GF SECURITIES·2024-03-28 16:00Investment Rating - The investment rating for the company is "Buy - A / Buy - H" with a current price of 4.17 CNY / 3.30 HKD and a fair value of 5.16 CNY / 4.09 HKD [5]. Core Insights - The company reported a steady expansion in assets and liabilities, with interest-earning assets growing by 17.6% year-on-year, and loan scale increasing by 14.4%. Corporate loans rose by 19%, with significant growth in manufacturing, technology innovation, green credit, and inclusive small and micro finance [4]. - The asset quality remains robust, with a non-performing loan (NPL) ratio of 1.33% at the end of 2023, down 2 basis points from the previous quarter. The new NPL generation rate was 0.56%, a decrease of 7 basis points year-on-year [4]. - Other non-interest income saw a substantial increase of 83% year-on-year, with a remarkable 285% growth in Q4 2023, primarily driven by investment income from trading financial assets [4]. - The net interest margin for 2023 was 1.60%, reflecting a decline of 2 basis points compared to the first three quarters of 2023 [4]. Summary by Sections Financial Performance - In 2023, the company's revenue, pre-provision operating profit (PPOP), and net profit attributable to shareholders grew by 0.03%, -1.8%, and 3.9% year-on-year, respectively [6]. - The cumulative performance for 2023 showed a slight increase in net profit growth compared to the first three quarters, driven by scale growth and other income adjustments [6][7]. Profit Forecast and Investment Recommendations - The forecast for net profit growth in 2024 and 2025 is 1.6% and 2.0%, respectively, with earnings per share (EPS) projected at 0.78 CNY and 0.79 CNY. The current stock price corresponds to a price-to-earnings (PE) ratio of 5.4X for 2023 and 5.3X for 2024, and a price-to-book (PB) ratio of 0.56X and 0.52X for the same years [7]. - The company maintains a "Buy" rating based on a fair PB valuation of 0.7X for 2024, translating to a fair value of 5.16 CNY per share [7]. Asset and Liability Management - The yield on interest-earning assets for 2023 was 3.41%, down 2 basis points from the first half of 2023, influenced by the repricing of existing mortgages and declining rates on new loans [29]. - The cost of interest-bearing liabilities increased to 1.96%, reflecting a rise in foreign currency deposit costs and a decrease in the liquidity of RMB deposits [29]. Market Performance - The company's stock performance relative to the market showed fluctuations, with a notable 21% increase from March 2023 to March 2024 [8].