SRCB(601825) 华创证券·2024-08-18 08:09Investment Rating - The report maintains a "Recommend" rating for Shanghai Rural Commercial Bank (SRCB) with a target price of 7.67 RMB, compared to the current price of 6.54 RMB [1] Core Views - Q2 2024 is expected to be the low point for revenue and profit growth due to a high base of other non-interest income in the same period last year [1] - Effective credit demand remains weak, with loan growth slowing, but the bank's technology finance business continues to show strong growth potential [1] - The net interest margin (NIM) declined by only 1bp in Q2 2024, benefiting from a narrowing decline in asset yields and continued compression of liability costs [1] - Fee income decreased by 17.4% YoY in H1 2024, mainly due to a 25.5% decline in insurance agency fees, but the bank's pension finance business remains a strong point [1] - Asset quality improved marginally, with the non-performing loan (NPL) ratio dropping by 2bp to 0.97%, and the provision coverage ratio decreased by 9.5pct to 372% [1] Financial Performance - H1 2024 revenue was 13.917 billion RMB, up 0.23% YoY, while net profit attributable to shareholders was 6.97 billion RMB, up 0.62% YoY [1] - The core Tier 1 capital adequacy ratio increased by 19bp to 14.68%, supporting a stable high dividend payout ratio of 33% [3] - The bank's mid-term cash dividend per share is 0.239 RMB (tax included), with an annualized dividend yield of 7.3% if the payout ratio remains consistent [3] Business Highlights - Technology finance, inclusive finance, and green finance businesses grew rapidly, with technology enterprise loans increasing by 17.3% compared to the end of 2023 [1] - Retail loans declined by 3.1% YoY, mainly due to a 4.3% drop in personal business loans, although mortgage loans showed signs of recovery [1] - The bank's pension finance business has a strong market position in Shanghai, with a customer base of nearly 1.22 million and AUM exceeding 300 billion RMB [1] Future Outlook - Revenue and profit growth are expected to rebound after the high base effect fades, with projected revenue growth of 2.1%, 5.3%, and 6.9% for 2024E-2026E, and net profit growth of 2.9%, 6.2%, and 10.0% respectively [3] - The bank's valuation is attractive, with a 2024E PB of 0.53X, and the target PB is set at 0.62X, reflecting the bank's regional advantages, business characteristics, and growth potential [3]