HTSC·2025-08-27 05:28Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 7.19 and RMB 7.46 [7][5]. Core Insights - The company has shown a steady increase in total assets, loans, and deposits, with year-on-year growth rates of 8.0%, 8.3%, and 8.9% respectively [2]. - Credit growth has accelerated, primarily supported by infrastructure projects, with new loans in Q2 reaching RMB 20.8 billion, significantly higher than the RMB 9.9 billion in the same period last year [2]. - The net interest margin has narrowed slightly to 1.60%, benefiting from improved funding costs, while non-interest income has seen a decline [3]. - The overall asset quality remains stable, with a non-performing loan (NPL) ratio of 1.17% and a provision coverage ratio of 356% [4]. Summary by Sections Financial Performance - For H1 2025, the company reported a net profit of RMB 12.2 billion, a 4.6% increase year-on-year, and a revenue growth of 0.5% [1]. - The annualized ROA and ROE for H1 2025 were 1.01% and 11.94%, reflecting slight declines from the previous year [1]. Credit and Asset Quality - The company has maintained a stable NPL ratio of 1.17% with a slight decrease in the provision coverage ratio [4]. - The retail loan segment has shown some volatility, with an increase in the NPL ratio to 2.04% [4]. Valuation and Forecast - The forecast for net profit from 2025 to 2027 is RMB 12.2 billion, RMB 13.0 billion, and RMB 14.0 billion, with expected growth rates of 6.2%, 6.6%, and 7.5% respectively [5]. - The report suggests a price-to-book (PB) ratio of 0.63 for A shares and 0.56 for H shares in 2025 [5].