Key points of investment

Overview of the data

24Q1-3 Jiangsu Golden Rental achieved total operating income of 3.96 billion yuan, up 8.8% year on year; net profit to mother of 2.23 billion yuan, up 9.1% year on year; 24Q3 net profit of 0.79 billion yuan, up 10% year on month, up 10% month on month; weighted average return on net assets was 11.87%, a decrease of 0.4 pct year on year, and performance was in line with expectations.

Lease balances have increased, interest spreads have declined, and poor control is better

24Q1-3's net interest income was $3.89 billion, up 7% year over year. ① Volume: The company's lease receivable balance at the end of 24Q1-3 was 123.7 billion yuan, an increase of 1% over the previous year, and an increase of 12% over the end of the previous year. It is estimated that investment will increase in the company's key layout areas (high-end manufacturing, clean energy, etc.). ② Price aspect: In the face of increased competition in the industry, the company's leasing interest rate narrowed slightly to 3.67%, down 0.02 pct year on year and 0.01 pct month on month.

③ Qualitative aspects: By the end of 24Q3, the company's non-performing financial leasing asset ratio was 0.92%, down 0.02pct year on year, and up 0.02pct month-on-month, but remained below 1%, with provision coverage of 426.01%.

Professional subsidiary opened, debt-for-equity conversion to supplement capital strength

The subsidiary opened, focusing on long-term professional operation: On July 12, 2024, Jiangsu Faba Golden Rental was approved to open, and the opening ceremony was held on September 19, 2024. The subsidiary has a registered capital of 1 billion yuan and was established as a joint venture between Jiangsu Golden Rental (holding 55% of shares) and France and Pakistan Leasing. In the future, it will focus on the agricultural and technological equipment leasing sector, characterized by retail finance and direct leasing, further strengthening the competitiveness of Jiangsu Golden Rental in the leasing segment.

Bond-for-money redemption has been launched to supplement capital strength: On September 6, 2024, the company issued an announcement stating that “rent to rent” had met the redemption conditions, the company decided to exercise early redemption rights, and the convertible bonds were delisted on October 18, and the sell-off pressure caused by debt conversion was eliminated. Although short-term increases in total share capital will dilute earnings per share and ROE to a certain extent, supplemental capital strength is beneficial to the company's long-term sustainable development.

Profit forecasting and valuation

Jiangsu Golden Rental's performance is growing steadily, and the subsidiary's focus on agriculture and technology is expected to strengthen competitiveness in the segment. Net profit to the mother is expected to grow 11%/12%/10% year-on-year in 2024-2026, respectively. The corresponding BPS is 4.98/4.59/4.97 yuan per share, respectively, and the PB corresponding to the current price is 1.06/1.15/1.06 times. The company was given 1.2 times PB in 2024, corresponding to a target price of 5.98 yuan, maintaining a “buy” rating.

Risk warning

The macroeconomy declined sharply; interest rates fluctuated sharply.