Low valuation and high dividend yield build the margin of safety.

The current valuation level of Bank of Beijing is the lowest in history vertically, relatively low horizontally in listed banks, and its dividend yield is at a higher level of more than 7%. Undervalued and high dividend yield bring deterministic returns for the Bank of Beijing to build a solid margin of safety.

The inevitability of improving the fundamentals under the location advantage.

Beijing has a strong financing demand and excellent asset quality, social financial growth and non-performing loan ratio are very high in the country, providing an excellent external environment for the Bank of Beijing. With the solution of its own stock problem and the promotion of retail transformation, its asset quality and profitability will return to the natural situation of Beijing, with strong certainty.

The new chairman brings new opportunities.

On April 8, 2022, the qualification of Mr. Huo Xuewen, the new chairman of the Bank of Beijing, was approved. As the new chairman, Mr. Huo Xuewen is very familiar with economic and financial work, has rich management experience and profound academic attainments, and continues to pay attention to the field of digital economy and Internet finance, which is conducive to the stable operation and digital transformation of the Bank of Beijing. Moreover, Mr. Huo Xuewen has experience with local regulators in Beijing, which helps the Bank of Beijing to understand and meet regulatory requirements more fully and achieve a better balance between business flexibility and regulatory requirements.

Investment advice: the characteristics of low valuation and high dividend yield of the Bank of Beijing have built a solid margin of safety for it. In the medium to long term, with the poor clearing of stocks, the promotion of retail transformation and the appointment of the new chairman, combined with Beijing's strong credit demand and high-quality asset quality, the Bank of Beijing has a strong certainty of asset quality optimization and profitability improvement, and is optimistic about its valuation and repair opportunities. The current share price corresponds to a 2022 / 2023 PB valuation of 0.39 / 0.36 / 0.34 in 2024, maintaining a "buy" rating.

Risk hint: asset quality is affected by a higher-than-expected economic decline, and credit risk is concentrated exposed.