INDUSTRIAL BANK(SH:601166) ZHONGTAI SECURITIES·2024-08-23 08:34Investment Rating - The investment rating for the company is "Buy" with a market price of 16.82, maintained from previous assessments [2]. Core Views - The company's net profit growth has turned positive at 0.9% in Q2 2024, driven by effective cost control on the liability side, stabilizing the net interest margin [6][10]. - Despite a decline in overall revenue growth due to weaker non-interest income, the company's asset quality remains stable with a slight decrease in provisioning efforts [6][10]. - The bank's strategy of focusing on both commercial and investment banking is expected to support steady growth in net interest income and open up opportunities for non-interest income growth in the future [8]. Financial Performance Summary - Revenue and Profit Forecasts: - Revenue (in million): 2023A: 210,245; 2024E: 214,396; 2025E: 220,888 [3]. - Net Profit (in million): 2023A: 77,116; 2024E: 77,326; 2025E: 79,752 [3]. - Growth rates: 2023A revenue growth: -5.3%; 2024E revenue growth: 2.0% [3]. - Net Interest Income: - Q2 2024 net interest income grew by 1.09% quarter-on-quarter, with a stable net interest margin of 1.62% [6][16]. - The asset yield decreased by 13 basis points to 3.73%, while the liability interest rate fell by 11 basis points to 2.15%, supporting margin stability [16]. - Asset and Liability Growth: - Total new credit issued in H1 2024 was 208.16 billion, a decrease of 13.1% year-on-year, with a significant increase in Q2 [7][18]. - New deposits in H1 2024 totaled 248.91 billion, down 37.7% year-on-year, but Q2 saw a recovery with an increase of 282.19 billion [19]. - Asset Quality: - The non-performing loan (NPL) ratio remained stable at 1.08%, with a slight increase in the annualized NPL generation rate to 1.18% [25]. - The overdue rate increased to 1.45%, indicating some pressure on asset quality [25]. Investment Recommendations - The company is projected to have a price-to-book (P/B) ratio of 0.46X in 2024E and 0.42X in 2025E, with a price-to-earnings (P/E) ratio of 4.52X and 4.38X respectively [8]. - The recommendation is to actively monitor the management's efforts in driving transformation and upgrading the business model, given the low valuation and high return on equity (ROE) [8].