Positioning: based in Chongqing, radiating the western region, focusing on the target customer groups of customer expert banks. The Bank of Chongqing has always been based on the strategic orientation of building a "customer expert bank". The retail business transformation has been accelerated, the company's business has gradually transformed from traditional credit business to specialized industry financial service providers, small and micro business is committed to becoming the forerunner of small and micro financial services in the region, and the capital business has returned to its origin.
The company's ownership structure is stable and diversified, the management is relatively stable, and senior executives have rich experience, which lays a foundation for strategic implementation and sound operation. The company takes Chongqing as the center, forms the radiation to the three western provinces of Sichuan Province, Shaanxi Province and Guizhou Province, continuously realizes the great-leap-forward development, and gradually becomes the leading comprehensive city commercial bank in the western region of China. At present, ROA and ROE are in the upper reaches of the comparable industry.
Balance sheet analysis: long-term steady expansion, more optimized structure. The scale growth of the Bank of Chongqing shows a high correlation with the economic growth of Chongqing, mainly due to the concentration of the company's business in Chongqing and the sound management style. Since 2020Q2, the economy of Chongqing has gradually recovered, and the growth of the company size has also shown a momentum of improvement. From the structural point of view: the asset allocation strategy is cautious, credit and financial investment are the main allocation direction, and the focus of loans is tilted to capital-saving areas, including retail loans and loans for small and micro enterprises; the scale and proportion of standardized creditor's assets with high liquidity and low capital consumption in financial investment are increasing. Adhere to the "deposit bank" in debt
Business philosophy, the main source of funds is deposits, and the contribution of retail deposits has increased rapidly in structure.
Profit statement analysis: maintain strategic focus and highlight profit advantages. Chongqing Bank adheres to its strategic position and its profitability has a certain advantage in the comparable industry. The specific performance is as follows: (1) the continuous optimization of the asset-liability structure helps the interest margin to rise to the forefront of the comparable industry; (2) thanks to the continuous strengthening of cost and expense management, the cost-to-income ratio is at a lower level in the same industry; (3) the main indicators of asset quality tend to be better and the safety cushion of superimposed provisions is thicker, which promotes the decline of credit costs and weakens the negative effect on profits. Since the second half of 2019, the company's revenue, PPOP, home net profit growth center has risen, and the performance growth rate in the first three quarters of 2020 is in the upper reaches of the comparable industry.
Profit forecast and reasonable value: the Bank of Chongqing maintains strategic concentration, ploughs the target customer base, and moves forward steadily in tapping its own potential. It is estimated that the net profit of homing from 2020 to 2021 will increase by 8.0% and 11.8% respectively compared with the same period last year. Taking into account the dilution effect of A-share IPO, it is estimated that the earnings per share from 2020 to 2021 are 1.35yuan and 1.37yuan per share, respectively, and the net assets per share are 11.48yuan and 12.64yuan per share respectively. According to the prospectus, the issue price per share of the company is 10.83 yuan per share, corresponding to the PE of 8.01X and 7.90X, respectively, from 2020 to 2021. PB is 0.94X/0.86X. With reference to the current PB valuation level of A-share listed City Commercial Bank, combined with the fundamentals of the company, the Bank of Chongqing A-share 2021 1.0X-1.2XPB, the corresponding reasonable value per share is 12.64-15.17 yuan per share.
Risk tips: (1) Chongqing's economic downturn exceeded expectations, asset quality deteriorated significantly; (2) policy regulation exceeded expectations, interest rates fluctuated sharply, resulting in higher-than-expected liquidity risk.