Investment Rating - The investment rating for Chengdu Bank is "Neutral" [6] Core Views - Chengdu Bank's revenue and net profit showed stable growth in the first half of 2025, with revenue reaching 12.27 billion yuan and net profit at 6.62 billion yuan, representing year-on-year growth of 5.91% and 7.29% respectively [1] - The bank's total assets grew by 14.32% year-on-year, exceeding 1.37 trillion yuan, indicating robust asset expansion [2] - The net interest margin remained relatively stable at 1.62%, with net interest income increasing by 7.59% to 9.77 billion yuan despite slight pressure from narrowing margins [3] - Asset quality is strong, with a non-performing loan ratio of 0.66% and a provision coverage ratio of 452.65% [3] Financial Performance Summary - Revenue for 2025 is projected to be 24.55 billion yuan, with a year-on-year growth rate of 6.8% [5] - The forecasted net profit for 2025 is 13.99 billion yuan, reflecting an 8.8% increase compared to the previous year [5] - The diluted earnings per share (EPS) is expected to be 3.29 yuan for 2025, with a price-to-earnings (PE) ratio of 5.6x [4][5] - The bank's core Tier 1 capital adequacy ratio is 8.61%, showing a slight decline from the beginning of the year [2]

Market Overview - The city commercial bank sector experienced a decline of 0.92% on August 29, with Suzhou Bank leading the drop [1] - The Shanghai Composite Index closed at 3857.93, up 0.37%, while the Shenzhen Component Index closed at 12696.15, up 0.99% [1] Individual Stock Performance - Xi'an Bank saw a significant increase of 10.00%, closing at 4.18, with a trading volume of 1.51 million shares and a transaction value of 623 million yuan [1] - Qingdao Bank and Xiamen Bank also reported slight increases of 1.03% and 0.75%, respectively [1] - Conversely, Suzhou Bank experienced a decline of 2.40%, closing at 8.12, with a trading volume of 744,000 shares and a transaction value of 612 million yuan [2] Capital Flow Analysis - The city commercial bank sector had a net outflow of 1.793 billion yuan from institutional investors, while retail investors saw a net inflow of 913 million yuan [2] - The capital flow data indicates that retail investors are showing interest in the sector despite the overall decline [2] Detailed Capital Flow by Stock - Xi'an Bank had a net inflow of 99.76 million yuan from institutional investors, while it faced a net outflow of 42.89 million yuan from retail investors [3] - Hangzhou Bank also saw a net inflow of 61.29 million yuan from institutional investors, but retail investors withdrew 35.94 million yuan [3] - In contrast, Qilu Bank experienced a significant net outflow of 62.93 million yuan from institutional investors, while retail investors had a net inflow of 35.68 million yuan [3]

Investment Rating - The report upgrades the investment rating of Chengdu Bank to "Buy" [5][8] Core Views - Chengdu Bank's revenue growth is supported by solid fundamentals, with a year-on-year increase of 5.91% in revenue and 7.29% in net profit attributable to shareholders for the first half of 2025 [1][2] - The bank's net interest income has rebounded, contributing to the upward trend in revenue growth, with net interest income reaching approximately 97.66 billion yuan, up 7.59% year-on-year [2][13] - The bank maintains a robust asset quality with a non-performing loan ratio of 0.66% and a provision coverage ratio of 452.7% as of the end of the first half of 2025 [4][27] Financial Performance - Chengdu Bank's total revenue for the first half of 2025 was approximately 122.7 billion yuan, with a quarter-on-quarter growth rate increase of 2.74 percentage points [2][13] - The bank's net interest margin stood at 1.62%, unchanged from the first quarter of 2025, while the yield on interest-earning assets was 3.57%, down 27 basis points from the end of 2024 [2][16] - The bank's total interest-earning assets reached 1.36 trillion yuan, growing 9.79% from the end of 2024 and 14.19% year-on-year [4][22] Asset and Liability Management - As of the first half of 2025, Chengdu Bank's interest-bearing liabilities amounted to 1.26 trillion yuan, reflecting a year-on-year growth of 13.55% [4][26] - The bank's deposit structure shows a 12.68% year-on-year increase in deposits, with significant growth in bond issuance and interbank liabilities [4][26] - The bank's loan portfolio continues to grow, with corporate loans increasing by 15.62% year-on-year and retail loans by 12.85% [22][23] Non-Interest Income - Non-interest income for the first half of 2025 included net commission and fee income of 248 million yuan, down 45.15% year-on-year, while investment net income was 2.266 billion yuan, up 13.07% [3][21] Asset Quality - The non-performing loan ratio for corporate loans decreased to 0.59%, while the non-performing loan ratio for retail loans increased to 0.98% [27][28] - The bank's provision coverage ratio remains high at 452.7%, indicating strong risk management practices [4][27]

