Key investment points: Bank of Jiangsu's 24Q1 revenue continued to grow well. The dividend ratio is highly attractive, and asset quality remains stable. We gave it a “superior to the market” rating.
Q1 Revenue grew rapidly. Bank of Jiangsu's 2024Q1 revenue growth rate was 11.73%, and net profit growth rate to mother was 10.02%. In addition, the Bank of Jiangsu plans to pay a dividend of 0.47 yuan per share in 2023. Considering that Bank of Jiangsu's profit growth rate in Q1 2024 also showed good growth, we think Bank of Jiangsu's dividend ratio is highly attractive.
The “Five Chapters” are being developed comprehensively. In terms of technology finance, at the end of 2023, Bank of Jiangsu technology enterprise loans increased by 32.56% compared to the end of 2022, serving more than 30,000 technology enterprises, ranking first in Jiangsu Province in total volume, including more than 15,000 specialized, innovative and high-tech enterprises. In terms of green finance, Bank of Jiangsu's green credit increased by 42.50% at the end of 2023 compared to the end of 2022. In terms of inclusive finance, Bank of Jiangsu's small and micro loans exceeded 620 billion yuan at the end of 2023, and Jiangsu Province continued to lead the market share. Among them, inclusive small and micro loans increased 25.27% compared to the end of 2022. In terms of pension finance, the Bank of Jiangsu introduced the “Enjoy Happiness Card” debit card specifically for the elderly, with a cumulative circulation of nearly 1 million. In terms of digital finance, the Bank of Jiangsu is actively exploring the use of new technologies such as big data, artificial intelligence, and the Internet of Things to meet the ubiquitous financial needs of G-end, B-side, and C-end customers.
Asset quality remains stable. The company's defect rate at the end of Q1 '24 was 0.91%, which was the same as the end of '23 and 23Q3. Bank of Jiangsu's provision coverage rate was 371.22% in Q1 in '24, and 378.13% and 378.12% at the end of '23 and Q3 respectively, which is not much of a difference.
Investment advice. We forecast EPS of 1.67, 1.88, and 2.08 yuan in 2024-2026, with net profit growth rates of 12.34%, 11.72%, and 10.04%. We obtained a reasonable value of 11.07 yuan based on the DDM model; according to the PB-ROE model, the 2024E PB valuation was 0.80 times (0.57 times that of a comparable company), and the corresponding reasonable value was 10.14 yuan. Therefore, the reasonable value range is 10.14-11.07 yuan (corresponding to 2024 PE is 6.07-6.63 times, corresponding PE is 4.77 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.