AGRICULTURAL BANK OF CHINA(601288) 平安证券·2024-11-13 06:31Investment Rating - The report assigns a "Recommend" rating to Agricultural Bank of China (ABC) for the first time [2] Core Views - ABC has solidified its customer base and differentiated growth by focusing on rural areas and agriculture [2] - The bank's rural financial services have become a key growth driver, with profitability and asset quality outperforming the overall bank [5] - ABC has maintained high loan growth despite industry fluctuations, driven by strong demand in rural areas [6] - The bank's non-interest income has room for growth, and its high dividend yield makes it attractive in a low-interest-rate environment [8] Company Overview - ABC is a state-owned large bank with a long history of serving agriculture and rural development [4] - As of Q3 2024, ABC's total assets reached 43.6 trillion yuan, making it the second-largest commercial bank in China [4] - The bank's deposit and loan balances were 29.3 trillion yuan and 24.7 trillion yuan, respectively, with year-on-year growth rates of 3.3% and 10.5% [16] - ABC's ownership structure is stable, with Central Huijin and the Ministry of Finance as the controlling shareholders [21] Rural Financial Services - ABC's rural financial services have a higher profit margin (1.38% of total assets) compared to the overall bank (0.63%) [5] - The rural segment's net interest margin is 2.07%, 23 basis points higher than the overall bank [5] - The non-performing loan ratio in rural areas is 1.12%, 20 basis points lower than the overall bank [5] - ABC's rural loan balance grew at a compound annual growth rate (CAGR) of 17.8% from 2019 to 2023, outpacing the overall loan growth by 3.7 percentage points [6] Financial Performance - ABC's loan growth CAGR from 2019 to 2023 was 14.1%, 1.9 percentage points higher than the industry average [6] - The bank's return on equity (ROE) was 11.5% as of H1 2024, ranking second among listed state-owned banks [6] - ABC's rural financial services contributed 39.5% of the total loan balance as of H1 2024, with a year-on-year growth rate of 15.0% [52] - The bank's rural financial assets reached 14.1 trillion yuan by H1 2024, accounting for over 30% of total assets [54] Valuation and Dividend - ABC's dividend yield was 5.55% as of November 12, 2024, offering a significant premium over the risk-free rate [8] - The bank's price-to-book (P/B) ratio for 2024-2026 is projected to be 0.64x, 0.59x, and 0.55x, respectively [8] - Earnings per share (EPS) for 2024-2026 is forecasted to be 0.80 yuan, 0.82 yuan, and 0.87 yuan, with year-on-year growth rates of 3.4%, 3.6%, and 5.1% [8]