In Q4, the return profit growth rate continued to be 25% + in a single quarter, and interest spreads remained stable. The annual revenue of the Bank of Zhangjiagang increased 4.57% year on year, and Guimu's net profit increased 29% year on year. Among them, the profit growth rate for the Q4 single quarter was 25.8%, which continued to maintain a high growth rate. Meanwhile, the interest spread of the Bank of Zhangjiagang in Q4 2022 was 2.25%, which is consistent with Q3.
The customer base was further developed. The customer base of the Zhangjiagang Bank is also expanding further. At the end of 2022, the total number of Zhangjiagang Bank loan customers was 387,700, an increase of 118,000 from the beginning of the year, an increase of 44.92%. Among them, the number of public customers exceeded 10,000, reaching 11,200, an increase of 0.35,000, an increase of 45.45%; the number of personal loan customers was 369,500, an increase of 114,500, an increase of 44.90%.
Asset quality continues to improve. In 22Q4, the non-performing rate of the Bank of Zhangjiagang fell 1 bp to 0.89% month-on-month, and the provision coverage rate was 521.09%, which continued to remain above 500%. The proportion of concerned loans of the Bank of Zhangjiagang improved, from 1.59% in 22Q3 to 1.50% in Q4 '22. The asset quality of the Zhangjiagang Bank continues to maintain a steady pace.
Investment advice. We forecast EPS of 0.90, 1.04, and 1.18 yuan in 2023-2025, net profit growth rates of 16.06%, 15.04%, and 13.93%. The original 2023-2024 EPS was 0.90 and 1.03 yuan. We obtained a reasonable value of 6.84 yuan based on the DDM model (see Table 2); according to the comparable valuation method, the 2023E PB valuation for the company 2023E was 0.95 times (0.58 times for comparable companies), and the corresponding reasonable value was 6.41 yuan. Considering that the DDM model better reflects the long-term value of the company, our target price is 6.84 yuan (7.60 times PE for 2023, 4.97 times PE for interbank companies), and the original target price is 7.00 yuan. We maintain the “superior market” rating.
Risk warning: The solvency of enterprises has declined, and asset quality has deteriorated drastically; major changes have occurred in financial supervision policies.