Introduction to this report:
The Bank of Jiangsu operates steadily, its performance is growing steadily, and its asset quality remains at an excellent level. In 24Q1, public deposit and loans were strong, and interest spreads were more resilient than peers. The target price was maintained at 9.11, and the increase in holdings rating was maintained.
Key points of investment:
The investment proposal adjusts the 2024-2026 net profit growth forecast to 10.6%, 11.8%, and 15.2% (new), corresponding to EPS 1.65 (-0.81), 1.85 (-1.13), and 2.15 (new) yuan/share, based on financial reports and changes in share capital after debt-to-equity conversion. Considering the shift in valuation and maintaining a comparative advantage in revenue, maintain the target price of 9.11 yuan, corresponding to 0.7 times PB in 2024, and maintain an increase in holdings rating.
The company operates steadily and its performance is growing steadily. 23A and 24Q1 revenue increased 5.3% and 11.7%, respectively, and net profit to mother increased 13.3% and 10% year over year. Among them, the 23Q4 revenue and profit growth rate fluctuated. First, due to the time of confirmation of some interest income, the 23Q4 net interest spread narrowed significantly in a single quarter, but 24Q1 had returned to a normal level, and interest spread resilience was still better than that of peers; second, there was a one-time confirmation of large handling fee expenses, and net handling fee revenue decreased by 102.2% year on year.
At the same time, since 2023, the quality of retail loan assets has been under pressure in the industry. The company has operated prudently, continuously increased impairment accrual and bad disposal efforts in 23Q4 and 24Q1, and consolidated provisions.
24Q1 is booming for public line deposits and loans, effectively balancing growth and risk. In 2023, corporate deposits and loans achieved high growth rates of 15.4% and 12.3% respectively, and continued to increase year-on-year in 24Q1.
Public business performance was impressive. 24Q1 deposits and loans increased by 162.8 billion yuan and 184.2 billion yuan respectively, up 61% and 190% year-on-year from 23Q1. It is estimated that there has been significant progress in major customer operations.
Asset quality was steady. The defect rate remained flat month-on-month at the end of 24Q1, and the attention rate and overdue rate increased slightly by 3 bps to 1.37% and 1.10% from the beginning of the year. The provision coverage rate is high and stable, and the overall risk is manageable.
Risk warning: Structural risk exposure exceeded expectations; deposit cost improvement was slower than expected.