Core point of view: agricultural commercial banks similar to urban merchants. Zijin Bank is the first agricultural commercial bank in the capital city of the province to be listed on A-shares. Although it is an agricultural commercial bank, the balance structure and business model of Zijin Bank is more similar to that of an urban commercial bank due to its regional endowments. Benefiting from the rapid economic development of Nanjing, where the headquarters is located, the asset scale reached 200 billion yuan at the end of 2019, ranking first among listed agricultural commercial banks in Jiangsu Province. In the transformation of “big retail”, a boutique wealth management bank is the vision. The traditional personal deposit and loan business is becoming more mature, and the share of retail savings and loans is constantly increasing. As one of the “banks with the most complete billing service programs” in Nanjing, the personal agency intermediary business has cultivated a strong base of customers and contributed to non-interest income. Actively carry out large-scale personal financial management business and successfully build the “Zijin Wealth” brand. In 2019, the comprehensive financial management capabilities ranked 8th among rural financial institutions in the country. Performance was driven by a shift from interest-bearing asset expansion to a recovery in net interest spreads, and ROE gradually returned to average. Zijin Bank showed the characteristics of high ROE, low ROA, and high equity multipliers. In 2012-2018, investment assets grew at a very high rate. The main drivers were government bonds, wealth management products, and interbank deposits in that order. Back to basics and retail transformation, net interest spreads rebounded slightly in 2019, which dragged down performance and marginally improved; the weakening of the size advantage of interest-bearing assets may be due to a slowdown in growth at a high base. Asset management is biased towards retail. Under the advantage of deposit costs, the downward pressure on interest spreads is relatively small. Since 2018, the capital structure has been restructured, and the net interest spread has been gradually repaired. The share of asset-side loans has rebounded. Personal loans are mainly housing mortgages and are gradually being skewed towards consumer loans, and the share of operating loans has increased. On the debt side, the deposit cost advantage is obvious, and the deposit cost ratio has always been significantly lower than the average of listed agricultural and commercial banks. Poor stocks are gradually being digested, and the pressure on asset quality is manageable. Due to historical reasons, the non-performing rate is relatively high, but the pressure has continued to drop since inception, and was 1.68% in 2019. Bad public relations mainly stem from small and micro enterprises, and are concentrated in the manufacturing industry and wholesale industries; poor personal loans focus on operating loans, and the vast majority of them are poor stocks due to historical reasons. The share of overdue loans increased in 2019, but overall bad assessments are relatively strict, and pressure on asset quality is manageable. Investment advice: Zijin Bank is rooted in mainland Nanjing, has obvious geographical advantages and deposit advantages, and is optimistic about the transformation of retail strategy. It is estimated that the company's net profit growth rates for 2020/21 will be 8.10% and 9.38% respectively, EPS will be 0.42/0.46 yuan/share, the closing price corresponding to 20/21 PE will be 11.23X/10.27X, and PB will be 1.14X/1.05X respectively. In the past two years, the company's PB valuation center has been around 1.18X. We think it is possible to give the company a PB valuation of 1.18X in 2020. We have calculated a reasonable value of 4.85 yuan/share, covering the first time that it has been given an “increase in holdings” rating. Risk warning: 1. The duration of the epidemic has exceeded expectations; 2. International financial risks have exceeded expectations; 3. The quality of overdue loans has deteriorated dramatically, and the non-performing rate is under pressure.