Bank Of Chongqing(601963) 浙商证券·2024-11-15 00:23Investment Rating - The investment rating for Chongqing Bank is "Buy" (first-time rating) [2] Core Views - Chongqing Bank is a city commercial bank deeply rooted in the Chongqing area, benefiting from increased debt resolution policies and the acceleration of construction in Chongqing, which is expected to support valuation recovery [1][4] - The bank's asset quality and profitability are in the mid-range of the industry, with a slight pressure from non-performing loans, but this pressure is expected to ease [1][16] Company Profile - Chongqing Bank has a balanced shareholding structure, with the largest shareholder being the Chongqing State-owned Assets Supervision and Administration Commission, holding 29% of the shares, followed by foreign shareholder Dah Sing Bank with 13% [1][11] - The management team is experienced and capable, with most executives being born in the 1970s, bringing significant local banking experience to the bank's operations [1][11][13] - The bank's business is heavily focused on urban investment, with urban investment assets (including infrastructure loans) accounting for 27.9% of total assets and 372.8% of net assets, ranking first among listed banks [1][15][14] Financial Analysis - As of Q3 2024, Chongqing Bank's total assets reached 824.1 billion yuan, ranking 9th among 17 city commercial banks [1][16] - The bank's annualized ROE for Q1-Q3 2024 was 11.43%, and ROA was 0.79%, both at the median level among listed city commercial banks [1][16] - The non-performing loan ratio was 1.26% as of Q3 2024, slightly above the average of 1.15% for listed city commercial banks, but the pressure from non-performing loans is expected to ease [1][16] Investment Story - The uncertainty surrounding debt resolution is decreasing, and the valuation of Chongqing Bank is expected to recover as the debt resolution policies accelerate and the Chengdu-Chongqing economic circle develops [1][4] - The bank's expansion potential is supported by the rapid progress of debt resolution in Chongqing, with 35 state-owned enterprises exiting financing platforms in 2024, leading to significant improvements in regional debt risk [1][4][10] Earnings Forecast and Valuation - Chongqing Bank's net profit growth is projected to be 5.29% in 2024, 5.37% in 2025, and 6.63% in 2026, with corresponding BPS of 15.53, 16.61, and 17.78 yuan [2][5] - The target price for Chongqing Bank's A-shares is set at 10.94 yuan, representing a potential upside of 16% from the current price [2][5]