HTSC·2026-03-25 04:46Investment Rating - The report maintains an "Accumulate/Buy" rating for the company [7] Core Views - The company reported a net profit attributable to shareholders of RMB 5.654 billion for 2025, representing a year-on-year increase of 10.5%, which aligns with previous expectations [1] - The company plans to distribute a cash dividend of RMB 0.46 per share, resulting in a dividend payout ratio of 30% and a dividend yield of 4.21% [1] - The company is experiencing a high expansion momentum, with total assets, loans, and deposits growing by 20.7%, 20.7%, and 19.3% respectively by the end of 2025 [2] - The net interest margin for 2025 is reported at 1.39%, showing a slight increase of 4 basis points year-on-year, primarily due to optimized high-interest liabilities [2] - Non-interest income has decreased by 24.2% year-on-year, significantly impacted by a decline in intermediary business income [3] - The overall non-performing loan (NPL) ratio remains stable at 1.14%, with a provision coverage ratio of 246% [4] - The company has a target price of RMB 12.48 and HKD 9.91 for 2026, with a projected price-to-book (PB) ratio of 0.73 for A shares and 0.51 for H shares [5] Summary by Sections Financial Performance - The company’s operating income for 2025 is RMB 15.113 billion, reflecting a growth rate of 10.48% [11] - The projected net profit for 2026 is RMB 6.225 billion, with a year-on-year growth of 10.09% [11] - The non-performing loan ratio is expected to remain stable at 1.14% through 2028 [11] Capital Adequacy - The capital adequacy ratio and core tier 1 capital adequacy ratio are reported at 12.55% and 8.53% respectively by the end of 2025 [3] - The company has 11.6 billion in convertible bonds that could enhance the capital adequacy ratio by 1.75% if successfully converted [3] Market Position - The company’s A/H shares are compared favorably against peers, with a higher dividend yield of 6.32% compared to the average of 5% for Chinese H-share banks [5] - The report suggests that the company’s shares are undervalued relative to comparable banks, with a target PB ratio of 0.73 for A shares and 0.51 for H shares [5]