Core Viewpoint - The financial performance of Chengdu Bank and Chongqing Bank in the first half of 2025 highlights their differentiated development in asset scale, revenue, profit, business layout, and risk management, sparking discussions about the title of "King of Southwest" [2] Asset Scale - As of June 30, 2025, Chengdu Bank's total assets reached 1.37 trillion yuan, a 9.77% increase from the end of the previous year, maintaining its position as the largest city commercial bank in Southwest China. Chongqing Bank's total assets amounted to 983.37 billion yuan, an increase of 14.79%, nearing the trillion yuan mark [3] Revenue and Profit - Chengdu Bank reported operating income of 12.27 billion yuan, a year-on-year increase of 5.91%, and a net profit attributable to shareholders of 6.62 billion yuan, up 7.29%. In comparison, Chongqing Bank achieved operating income of 7.66 billion yuan, a 7.00% increase, and a net profit of 3.19 billion yuan, growing by 5.39% [4] Revenue Structure Challenges - Both banks face challenges in their revenue structures, particularly in the transformation of intermediary businesses. Chengdu Bank's net interest income was 9.77 billion yuan, up 7.59%, but its fee and commission income dropped by 45.15%. Chongqing Bank's net interest income increased by 12.22% to 5.86 billion yuan, while its fee and commission income fell by 28.62% [5] Business Layout - Chengdu Bank has focused on expanding corporate business, with corporate loans reaching 689.64 billion yuan, a 14.44% increase. Despite its "big retail" strategy, its retail business remains underdeveloped. Chongqing Bank also actively supports the dual-city economic circle, providing credit support of nearly 140 billion yuan for over 90 major regional projects [6][7] Risk Management - Chengdu Bank maintains a low non-performing loan (NPL) ratio of 0.66% and a provision coverage ratio of 452.65%. Chongqing Bank's NPL ratio improved to 1.17%, with a provision coverage ratio of 248.27%. However, both banks face challenges in capital adequacy, with Chengdu Bank's capital adequacy ratios declining slightly [9][10] Future Outlook - Analysts suggest that the bank that can optimize its business structure and overcome challenges in intermediary and retail businesses will have a better chance of securing the title of "King of Southwest" [11]

Investment Rating - The report maintains a "Strong Buy" rating for Chengdu Bank, expecting the stock to outperform the market by over 20% within the next six months [13]. Core Views - Chengdu Bank's operating income for the first half of 2025 reached 12.3 billion yuan, a year-on-year increase of 5.9%, while net profit attributable to shareholders was 6.62 billion yuan, up 7.3% year-on-year [4][7]. - The bank's total assets grew to 1.37 trillion yuan, reflecting a 14.3% year-on-year increase, with loans and deposits increasing by 18.0% and 14.7%, respectively [4][7]. - The narrowing decline in net interest margin and stable asset quality indicate a positive outlook for the bank's performance [7][8]. Summary by Sections Financial Performance - Chengdu Bank's net interest income for the first half of 2025 increased by 7.6% year-on-year, supported by a recovery in revenue growth [7]. - Non-interest income saw a slight decline of 0.2%, primarily due to a significant drop in fee-based income [7]. - The bank's net interest margin at the end of the first half of 2025 was 1.62%, with a quarterly annualized net interest margin of 1.48%, showing a reduced decline compared to the first quarter [7]. Asset Quality - The non-performing loan (NPL) ratio remained stable at 0.66%, with a calculated NPL generation rate of 0.23% [8]. - The bank's provision coverage ratio and loan-to-provision ratio were 453% and 2.98%, respectively, indicating strong risk mitigation capabilities [8]. Growth Projections - The report forecasts Chengdu Bank's earnings per share (EPS) for 2025-2027 to be 3.26, 3.58, and 3.98 yuan, respectively, with corresponding profit growth rates of 7.6%, 9.8%, and 11.1% [7][10]. - The bank's price-to-book (P/B) ratios for 2025-2027 are projected to be 0.87x, 0.77x, and 0.69x, suggesting potential for valuation expansion [7][10].

