Key investment points: Rui Fung Bank's 24Q1 revenue maintained rapid growth, asset quality remained stable, and we gave it a “superior to the market” rating.

The 24Q1 revenue growth rate maintained rapid growth. Rui Fung Bank's 2024Q1 revenue growth rate was 15.32%, and net profit growth rate to mother was 14.69%, of which net interest income grew 5.57% year on year. Ruifeng Bank's interest spread for 2024Q1 was 1.60% compared to 1.73% at the end of 2023

Non-interest income has increased. In terms of net revenue from handling fees, Rui Fung Bank achieved net revenue of 3.231 million yuan from handling fees and commissions in 24Q1, compared to negative for the same period in 2023. In terms of investment income, Ruifeng Bank achieved investment income of 337 million yuan in Q1, compared with 72 million yuan in the same period in 2023.

Asset quality remains stable. The company's defect rate at the end of Q1 '24 was 0.97%, which is the same as at the end of '23.

Rui Fung Bank's provision coverage rate was 304.84% in Q1, up slightly from 304.12% at the end of '23.

Investment advice. We forecast EPS of 0.98, 1.09, and 1.19 yuan in 2024-2026, with net profit growth rates of 11.44%, 11.38%, and 9.18%. We obtained a reasonable value of 6.22 yuan based on the DDM model; according to the PB-ROE model, the 2024E PB valuation was 0.75 times (0.61 times that of a comparable company), and the corresponding reasonable value was 6.96 yuan. Therefore, a reasonable value range of 6.22-6.96 yuan (corresponding to 2024 PE is 6.35-7.10 times, corresponding PE is 4.28 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.