SPD Bank's 2021-2023 net profit growth rate and industry differentiation. The biggest pressure comes from bad exposure. On the one hand, adverse exposure directly increases the pressure on provision plans. On the other hand, it also affects the rate of asset expansion, including slowing asset growth to focus more on risk prevention and control, and increasing provision plans affecting profitability, leading to a decrease in capital's endogenous capacity. In 2021-2023, SPD Bank's net profit to mother continued to decline, and its net profit growth rate was lower than the overall level of listed banks. We have broken down the gap in the overall net profit growth rate between SPD Bank and listed banks through attribution analysis. We can find that there are two main reasons why its performance growth rate continues to fall below the overall level of the industry: one is that the pressure to accrue asset impairment losses is high, and the other is that the average balance of interest-bearing assets is growing slowly. The impact of other factors on its net profit growth is not much different from the overall situation of the industry.
The bad generation rate of SPD Bank has fallen back to close to the overall level of stock banks, and subsequent asset quality trends need to be observed. Whether SPD Bank's future performance can continue to improve depends mainly on changes in the quality of its assets.
The bad generation rate of SPD Bank has continued to decline in recent years. Although the bad generation rate in 2022 to 2023 is still higher than the overall level of listed banks, it has fallen back to close to the overall level of stock banks. We will continue to track and observe the trend of the company's subsequent bad generation rate.
The growth rate of SPD Bank's net profit to mother recovered in the first quarter of 2024. In the first quarter of 2024, SPD Bank achieved operating income of 45.3 billion yuan, down 5.7% year on year; realized net profit of 17.4 billion yuan, up 10.0% year on year. The net profit growth rate recovered mainly due to reduced asset impairment losses, and asset impairment losses decreased 20.1% year on year in the first quarter of 2024. Judging from the main indicators, SPD Bank's asset growth rate has remained low, the decline in net interest spreads has narrowed, and asset quality indicators have not changed much.
Investment advice: We expect the company's net profit to be 404/425.45.5 billion yuan in 2024-2026, with a year-on-year growth rate of 10.1/5.1/ 7.0%; diluted EPS of 1.19/1.26/1.37 yuan; current stock price corresponding to PE is 7.1/6.7/6.2, and PB is 0.39/0.37/0.36x. Based on absolute valuation and relative valuation, we believe that the company's reasonable stock price in 2024 is 7.8-9.4 yuan, and the corresponding 2024 dynamic PB is 0.36-0.43x. The current valuation is quite reasonable, and for the first time, coverage gives a “neutral” rating.
Risk warning: valuation risk, profit forecasting risk, policy risk, financial risk, market risk, etc.