On November 18, 2024, the Bank of Nanjing announced that BNP Paribas (QFII) increased its shares by 1%, and BNP Paribas, the company's largest shareholders, and BNP Paribas (QFII), the combined share holdings of the company increased from 17.04% to 18.04%. The Bank of Nanjing successively received major foreign shareholders and increased state-owned assets in the same region during the year, reflecting investors' recognition of the Bank of Nanjing's future development potential. Currently, Bank of Nanjing's convertible bonds are in the share conversion period. The closing price of the underlying stock is 5% of the strong ransom space (2024/11/08). Market resistance near strong debt-conversion prices has increased, and the majority shareholders have increased their holdings and stabilized their position confidence once again. The company's strategic transformation is effective, there is broad scope for business development, and the purchase rating is maintained.

Major shareholders increase their holdings again, demonstrating long-term value

Shareholders increased their holdings several times during the year, showing confidence in the investment value and future development of the Bank of Nanjing. According to the announcement, BNP Paribas (QFII) used its own funds to increase its holdings of Bank of Nanjing 0.179 billion shares through centralized bidding transactions on the Shanghai Stock Exchange between March 14, 2024 and November 7, 2024, with an increase of 1.00%. In recent years, BNP Paribas, the majority shareholder, has increased its holdings several times, demonstrating confidence in the long-term development of the Bank of Nanjing. In May 2022 and February 2024, BNP Paribas increased its holdings of Bank of Nanjing by 0.183 billion shares and 79.87 million shares respectively, accounting for 2.33% and 0.77%, respectively. Furthermore, in October, Dongfang Airport Group, a subsidiary of the Jiangsu State-owned Assets Administration Commission, announced an increase in the company's shares by 0.116 billion with its own capital, becoming the company's new shareholder, with a shareholding ratio of 1.09%. Shareholders have increased their holdings many times, stabilizing their confidence in holding positions.

Deepen strategic cooperation and open up space for development

BNP Paribas is the largest shareholder of the Bank of Nanjing and an important strategic partner, and business cooperation is expected to continue deepening. Since the Bank of Nanjing and BNP Paribas signed a strategic cooperation agreement in 2005, the two sides have been cooperating for nearly 20 years, continuing to promote domestic and foreign cooperation in the corporate retail finance market and other areas.

Among them, the consumer finance sector is the focus of cooperation between BNP Paribas and the Bank of Nanjing. Based on the complementary advantages of the two sides, the business model of Bank of South Africa's financial subsidiary is mature and the growth trend is impressive. As of the end of September, the loan balance of the consumer finance subsidiary reached 51.5 billion yuan and the registered capital was 5.215 billion yuan. It is expected that in the future, the consumer finance experience will gradually migrate to the parent bank, further opening up space for business development.

Performance improved quarter by quarter, with dividend growth

We maintain our previous forecast that the company's 24E-26E net profit to mother was 20.4/22.7/25.6 billion yuan, a year-on-year growth rate of 10.1%/11.6%/12.4%. The 25-year BVPS forecast is 15.81 yuan, corresponding to 0.64 times PB.

The Bank of Nanjing is a high-quality commercial bank rooted in Jiangsu. Financial market investment is a traditional strength. The new chairman took office at the end of 2023 to stimulate the entire bank's reform momentum. 9M24's revenue and net profit growth rates were 8.0% and 9.0%, and the performance growth rate improved quarterly; 23A's dividend rate of 5.27% (2024/11/08) was a high-quality target for both dividend growth. Comparable to the company's 25-year Wind unanimously predicts an average PB value of 0.59 times. We believe that the company's strategic transformation is effective and has broad scope for business development, and should enjoy a certain valuation premium, giving the 2025 target PB 0.82 times (previous value 0.80 times) and a target price of 12.96 yuan (previous value 12.79 yuan).

Risk warning: Economic recovery fell short of expectations, and the deterioration in asset quality exceeded expectations.