The profit growth rate remained stable under a higher base. CCB's 23Q3 revenue year-on-year was -2.68%, net profit was +2.63% yoy; 23Q1-3 revenue was -1.27%, net profit was +3.11% yoy. It remained stable despite a high profit growth base for the same period last year.

Asset structure optimization. The ratio of loans to interest-bearing assets increased by 2pct to 62.0% month-on-month. Among them, the share of retail loans increased slightly month-on-month, contributing 38% of the Q3 loan balance increase. The company continues to expand the customer expansion and service coverage of inclusive finance, consolidate the foundation of business operations, continue to improve the comprehensive service system for rural revitalization, and further enrich the agricultural credit product system and financial service scenarios.

Asset quality has remained stable, and the trend has not changed. The bad rate remained flat at 1.37% month-on-month and has maintained a downward trend since 2020. The provision coverage rate was 243.31%, which remained stable from month to month.

Investment advice. We forecast EPS for 2023-2025 to be 1.29, 1.35, and 1.42 yuan, and net profit growth rates of 1.12%, 4.11%, and 5.73%. We obtained a reasonable value of 7.08 yuan according to the DDM model; according to the PB-ROE model, we gave the company a valuation of 2023E PB 0.60 times (0.51 times that of comparable companies), and the corresponding reasonable value was 7.06 yuan. Therefore, the reasonable value range is 7.06-7.08 yuan (5.46-5.48 times PE corresponding to 2023, 4.82 times PE for peer companies), maintaining the “superior to market” rating.

Risk warning: The solvency of enterprises has declined, and asset quality has deteriorated drastically; major changes have occurred in financial supervision policies.