Key investment points: ICBC's performance has remained stable, and an inflection point in the real estate non-performing rate may have already appeared. We continue to be optimistic about ICBC and give it an “superior to the market” rating.
Profits continued to grow steadily. ICBC's revenue growth rate for the full year of 2023 decreased by 3.73% year on year, and net profit to mother increased by 0.79% year on year. Among them, net profit to mother increased by 0.80% in Q4, and overall performance continued to grow steadily. ICBC plans to pay a dividend of 3.064 yuan (tax included) for every 10 shares and continue to maintain a 30% dividend ratio.
Fully support the “Five Major Chapters.” In terms of technology finance, ICBC's strategic emerging industry loan balance at the end of 2023 was 2.7 trillion yuan, an increase of 948.405 billion yuan over the end of 2022, an increase of 54.1%. In terms of green finance, the General Administration of Financial Regulation's caliber green loans at the end of 2023 was nearly 5.4 trillion yuan, an increase of nearly 1.4 trillion yuan over the end of 2022. In terms of inclusive finance, at the end of 2023, loans for inclusive small and micro enterprises were 2227.752 billion yuan, an increase of 43.7% over the end of 2022; 1.467 million inclusive small and micro enterprise loan customers, an increase of 451,000. In terms of pension finance, at the end of 2023, ICBC was entrusted with managing annuity funds of 554.1 billion yuan, managed 13.14 million corporate annuity personal accounts, and managed 1378.1 billion yuan of annuity funds. The size of managed corporate annuity funds, the number of managed corporate annuity personal accounts, and the size of managed annuity funds continued to rank first among banks.
In terms of digital finance, ICBC's digital business share in 2023 has reached 99%.
The real estate defect rate has reached an inflection point. The company's non-performing rate at the end of '23 was 1.36%, the same as Q23. The non-performing rate for public real estate was 5.37%, a sharp drop from 6.68% in 23Q2, and is the first time since 2020 that the non-performing rate for public real estate has declined. ICBC's 23Q4 provision coverage rate was 213.97%, a slight decrease from 216.22% in 23Q3.
Investment advice. We forecast EPS of 1.01, 1.07, and 1.12 yuan in 2024-2026, with net profit growth rates of 3.31%, 4.99%, and 4.53%. We obtained a reasonable value of 5.63 yuan based on the DDM model; according to the PB-ROE model, the 2024E PB valuation was 0.62 times (0.54 times that of a comparable company), and the corresponding reasonable value was 6.36 yuan. Therefore, the reasonable value range is 5.63-6.36 yuan (corresponding to 2024 PE is 5.57-6.30 times, corresponding PE is 5.40 times that of the same company), 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.