Main points of investment:
The only city commercial bank in the country with the background of Taiwan shareholders shows its confidence in the five-year lock-up period. Xiamen Bank ploughs the local market, and its outlets cover all prefectures and cities in Fujian Province. Taiwan Fubon Financial Holdings subsidiary was introduced as a strategic investor in 2008. At present, Fubon Financial Holdings is the second largest shareholder after Xiamen Finance Bureau. Xiamen Bank is also the only city commercial bank on the mainland with the background of Taiwan shareholders. The listing of Xiamen Finance Bureau, Fubon Financial Holdings promised a five-year lock-up period and stock price stabilization measures to demonstrate the confidence of shareholders.
The strategic positioning is clear: "based on the local economy, serving small and medium-sized enterprises, facing urban residents, and serving Taiwan businessmen on both sides of the strait." In the past, because of its small economic volume and single industrial structure, Xiamen's economic vitality and development potential have been underestimated for a long time. In 1919, the government issued the Xiamen Investment Promotion Handbook, vigorously promoting the upgrading of the regional industrial structure to new infrastructure, high-tech and other industries, creating an environment in which "everyone does business". In 1919, Xiamen ranked first among vice-provincial cities in terms of GDP growth of 25% year on year. Xiamen Bank serves small and micro enterprises with a clear strategic positioning. Small and micro enterprise loans + personal business loans account for 43% of Prida, and the defect rate is low and stable. At the same time, relying on the background of Taiwan shareholders, Xiamen Bank has set up a cross-strait financial business platform, forming business characteristics of differentiation to Taiwan, which has great potential for development.
Fundamental performance: ROE is lower than comparable peers, but on the premise of maintaining excellent asset quality, optimizing the negative asset structure and stabilizing the performance of interest spreads has great potential to improve.
1) the identification of defects is very strict and the quality of assets is excellent. Xiamen Bank bad identification is very strict, 2Q20 "overdue loans / non-performing loans" is 102%, overdue loans are basically included in non-performing loans. The failure rate of 2Q20 is 1.12% (city bank: 1.24%), overdue rate is 1.14% (city bank: 1.96%), and attention rate is 0.94% (city bank: 1.38%), and has been better than that of city banks for 19 years.
2) there is room for optimization on the debt side, and the business returns to the source. For many years in a row, the loan growth rate is nearly 30% compared with the same period last year, with a rapid increase in the proportion (15 years / 2Q20displacement 22% hand 47%). However, the deposit share increases slowly (15 years / 2Q20Suzhou 57% hand 58%). With the rapid expansion of loans, the loan-to-deposit ratio has risen to 86% (15 years: 41%), second only to the Bank of Beijing. Subsequent sluggish deposit growth may affect loan expansion
3) the net interest margin is lower than the average level of city commercial banks, and the net interest margin of 1H20 Xiamen bank is 1.56%, which is much lower than the average level of city commercial banks (1.89%). There is room for optimization of the debt-side deposit cost (Xiamen Bank 1H20 debt cost / deposit cost:
2.69% Universe 2.67%). At the same time, with the gradual repair of the macro-economy, Xiamen Bank's increasing small and micro support and the stabilization of loan pricing will help to stabilize its asset income performance. There is room for improvement in net interest margin.
Investment advice: under the premise that asset quality remains stable, scale expansion, structural optimization and improvement of interest rate spreads drive performance growth.
Xiamen Bank has clear strategic positioning and good regional advantages; the fundamentals remain stable, the bad identification is extremely strict, the asset quality is excellent, and there is room for optimization of negative asset structure. The company's issue price is 6.71 yuan per share, corresponding to the company's 20-year PB 0.98X.
Risk tips: the macro-economy worsened more than expected, leading to adverse risk exposure; the optimization of asset-liability structure is not as expected.
Special note: the IPO pricing predicted in this report is not the price performance on the first day of listing, but a reasonable price range when the existing market environment remains basically unchanged.