Company profile
Founded in 2012, Guizhou Bank is the only provincial-level city commercial bank in Guizhou Province, which was formed by the merger of the former Zunyi City Commercial Bank, Liupanshui City Commercial Bank and Anshun City Commercial Bank in Guizhou Province. behind the main equity owners are the Department of Finance of Guizhou Province and Guizhou Moutai. The company's head office is located in Guiyang City and has an extensive distribution network covering the whole of Guizhou Province. at present, it operates through 8 branches and 207 branches. According to the Guizhou Regulatory Bureau of the China Banking and Insurance Regulatory Commission, as of the end of 2018, the company ranked fourth and fifth among all banks operating in Guizhou Province in terms of total assets and deposits in Guizhou Province.
Sino-Thai viewpoint
Guizhou Province's leading city commercial bank: as a leading city commercial bank initiated by the Guizhou provincial government, the company benefits from the rapid and great-leap-forward economic growth of Guizhou Province with the support of the national favorable policy. The real GDP growth rate of Guizhou Province in 2017 and 2018 was 10.2% and 9.1% respectively, ranking first among all provinces in the country for two consecutive years. The company has received strong support from local finance bureaus and other local governments in absorbing deposits, establishing a branch network and creating a supporting financial environment. As of June 30, 2019, the company has absorbed 32.3 billion yuan in deposits from all levels of financial bureaus in Guizhou Province.
In terms of operating performance: from 2016 to 2018 and as of June 30, 2019, the company's operating income was 8.01 billion yuan, 8.63 billion yuan, 8.78 billion yuan and 5.05 billion yuan respectively, of which net interest income was the largest component of the company's operating income. accounted for 98.3%, 101.0% and 94.9% and 91.9% of operating income, respectively The net interest margin was 3.86%, 3.31%, 2.66% and 2.61% respectively, and the net interest yield was 3.95%, 3.45%, 2.82% and 2.74%, respectively. The decline is mainly due to the intensification of market competition driven by the marketization of interest rates, and the increase in the proportion of low-risk projects supported by the company. According to the distribution of customer loans, large and medium-sized enterprises account for about 35% of the total corporate loans, while the rest are loans from small and micro enterprises or educational institutions, hospitals, land reserve centers and other institutions; the tier one capital adequacy ratios are 10.26%, 10.93%, 10.62% and 10.31%, respectively, which meet the requirements of regulators, but lower than the average level of commercial banks in the same period. The scale of assets is growing rapidly, but the capital adequacy ratio is low; the non-performing loan ratio is 1.91%, 1.60%, 1.36% and 1.09% respectively; and the provision coverage ratio is 212.86%, 192.77%, 243.72% and 323.27%, respectively. The company has had a business relationship with the contractor Bank since September 2014. the deposit in the contractor Bank confirms an impairment loss of 150 million yuan in the amount of money deposited by the same industry and other financial institutions.
Valuation: based on 14.6 billion shares after the global public offering, the company's market capitalization is HK $358.9 to HK $38.07 billion, which is in the middle of the market compared with its Hong Kong counterparts. In 18 years, the price-to-earnings ratio of the company is about 11.2-11.9 times, which is higher than the industry average, and the price-to-book ratio is about 1.02-1.07 times, which is higher than the industry average. In terms of profitability, the 18-year ROE and ROA were 12.36% and 0.92% respectively, higher than the industry average. A total of five banks have been listed in the past two years, with a relatively limited increase in share prices on the first day, with an average first-day performance of about 1.9%. This time the price stabilization is handled by Agricultural Bank of China International, which has an excellent track record in maintaining price stability. But considering that the increase is limited and the valuation is too high, to sum up, we give it a score of 56, with a rating of "do not apply".
Risk hints: (1) market competition risk, (2) excessive concentration of business operations in Guizhou Province, (3) credit risk