HTSC·2025-04-30 08:01Investment Rating - The report maintains a "Buy" rating for the company in Hong Kong and an "Overweight" rating for the A-share market [9]. Core Views - The company demonstrates strong profit resilience with a year-on-year increase in net profit of 2.2% and operating income of 0.4% for Q1 2025, alongside a slight decline in annualized ROE and ROA [2]. - The company is expected to benefit from its unique county-level financial characteristics, justifying a valuation premium [6]. - The report predicts stable profit growth with net profit forecasts of RMB 289.3 billion, RMB 298.1 billion, and RMB 314.0 billion for 2025, 2026, and 2027 respectively, reflecting year-on-year growth rates of 2.6%, 3.0%, and 5.3% [6]. Summary by Sections Financial Performance - For Q1 2025, the company reported a net profit of RMB 289.3 billion and operating income of RMB 721.3 billion, with respective year-on-year growth rates of 2.2% and 0.4% [2]. - The annualized ROE and ROA for Q1 2025 were 10.82% and 0.66%, showing a decrease of 0.57 percentage points and 0.04 percentage points year-on-year [2]. Asset and Loan Growth - As of March 2025, total assets, loans, and deposits grew by 6.3%, 9.8%, and 3.1% respectively compared to the end of 2024 [3]. - The company maintained a steady credit issuance with retail and corporate loans increasing by RMB 443.2 billion and RMB 703.5 billion respectively in Q1 2025 [3]. Non-Interest Income and Cost Management - Non-interest income increased by 11.1% year-on-year in Q1 2025, driven by strong growth in other non-interest income, particularly from investment gains and foreign exchange [4]. - The effective tax rate improved to 7.1%, down 3.7 percentage points year-on-year, contributing to profit release [4]. Asset Quality and Capital Adequacy - The non-performing loan ratio and provision coverage ratio as of March 2025 were 1.28% and 298% respectively, indicating a slight improvement [5]. - The capital adequacy ratio and core tier one capital adequacy ratio were 17.79% and 11.23%, showing a minor decrease from the end of 2024 [5]. Valuation Metrics - The report assigns a target price of RMB 6.40 and HKD 6.02 for the company's A/H shares, corresponding to PB ratios of 0.80 and 0.70 for 2025 [6]. - The company is expected to trade at a premium compared to its peers, with the average PB for comparable A-shares at 0.62 and H-shares at 0.47 for 2025 [6].