Shenwan Hongyuan Securities·2025-09-23 13:57Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [2]. Core Views - The company is transitioning towards a "quality first, moderate scale" strategy, moving away from a focus on rapid growth and scale [5][21]. - The bank's total assets grew by 3.1% year-on-year to 3.35 trillion yuan as of Q2 2025, indicating a slower growth rate compared to peers [5][21]. - The bank's stock is currently trading at a significant discount compared to its peers, with a price-to-book (PB) ratio of 0.45, reflecting a 12% discount [9]. Summary by Sections 1. Quality First Strategy - The bank has adopted a strategy of "quality first, moderate scale," focusing on sustainable growth rather than rapid expansion [5][21]. - The bank's shareholder structure has improved, with stable long-term capital from state-owned and insurance funds, alleviating previous concerns about problematic shareholders [6][27]. 2. Financial Performance and Projections - The bank's total revenue for 2023 is projected at 63.7 billion yuan, with a year-on-year growth rate of 4.29% [7]. - The bank's net profit attributable to shareholders is expected to be 15.0 billion yuan in 2025, reflecting a slight decline of 1.17% from the previous year [7]. - The bank's return on equity (ROE) is projected to be 7.83% in 2025, which is below the industry average [8][36]. 3. Investment Analysis - The bank's high dividend yield of 5.5% for 2025 is a significant attraction for investors, with a projected dividend payout ratio of 30.1% for 2024 [9][11]. - The report anticipates a potential upside of 15.2% based on a target PB ratio of 0.52 for 2025, indicating room for valuation recovery [9][10]. 4. Strategic Focus on Zhejiang - The bank has been focusing on deepening its presence in Zhejiang, with loans and deposits from the region accounting for 33.3% and 29.4% of the total, respectively, by the end of 2024 [21][27]. - The strategy aims to leverage the economic strengths of Zhejiang, which is characterized by a robust private sector and wealth distribution [21][11].