Investment Rating - The investment rating for Bank of Nanjing is maintained at BUY with a target price of RMB 13.29, indicating a potential upside of 17% from the closing price of RMB 11.35 as of 9 June 2025 [1][6]. Core Insights - The conditional redemption clause of the convertible bonds (CBs) has been triggered, which is expected to enhance the capital strength of Bank of Nanjing and support further business expansion [2]. - The unconverted balance of the CBs is approximately RMB 5.2 billion, accounting for about 4% of the company's total market capitalization, suggesting limited share-capital dilution while maintaining a solid dividend profile and growth potential [3]. - Bank of Nanjing has demonstrated steady earnings growth, with a year-on-year increase in revenue and net profit of 6.5% and 7.1% respectively in 1Q25, outperforming peers [4]. Financial Performance - Revenue is projected to grow from RMB 45,160 million in 2023 to RMB 61,209 million by 2027, with a compound annual growth rate (CAGR) of approximately 7.27% [12]. - Net profit attributed to the parent is expected to increase from RMB 18,502 million in 2023 to RMB 26,113 million in 2027, reflecting a steady growth trajectory [12]. - The estimated dividend yield for 2025 is 5.02%, which remains attractive even after accounting for potential dilution from the CB conversion [3][12]. Valuation Metrics - The forecasted earnings per share (EPS) for 2025 is RMB 1.86, with a price-to-earnings (PE) ratio of 6.10x, indicating a favorable valuation compared to peers [10][12]. - The book value per share (BVPS) is estimated at RMB 14.77 for 2025, with a price-to-book (PB) ratio of 0.77x, suggesting that the stock is undervalued relative to its intrinsic value [10][12]. - The core capital adequacy ratio is expected to improve by 0.57 percentage points to 9.46% following the full conversion of the CBs, enhancing the bank's capital position [2].