HTSC·2024-09-01 06:03Investment Rating - Investment Rating: Buy (Maintain) for 1288 HK, Accumulate (Maintain) for 601288 CH with target prices of HKD 4.48 and RMB 5.58 respectively [5][20]. Core Views - The report indicates a recovery in operational performance and stable asset quality for the company, with a notable increase in net profit and revenue growth compared to peers [29][30]. - The company is expected to maintain a valuation premium due to its unique characteristics in county-level finance, despite uncertainties in the macroeconomic recovery [7][8]. Financial Performance Summary - For the first half of 2024, the company's net profit, revenue, and pre-provision operating profit (PPOP) growth rates were +2.0%, +0.3%, and flat respectively, outperforming peers [7]. - The annualized ROA and ROE for the first half of 2024 were 0.67% and 10.75%, showing a slight decline from the previous year [7]. - The company’s total assets, loans, and deposits as of June increased by 10.4%, 11.9%, and 4.4% year-on-year, with a significant focus on county-level loans [8][10]. Asset Quality and Risk Indicators - The non-performing loan (NPL) ratio stood at 1.12% as of June, down 12 basis points from the end of 2023, indicating improved asset quality [8][10]. - The company’s provision coverage ratio was stable at 304%, reflecting a solid buffer against potential loan losses [10][14]. Earnings Forecast - The forecasted EPS for 2024, 2025, and 2026 are RMB 0.79, 0.80, and 0.82 respectively, with a projected book value per share (BVPS) of RMB 7.44 for 2024 [11][42]. - The report anticipates a steady growth in net interest income and a slight recovery in non-interest income, with a focus on improving the net interest margin [9][11]. Valuation Metrics - The company is trading at a projected price-to-earnings (PE) ratio of 5.76 for 2024 and a price-to-book (PB) ratio of 0.61 [11][42]. - The target PB ratios for A/H shares are set at 0.75 and 0.55 for 2024, reflecting the company's expected valuation premium [7][8].