Market Performance - The city commercial bank sector increased by 1.22% on August 28, with Chengdu Bank leading the gains [1] - The Shanghai Composite Index closed at 3843.6, up 1.14%, while the Shenzhen Component Index closed at 12571.37, up 2.25% [1] Individual Bank Performance - Chengdu Bank's closing price was 18.54, with a rise of 2.77% and a trading volume of 674,500 shares, amounting to a transaction value of 1.241 billion yuan [1] - Nanjing Bank closed at 11.28, up 1.99%, with a trading volume of 653,800 shares and a transaction value of 735 million yuan [1] - Jiangsu Bank closed at 11.02, up 1.94%, with a trading volume of 2.122 million shares and a transaction value of 2.324 billion yuan [1] - Other notable banks include Hangzhou Bank (closing price 16.08, up 1.39%), Ningbo Bank (closing price 28.29, up 1.11%), and Suzhou Bank (closing price 8.32, up 1.09%) [1] Capital Flow Analysis - The city commercial bank sector saw a net inflow of 470 million yuan from main funds, while retail funds experienced a net outflow of 383 million yuan [2] - The individual stock capital flow indicates that Jiangsu Bank had a net inflow of 111 million yuan from main funds, while it faced a net outflow of 10.2 million yuan from retail funds [3] - Hangzhou Bank also reported a net inflow of 108 million yuan from main funds, with a net outflow of 81.36 million yuan from retail funds [3]

Investment Rating - The investment rating for Chengdu Bank is "Buy" and is maintained [8]. Core Views - Chengdu Bank's performance in the first half of the year exceeded expectations, with revenue growth of 5.9% year-on-year and net profit growth of 7.3% [2][6]. - The bank's net interest income increased by 7.6%, reflecting a stabilization in net interest margin and rapid loan growth [2][12]. - The non-performing loan (NPL) generation rate dropped to a near-record low of 0.18%, with the NPL ratio remaining stable at 0.66% [2][12]. Summary by Sections Financial Performance - Revenue growth for the first half of the year was 5.9%, with a quarterly increase of 8.5% in Q2. Net profit grew by 7.3%, with Q2 showing an 8.7% increase [2][6]. - Net interest income growth was 7.6%, with Q2 showing a significant increase to 11.6% [12]. - Total assets grew by 9.8% compared to the beginning of the year, with loans increasing by 12.4% [12]. Asset Quality - The NPL ratio remained stable at 0.66%, with a provision coverage ratio of 453% [2][12]. - The NPL generation rate decreased to 0.18%, significantly better than industry peers [12]. Loan and Deposit Growth - Total loans increased by 921 billion, with a year-on-year increase of 12.4% [2][12]. - Deposits grew by 11.2%, with a decrease in the proportion of demand deposits [12]. Interest Margin and Cost Management - The net interest margin was 1.62%, slightly down from the previous year but showing signs of stabilization [12]. - The cost-to-income ratio improved, driven by stable credit impairment provisions and tax rates [12]. Investment Recommendations - The bank's return on equity (ROE) and asset quality metrics are industry-leading, with a projected dividend yield of 5.3% for 2025 [12]. - The stock is recommended for purchase, with a price-to-book (PB) ratio of 0.86x and a price-to-earnings (PE) ratio of 5.7x [12].

