Guoxin Securities·2025-10-25 12:01Investment Rating - The report assigns an "Outperform the Market" rating to the company for the first time [5]. Core Views - The company is positioned in a key area of national strategy, benefiting from continuous improvement in its fundamentals [1]. - The company has effectively cleared its existing non-performing loans and shifted its lending focus primarily towards government-related sectors, resulting in a significant increase in the proportion of loans in these areas [2]. - The net interest margin has shown signs of improvement, contributing to enhanced profitability, with projections indicating continued growth in revenue and net profit over the next few years [3][32]. Summary by Relevant Sections Company Overview - Chongqing Bank, established in 1996, has evolved into a significant player in the banking sector, with total assets reaching 983.4 billion yuan and total loans amounting to 498.6 billion yuan as of June 2025 [7]. Financial Performance - The bank's revenue is projected to grow from 13.21 billion yuan in 2023 to 17.77 billion yuan by 2027, with a compound annual growth rate of approximately 10.1% [4]. - Net profit is expected to increase from 4.93 billion yuan in 2023 to 6.29 billion yuan in 2027, reflecting a growth rate of 9.8% [4]. - The bank's return on assets (ROA) and return on equity (ROE) are projected to stabilize around 0.59% and 10.7% respectively by 2027 [4]. Loan and Asset Quality - As of June 2025, the bank's loan portfolio is heavily weighted towards government-related sectors, with 54.5% of loans allocated to these areas, indicating a strategic shift in lending practices [2][36]. - The non-performing loan ratio stands at 1.17%, with a provision coverage ratio of 248.3%, reflecting a strong asset quality position compared to peers in the region [2][49]. Market Position and Growth Potential - The bank is well-positioned to benefit from the economic growth in the Chengdu-Chongqing economic circle, which is expected to enhance its market share and profitability [1][14]. - The bank's loan market share in Chongqing is 76.4%, with significant presence in neighboring provinces, indicating a robust regional footprint [12]. Valuation and Investment Recommendation - The estimated fair price range for the company's stock in 2026 is between 12.3 and 14.4 yuan, suggesting a potential upside of approximately 19.3% to 39.7% from the current price of 10.3 yuan [68].