progress of the strategy. it is expected to enhance market confidence. We maintain the predicted EPS of 5.33, 6.12, 7.04 yuan for 2022-24 and 32.82 yuan for 22-year BVPS, corresponding to 1.16 times of PB. The average PB (LF) of the company in the past 5 years is 1.66 times. We expect the company's strategy to advance steadily for a long time after the arrival of the new president, and the leading position of retail wealth management will continue to strengthen. We maintain the 22-year target PB 1.60 times, maintain the target price 52.51 yuan, and maintain the "buy" rating.
The new president landed, and the "old China Merchants Bank" is expected to protect the company.
China Merchants Bank issued the announcement on the appointment of President on May 19, in which the board of directors agreed to appoint Mr. Wang Liang as President China Merchants Bank for a term starting from the date of approval of the qualification of President by the CBCIRC to the expiration of the 11th session of the Board of Directors. Mr. Wang Liang has been a veteran recruiter in China Merchants Bank for 27 years. Since 1995, he has joined Beijing Branch and has been promoted from the grass-roots level to Assistant President / Vice President / President, Assistant President, Deputy Governor, Secretary to the Board of Directors, Chief Financial Officer, Executive Deputy Governor, etc. He has been in charge of risk and compliance, financial markets and financial management, assets and liabilities and financial management during the working period of the head office. We believe that Mr. Wang Liang has an in-depth grasp of China Merchants Bank's strategic culture and business operation, and the smooth exchange of the president is expected to achieve a smooth business transition, steady strategic progress and sustained growth in performance.
The leading market-oriented mechanism is expected to promote the steady progress of the strategy.
We believe that China Merchants Bank has a strong market-oriented gene in the governance mechanism, and the new president is expected to promote the strategy along the established direction for a long time and steadily. Chairman Miao Jianmin summed up the "three invariants" that China Merchants Bank always adhered to in the 2021 annual report, that is, "the president responsibility system under the leadership of the board of directors will remain unchanged, the market-oriented incentive and restraint mechanism will remain unchanged, and the stability of cadres and talents will remain unchanged." Mr. Wang Liang also stressed at the performance exchange meeting in the first quarter of 2022 that "in the next step, China Merchants Bank management will unswervingly continue to implement the strategy and maintain the undeviated and unwavering implementation of the strategy." Driven by the marketization and specialization mechanism, we expect China Merchants Bank to move forward steadily along the established strategic direction in the future.
The retail wealth strategy system is mature, creating a long-term moat
In the medium and long term, China Merchants Bank's retail wealth management strategy has built a mature system, from the retail banking strategy in 2004 to the light banking strategy in 2014, and then to the 3.0 business model with the big wealth management value cycle chain as the core since 2021. The company's strategy continues to lead the industry. In terms of organizational culture, long-term deep ploughing retail has formed the cultural heritage of "taking customers as the center and creating value for customers". We believe that this invisible culture also constitutes China Merchants Bank's core competitiveness. We believe that with mature strategic system, organizational culture and market-oriented mechanism, the company is expected to build a stable long-term value moat.
Risk hint: the duration of the economic downturn is longer than expected, and the deterioration of asset quality is higher than expected.