If the debt conversion process progresses smoothly, the quality of the domestic investment products will improve, which will help boost the company's valuation.
Shandong's complete industrial system makes enterprises in the region extremely competitive, and is a fertile ground for cultivating “individual champions in the manufacturing industry.” Qilu Bank has been serving small and medium-sized enterprises for a long time, providing financing for current and future “invisible champions”. Benefiting from the stable position of physical enterprises in the industrial chain, Qilu Bank's price level and loan quality on the asset side are guaranteed.
Qilu Bank focuses on “county finance,” and has set up branches in accordance with the idea of “first the county, then the city.” Unique county finance is the source of its volume expansion.
Local real estate risk in Shandong is low, and Qilu Bank has excellent risk control capabilities. The actual loan overdue situation is not inferior to that of high-quality commercial banks. It is expected that profits will be released through lower credit costs in the future.
Investment advice:
We forecast EPS of 0.92, 1.03, and 1.15 yuan in 2023-2025, and net profit growth rates of 17.01%, 12.02%, and 12.34%. We obtained a reasonable value of 4.86 yuan based on the DDM model; according to the comparable valuation method, the 2023 EPB valuation was 0.80 times (0.64 times the comparable company), and the corresponding reasonable value was 5.66 yuan. Therefore, a reasonable value range of 4.86 to 5.66 yuan (corresponding to 2023 PE is 5.31-6.17 times, corresponding PE is 4.68 times for peer companies), maintaining the “superior to market” rating.