Revenue growth is picking up. The company's revenue increased 1.28% year on year in '23, up from the year-on-year growth rate in 23Q3 due to the contribution of non-interest income such as investment income. The company's net interest margin decreased by 2bps to 1.64% compared to 23H1.

Deeply cultivate inclusiveness and expand the scope of loans incrementally. The number of credit customers at the end of '23 increased by 23,300 compared to the beginning of the year, an increase of 25.39%. The company continues to deepen its interface with governments, industrial parks, and chambers of commerce associations at all levels, covering more than 3,000 enterprises. At the end of 23, loans increased 11.2% year over year, maintaining a double-digit growth rate. Among them, inclusive loans increased 25.15% year over year.

The overall risk remains low. The company set up a specialized approval team for retail business, promoted the iterative upgrading of the credit risk decision-making platform, and continued optimization of the risk control system. At the end of 23, the company's non-performing ratio was 0.79%, slightly up 1 bps from 23Q3; the share of concerned loans was 0.42%, a slight decrease of 1 bps from 23Q3, and the non-performing loan rate, interest loan rate, and non-performing loan generation rate remained low.

Investment advice. We forecast EPS of 1.03, 1.08, and 1.14 yuan in 2024-2026, with net profit growth rates of 7.35%, 4.80%, and 4.89%. We obtained a reasonable value of 5.91 yuan based on the DDM model (see Table 2); according to the PB-ROE model, the 2024E PB valuation was 0.70 times (0.54 times that of a comparable company), and the corresponding reasonable value was 6.55 yuan. Therefore, the reasonable value range is 5.91-6.55 yuan (corresponding to 2024 PE is 5.73-6.35 times, corresponding PE is 4.50 times for peer companies), maintaining the “superior to market” rating.

Risk warning: The solvency of enterprises has declined, asset quality has deteriorated dramatically; financial supervision policies have undergone major changes.