Changsha Bank (601577): Better Performance and Optimized Structure

Changsha Bank (601577): Better Performance and Optimized Structure
Event: On January 20th, Changsha Bank released its 2019 performance report with a 上海夜网论坛 revenue of 170.2 billion, a year-on-year increase of +22.1% (+ 7 pct); net profit attributable to mother 50.8 billion, a year-on-year increase of +13.4% (-0.5pct).ROE is 15.61% (-130BP).Defective rate 1.22% (-7BP).  Increased revenue and improved net profit margins.19 year revenue growth rate 22.1%, an increase of 7 a year.1pct, earlier 19Q3 is 0.7 points.Taking into account the expected 15% revenue growth rate of 18%, at a low stage, 19 years of revenue in line with expectations, the performance showed a good trend.The growth rate of net profit attributable to mothers in 19 was 13.4%, which was 2 higher than the earlier 19Q3.2 pct, a slight decrease of 0 every year.5 pct, or related to the provision of accrual strength.The growth gap between operating income and operating profit expanded rapidly in 19Q117.2 points to 19.7%, and then 杭州夜网 gradually canceled 7 of 19Q4.1%, the general provisioning strength tends to turn from strong to weak, but overall it is still a substitute.  ROE is down, or it may be affected by the dividend of preferred stocks.The ROE in 19 was 15.61%, 130BP lower than in the previous 18 years, mainly due to the issue of preferred shares in December 19, which will give priority to the distribution of profits over ordinary shares, thereby diluting the net profit attributable to shareholders of ordinary shares and slender ROE.But overall, its ROE is still at a relatively high level among listed city commercial banks.Asset quality continued to improve.The NPL ratio at the end of 19 was 1.22%, a decrease of 7BP from the beginning of the year. Since 14 years, it has been lower than the average value of listed city commercial banks and the asset quality is relatively good.  The asset structure continued to adjust, which was positive for net interest margin.Short-term interest rate of loan growth 4.5 pct, but still higher than the growth rate of total assets, the proportion of loans to total assets is increasing.The growth rate of deposits has steadily increased in 19 years, and it has increased by 3 compared with 19H1 in 19 years.1pct, but the proportion of deposits to total debt is trending downward.However, in the process of returning assets to loans, deposit growth will further improve.The asset structure will continue to be optimized, or it will provide momentum for continuous performance improvement.  Profit forecast and estimation: The revenue growth rate is good, the structure adjustment is optimized or the net interest margin is optimized, and the ROE is still maintained at a high level among city commercial banks.It is expected that the EPS in 20/21 will be 1.75/2.14 yuan, the corresponding PB is 0.78/0.69 times, giving a “neutral” rating.  Risk reminder: the classification policy tends to be severe and the adverse exposure is accelerated; the economy is stabilizing less than expected.