The strong business performance of banks and finance companies supported a high level of revenue growth. As of the end of 2023, CNPC Capital's revenue growth rate remained above 20%. Looking at the segment, the annual revenue growth rate of finance companies reached 36.9%. Against the backdrop of a slight decline in total asset growth, or mainly benefiting from improvements in interest spreads and changes in the fair value of transactional financial assets; Kunlun Bank's annual revenue growth rate was 11.2%, down 0.9 pct from 23H1. The revenue growth rate is expected to be superior to that of most listed banks, or mainly supported by net interest spreads. Since 2021, under the direction of “being smaller, harder, more specialized, and deeper” and retail transformation, their net interest spreads rebounded against the trend (23H1 has declined somewhat, but is still superior to the city (Commercial bank average). Although the revenue growth rate remained high, profit growth fell 5.8 pct to 0.2% month-on-month compared to 23Q3, mainly affected by increased credit impairment losses. Among them, loan and off-balance sheet credit impairment losses increased significantly.
The scale of assets has expanded moderately, and various license plates have diversified. By the end of 2023, the total assets of CNPC Capital had a year-on-year growth rate of 4.9%, down 4.9pct from 23Q3. Looking at the segment, Kunlun Bank's asset growth rate increased by 2 pct to 11% compared to '22, while finance companies continued to grow slightly negatively. The expansion of financial leasing companies in 2023 showed a marked acceleration. The growth rate increased by more than 10 pcts compared to '22, indicating that after the impact of the epidemic was eliminated, the recovery of the financial rental business was relatively remarkable.
As a financial control platform for central enterprises that adhere to the integration of industry and finance, market value management assessments are expected to help increase their ROE. As of the end of 2023, CNPC Capital's ROE (diluted) was 4.92%, a slight decrease from '22, and the dividend payment ratio is estimated to remain at 30%. The State Assets Administration Commission held a meeting in 2024 to fully implement market value management assessments for listed central enterprises this year. CNPC Capital, as a financial control platform for central enterprises, is expected to improve operating costs through industry-finance integration and financial collaboration. First, it can be reflected in the management expenses side, and secondly, the ability to deeply understand petroleum chain and other enterprises given by the combination of industry and finance may also help improve credit costs, thereby supporting profit growth and the steady recovery of ROE.
With oil prices continuing to rise, the financial cycle is expected to bottom out, and market value management assessments of central enterprises are being comprehensively promoted, the company's operating fundamentals are well supported, and ROE is expected to enter an upward channel. Considering that the profit growth rate in 2023 was lower than expected, we slightly adjusted the profit forecast and predicted that the company's net profit growth rate for 24/25/26 would be 20.9%/6.3%/11.5%, the BVPS would be 8.34/8.73/9.17 yuan (the value before 24/25 was 8.29/8.74 yuan), and the PB corresponding to the current stock price would be 0.7X/0.7X/0.6X. Using a comparable company valuation method, we gave CNPC Capital 0.8 times PB for 24 years, and the corresponding target price was 6.67 yuan, maintaining a “buy” rating.
Risk warning
Oil prices fell beyond expectations; economic recovery fell short of expectations; poor performance in specific industries intensified exposure.