Core ideas:
The performance was lower than expected, with 21Q1's homed net profit rising 2.2 per cent year-on-year. According to the company's annual report for 2020 and quarterly report for 2021, 20-year revenue, PPOP and return net profit increased by-4.2%,-4.5% and 1.7% respectively compared with the same period last year, mainly dragged down by the decline in net interest income and middle income. Other non-interest, provision and tax incentives are the main performance contributions. Under the premise of more negative growth in 21Q1 revenue and PPOP, and the overall stability of asset quality, the provision slowed down, and the return net profit increased by 2.2% compared with the same period last year. In terms of revenue structure, middle income and other non-interest income in 21Q1 are still negative compared with the same period last year, but the growth rate of net interest income has become positive, at 2.2 per cent.
The negative asset structure continues to be optimized, and the spread pressure is released slowly. The net interest margin of 20A was 1.91%, which was 21 BP lower than that of 19A, mainly because the rate of return on interest-bearing assets (45bp) was greater than the interest-bearing liability cost ratio (25bp). 21Q1 net interest margin fell to 1.87 per cent. (1) on the asset side, 20A loans grew by 18.0%, and the ratio of loans to interest-bearing assets rose to 55.4% for three consecutive years. 21Q1 continued to rise to 55.7%. Retail loans grew by 27.4%, and retail loans accounted for 24.6% of 21Q1 continued to rise to 25.7%. At the end of the year, the loan balance of inclusive small and micro enterprises was 16.82 billion yuan, a growth rate of 42.60%, which was higher than the average loan growth rate of 24.14pct. The company fully implemented the financial rescue, reduced the cost of physical financing, and the loan yield fell 25bp to 5.13% compared with 19A. (2) on the debt side, the growth rate of 20A deposits is 12.8%, and the proportion of deposit / interest-bearing liabilities is 74.6%, which is 3.0% higher than that of 19A and increases from 21Q1 to 77.6%. The growth trend of personal deposits is good, with 21Q1 personal deposits accounting for 47.5%, and the deposit cost rate increases by 6bp to 1.91% compared with 19A. The proportion of corporate deposits and demand deposits is relatively high, the cost of debt is at a better level in the industry, and interest spreads benefit relatively in the upward environment of interest rates.
Looking back, as the economy repairs and the proportion of deposits and loans continues to rise, interest rate spreads are expected to pick up.
The identification of defects is strict, and the quality of assets is further consolidated. The default rate of 20Q1 is 1.68%, which is the same as that of 20A/19A. 21Q1 is concerned that the loan balance and ratio continue to decline. At the end of 20A, the ratio of overdue loans to non-performing loans was 44.36%, and the ratio of outstanding loans to non-performing loans more than 60 days overdue was 46.35%. At the end of 20A, the provision coverage is 220.15% and 21Q1 is 215.20%, and the risk offset ability is still strong. We estimate that the bad generation rate of 20Q1 is 0.97%, which is 0.41 pct lower than that of 20A. As the company continues to strengthen comprehensive risk management, asset quality is expected to remain stable in the future.
Investment advice: due to the impact of the epidemic, the company's performance growth rate has declined greatly, but the asset quality has been further consolidated, and the increase in the holdings of Dong Jiangao and major shareholders shows confidence in the future development. It is estimated that the growth rate of the company's net profit from homing in the 22nd year is 5.1%, 14.4%, 0.41, 0.47 yuan per share, and 4.25, 4.62 yuan per share, respectively. The current A-share price corresponds to the 22nd year PE of 21Universe, and the PE is 9.45XAccording to 8.26XJue. PB is 0.92X/0.85X. The company is rooted in Nanjing, with obvious geographical advantages and deposit advantages, and the development of retail transformation is accelerated, which can give the company a 2021 PB valuation of 1.0X, a reasonable value of 4.25 yuan per share, and maintain an "overweight" rating.
Risk tips: the economy has declined more than expected, asset quality has deteriorated significantly, and regional deposit competition has intensified.