Bank Of Chongqing(601963) 申万宏源·2024-11-05 01:11Investment Rating - The report assigns a "Buy" rating to Chongqing Bank, indicating a positive outlook for the stock [1][72][75]. Core Insights - Chongqing Bank is experiencing steady performance improvements due to its deep roots in Chongqing and strong state-owned enterprise support, with total assets exceeding 800 billion RMB and a double-digit year-on-year growth rate [1][18]. - The bank is positioned to benefit from a significant turnaround in risk expectations related to local government platforms and real estate, leading to a more favorable valuation recovery [1][8]. - The bank's asset quality is expected to improve steadily, with a projected non-performing loan (NPL) ratio of 1.23% by 2024, down from 1.34% in 2023 [2][9][70]. Summary by Sections 1. Local Market Position and Growth Potential - Chongqing Bank has a comprehensive network covering all districts in Chongqing and has expanded into three other cities, enhancing its competitive advantage [1][26]. - The bank's management has been renewed, focusing on efficient operations and risk management, which is expected to support better performance [1][18]. 2. Asset Quality Improvement - The bank has accelerated the resolution of historical non-performing assets, with a significant reduction in the NPL ratio and an increase in the provision coverage ratio to over 250% [1][31][37]. - The bank's real estate exposure has been effectively managed, with the proportion of real estate loans in total loans decreasing to 2% [1][46]. 3. Financial Performance and Projections - The report forecasts a compound annual growth rate (CAGR) of 13.6% for loans from 2024 to 2027, driven by government financing and manufacturing sectors [1][50][54]. - The bank's net interest margin is projected to stabilize around 1.4% by 2026, with a focus on reducing funding costs [1][57][67]. 4. Valuation and Market Comparison - Chongqing Bank's current price-to-book (PB) ratio is 0.54, significantly lower than the industry average of 0.58, indicating potential for valuation recovery [1][72][75]. - The report estimates a target valuation of 0.72 times the 2025 PB, suggesting a 34% upside potential from the current price [1][8][75]. 5. Dividend Policy - The bank has maintained a stable dividend payout ratio of around 30%, which is expected to continue, supporting its high dividend yield of approximately 4.7% [1][75][81].