Core Viewpoint - Chengdu Bank reported a positive performance in the first half of 2025, with significant growth in revenue and net profit, reflecting the resilience of the macroeconomic environment in China [1]. Financial Performance - Chengdu Bank achieved an operating income of 12.27 billion yuan, a year-on-year increase of 5.91% [1]. - The net profit attributable to shareholders reached 6.617 billion yuan, growing by 7.29% compared to the previous year [1]. Economic Context - The Chinese economy showed signs of improvement in the first half of 2025, supported by a comprehensive financial policy framework aimed at stabilizing the market and expectations [1]. - Regulatory policies have continued to demonstrate their effectiveness during this period [1]. Business Growth and Risk Management - Chengdu Bank maintained strategic development focus, enhancing the quality and efficiency of financial services, leading to coordinated growth in scale, efficiency, and quality [1]. - Total assets increased by 9.77% compared to the end of the previous year, with both total deposits and total loans also showing growth [1]. - The ratio of deposits to total liabilities stood at 76.61%, indicating a stable operational structure [1]. - The non-performing loan ratio was reported at 0.66%, with liquidity remaining ample [1]. Market Position - Chengdu Bank has adhered to regulatory requirements and worked to enhance its value creation and market competitiveness [1]. - According to The Banker magazine's 2025 Global Bank 1000 ranking, Chengdu Bank improved its position to 170th globally, rising 14 places from the previous year, further solidifying its status in the global banking industry [1].

Core Insights - The report highlights the updated monthly interest rate timing model, which shows improved predictive accuracy with a success rate of 74% for the recent two years [12][14] - The company Atour (ATAT.O) has raised its full-year retail revenue guidance, with Q2 revenue growing by 37.4% year-on-year to 2.47 billion yuan, exceeding expectations [15][17] - Shenzhen International (00152.HK) reported a revenue of 6.67 billion yuan, a year-on-year increase of 0.9%, with a focus on logistics park transformation projects [18][16] Group 1: Interest Rate Timing Strategy - The updated model incorporates richer factor indicators and adjusts weightings for different types of indicators, enhancing predictive capabilities [14] - Three strategy applications have been designed: basic timing strategy, timing & treasury futures strategy, and timing & leverage strategy, all outperforming longer-duration benchmarks [14] - The timing & leverage strategy achieved a maximum annualized excess return of 128 basis points [14] Group 2: Atour (ATAT.O) Performance - Atour's Q2 performance exceeded expectations, with a net profit increase of 39.8% year-on-year to 425 million yuan [15][17] - The company opened 118 new hotels in Q2, maintaining its target of 500 new openings for the year [15][17] - Retail business GMV reached 1.144 billion yuan in Q2, a year-on-year growth of 84.6%, with online sales accounting for over 90% [15][17] Group 3: Shenzhen International (00152.HK) Insights - The company’s logistics park transformation and asset securitization strategies are expected to enhance earnings resilience [18][16] - For 2025-2027, net profit forecasts are 3.081 billion, 3.430 billion, and 3.925 billion HKD, with a dividend yield projected at 8.3%, 9.3%, and 10.6% respectively [18][16] - The logistics park business reported a revenue of 785 million HKD in H1 2025, a year-on-year increase of 5.4% [18][16] Group 4: Steel Industry Performance - Baosteel (600019) reported steady growth with high dividend maintenance, while Hualing Steel (000932) saw a significant increase in high-end product sales [20][24] - The steel industry is experiencing a shift towards high-end products, with companies like Zhongxin Special Steel (000708) maintaining stable performance [26] - The overall steel market is expected to benefit from reduced raw material costs and improved product structures, leading to enhanced profitability [24][26]

Core Viewpoint - The banking sector in Sichuan is planning to jointly apply for a wealth management company license, which could signify a new trend in the establishment of such companies in China, especially under the pressure of clearing existing wealth management products by the end of 2026 [1][2]. Group 1 - Three banks in Sichuan, namely Chengdu Bank, Chengdu Rural Commercial Bank, and Sichuan Bank, are preparing to apply for a wealth management company license together, indicating a collaborative approach among local banks [1]. - There has been no new wealth management company license approved since December 29, 2023, and if Sichuan's application is successful, it may signal the beginning of a new round of license approvals [1]. - Currently, most wealth management companies are established solely by banks, but the joint application by three domestic banks could introduce a new model for the formation of wealth management companies [1]. Group 2 - The pressure to clear existing wealth management products is significant, particularly in central and western provinces, leading many local banks to actively seek licenses [2]. - The "one province, one bank" model, similar to the Sichuan approach, is gaining traction among provinces that have yet to obtain a wealth management license, indicating a potential shift in how licenses are pursued [2].