The readings of this report are as follows:
The Bank of Chongqing is expected to benefit more from the opportunity of the construction of the Chengdu-Chongqing Shuangcheng economic circle, and the cost of debt and the quality of assets are expected to improve gradually, covering for the first time giving the Bank of Chongqing a target price of 1.1x PB, in 2021.
Main points of investment:
Investment suggestion: the net profit growth rate of the Bank of Chongqing in 2021-2023 is expected to be 19.69%, 13.60%, 13.07%, corresponding to EPS 1.52, 1.73, 1.96, BVPS12.30/13.57/15.01, and the current price corresponds to 7.36, 6.48, and 5.73 times PE,0.91/0.83/0.75 PB in 2021-2023. With the combination of absolute valuation method and relative valuation method, the Bank of Chongqing was covered for the first time to increase its holding rating by 1 times the target price of PB, in 2021.
Business highlights: take advantage of "Chengdu and Chongqing Shuangcheng" to build Dongfeng, debt cost and bad hope to improve.
1. Chengdu-Chongqing Shuangcheng economic circle brings development opportunities. Chongqing leads the western region in terms of GDP growth, per capita GDP and household consumption, with great potential for economic growth and strong financial demand. The Bank of Chongqing cooperates closely with the local government and will benefit more from the development opportunities brought about by the construction of the Chengdu-Chongqing Shuangcheng Economic Circle.
2. The net interest margin is expected to stabilize. The loan interest rate and the rate of return on financial investment of Chongqing banks are higher than those of other listed banks in the western region, but the higher deposit cost is still the main obstacle to the improvement of net interest margin.
To this end, the Bank of Chongqing will strengthen the construction of settlement deposits, transaction banks and supply chain finance on the public side, develop wealth management on the retail side, and gradually optimize the deposit structure.
3. The quality of assets is expected to be improved. Although the defect rate of the Bank of Chongqing has not improved significantly and is at the middle level of comparable banks, forward-looking indicators such as concern rate, overdue rate and overdue 90 days / non-performing loans have taken the lead in a significant decline, indicating that the potential risks have been effectively digested and the asset quality is expected to improve in the follow-up.
Risk hint: the epidemic prevention and control is not as expected as a drag on the regional economy, and the local city investment defaults on a large scale.