Industrial Bank (601166): Steady improvement in asset quality and steady earnings growth

Industrial Bank (601166): Steady improvement in asset quality and steady earnings growth

Investment points: Industrial Bank’s asset structure has been gradually adjusted while asset quality has been steadily improved, so as to maintain 19 years of stable endogenous growth and maintain a “scale market” rating.

  Although the growth rate of revenue has decreased, the growth rate of profits has remained basically the same.

Societe Generale Bank recently released its 2019 performance report, and in 2019, it initially achieved two growth rates in revenue.

55%, compared with 19 in the first three quarters.

18% decline, we think it is mainly due to the gradual disappearance of the low base effect in 19Q4, the single quarter revenue growth in the fourth quarter was extended2.

39%.

The initial net profit attributable to mothers in 2019 is expected to achieve a ten-year growth rate.

66%, a growth rate of 8% in the first three quarters.

52% increased slightly, the growth rate in the fourth quarter of the single quarter was 9.

37%.

We calculate a minimum effective tax rate of 10.

8%, a slight increase of 0 from the 2018 full year ranking.

Eight shareholders, we believe that tax-free assets are still one of the company’s asset-side allocations.

  The growth rate of total assets is stable, and the proportion of loans may increase further.

Express performance report shows that Industrial Bank ‘s total assets in the final period of 19Q4 increased by 6 years.

4%.

The company’s half-year growth rate of total assets has stabilized at around 6% since the end of the second quarter.

Considering that the highest average growth rate of loans in the first three quarters was above 20%, we expect that loans will also maintain the same growth rate in the fourth quarter of 2019, and the proportion of loans will further increase.

The company’s loan ratio at the end of 3Q19 has increased by 4 compared with the end of 2018.

9 up to 49.

0%.

  NPL ratio continued to decline and asset quality improved.

The performance report shows that the non-performing rate at the end of 19Q4 was 1.

54%, down 1BP from the previous month.

The company’s non-performing rate has gradually declined since mid-2019.

At the end of 19Q2 and 19Q3, the interest rate of interest loans decreased marginally along with the non-performing rate. At the end of the two seasons, the interest rate of loans fell by 23 and 3BP, respectively.

We believe that the marginal decline in both the non-performing ratio and the interest-oriented loan ratio reflects that the company’s asset quality is gradually improving marginally.

  Investment Advice.

Industrial Bank’s asset structure has been gradually adjusted while the quality of its assets has been steadily improved, thereby maintaining a steady, endogenous growth of 19 years.

We use the DDM model (assuming the company’s EPS for the next three years is 3.

10, 3.

47, 3.

92 yuan, the fourth to tenth year of net profit growth was 8.

0%, the dividend ratio is 25%; the net profit growth rate in the sustainable phase is 5.

0%, perpetual dividend payout ratio is 30%, risk discount reorganization9.

73%) to get a reasonable value of 26.

08 yuan, and the comparable estimation method, according to the PB-ROE model, the company’s 2019E PB statistics are doubled (comparable company average 1).

10 times), corresponding to a reasonable value of 成都桑拿网 23.38 yuan.

Therefore, the 2019 PB assessment is given1.

00-1.

12 times, corresponding to a reasonable value range of 23.

38-26.

08 yuan (corresponding to PE for 2019 is 7).

5-8.

4 times, the average PE of comparable companies is 8.

14 times), give “previous market” rating.

  Risk warning: the company’s ability to repay its debts has declined, and the quality of its assets has deteriorated severely; major changes have occurred in financial regulatory policies.