Bank of Suzhou: The beginning of a new phase, ready for new growth
Bank of Suzhou has entered a new stage of growth. The company's strategy and organizational structure have been comprehensively upgraded and innovated at the time when the new three-year plan began after adopting the previous and beginning. The new leadership team has been established, and the management is professional, practical and experienced, which is an important guarantee for the smooth implementation of the strategy. In the short term, the company's performance growth is gaining momentum, and the performance is expected to continue to outperform its peers. Rooted in high-quality regions, we are optimistic about the short-term performance elasticity and long-term growth of the Bank of Suzhou. We forecast the 2023-2025 EPS to be 1.30/1.57/1.89 yuan, respectively, and the 24-year BVPS forecast value is 11.72 yuan, corresponding to 0.57 times PB. Comparatively, the company's 24-year Wind unanimously predicted an average PB value of 0.44 times. The company is rooted in high-quality regions, has clear strategic goals, and should enjoy a certain valuation premium. We gave the 24-year target PB 0.75 times and a target price of 8.79 yuan, maintaining a “buy” rating.
External environment: Strong industrial roots and sufficient financial resources
Jiangsu Province has a high-quality industrial base. Suzhou is also the largest industrial city in the world. High-quality physical enterprises gather, and demand for credit is strong. The high-end transformation of the manufacturing industry in Jiangsu Province is also leading the country, spawning demand for financing science and innovation, and once again opening up space for the financial services manufacturing industry. Looking at the internal pattern, the five cities in southern Jiangsu lead economic development and continue to attract population inflows. As Suzhou becomes a “megacity,” the future construction and industrial planning of Suzhou and surrounding cities such as Wuxi, Changzhou, and Nantong will usher in new changes and possibilities. Suzhou City and Jiangsu Province as a whole still have abundant financial resources to be tapped. As the only local commercial bank in Suzhou, the Bank of Suzhou still has room for a significant increase in its market share.
Endogenous mechanism: strong strategic strength, innovation and fresh start
With the strategic strength of deeply cultivating “small” and “people,” the Bank of Suzhou continues to improve its strength in various businesses. 2023 marks the end of the three-year plan. The scale of assets has exceeded 500 billion dollars, bad burdens have basically been cleared, and growth has entered a new stage. The company's strategy was upgraded from “small for beauty” to “moving towards reality”, and on the basis of consolidating the advantages of small and micro customer groups, it entered large and medium-sized enterprise customers. A strict business division system has forged excellent professional capabilities for the company. The new stage will place more emphasis on “integrated integrated management” of public and retail, serving customers well while opening up customer acquisition channels and enhancing profitability. The beginning of the new phase coincided with a number of management changes. The new leadership team is professional, practical and experienced, which is an important guarantee for the smooth implementation of the new strategy.
Investment logic: short-term performance flexibility+long-term growth
Short-term performance is improving, and the implementation of a new long-term strategy has opened up room for growth, and I am optimistic about the investment value of Bank of Suzhou. In the short term, the Bank of Suzhou's operating capacity continues to be optimized, and performance is expected to continue to improve. 1) Scale: The expansion of physical enterprise customers and the expansion of offsite branches is the main driver for scale expansion; 2) Pricing: retail/regular share is higher than that of peers, and there is room for improvement in debt-side costs; 3) Revenue: Wealth income is growing strongly, and the acquisition of funds and custodian licenses will further enhance comprehensive service capabilities; 4) Asset quality: Inventory burdens are basically cleared, and various indicators are superior to peers, and there is room for free up. In the long run, high-quality regions+professional management+clear strategy will drive the company's continued high-quality growth.
Risk warning: Economic recovery fell short of expectations, and the deterioration in asset quality exceeded expectations.