Temasek has been the largest shareholder since 2006 with stable and experienced management staff. Standard Chartered PLC (Standard Chartered PLC), headquartered in London, is a leading international banking group with a history of more than 160 years. Temasek is the largest shareholder since 2006, with a stake of more than 10 per cent. Temasek is the largest single shareholder since the Qiu family, a Singaporean tycoon, transferred its shares, which account for about 11.55 per cent of ordinary share capital, to Temasek Holdings in 2006. As of 2021, Temasek held 16.01 per cent of Standard Chartered PLC's common shares. Key management positions such as chairman, chief executive and chief financial officer have remained stable since 2010. Starting in 2015, Standard Chartered PLC began to implement a strategic plan led by Bill Winters, giving priority to returns and allocating capital and investment to areas with long-term competitive advantage. Before joining Standard Chartered Bank, the management all had more than 10 years of management experience in the financial industry.
The rate of expansion of net interest margin has slowed, but will continue to rise further. In 2022, asset growth is expected to be low to the middle digits, with 22Q1 annualized net interest margin of 1.29%, a month-on-month increase of 10bps. As measured by the loan-to-deposit ratio (LDR), we believe that Hong Kong has ample liquidity.
22Q1 annualized credit cost is 24bps, and we expect credit cost to increase in the future. The company points out that the cost of credit will rise to a normal range of 30-35bps in the medium term. We expect the calculated cost of credit to be 23-30bps in 2022-2024. At 22Q1, the third phase of the write-down was $281 million, including a $107 million downgrade of Sri Lanka's sovereign rating to phase III and a $160 million write-down of China's commercial property exposure.
Investment advice: we predict that the EPS from 2022 to 2024 will be US $0.84,1.01,1.09, and the growth rate of net profit will be 30.27%, 20.64% and 7.94%. According to the DDM model (see Table 5), we get a reasonable value of HK $60.95 (1 USD=7.85 HKD). According to the PB-ROE model, we value the company's 2022E PB at 0.50 times (0.70 times for the comparable company), and the corresponding reasonable value is HK $64.02. Therefore, the reasonable value range is HK $60.95-64.02 (corresponding to 2022 PE 9.29-9.75 times, peer companies 9.98 times PE), and the final coverage is given a "neutral" rating for the first time.
Risk hint. Net profit margin is better / worse than expected; cost control process is faster / slower than expected; asset quality is better / worse than expected