投资者陈述 - 新资金管控助力 “反内卷”-Investor Presentation-New funding controls to aid Anti-Involution and

Summary of Key Points from the Conference Call Industry Overview - Industry: China Financials - View: Attractive [2][33] Core Insights and Arguments 1. New Funding Controls: Implementation of new funding controls aims to aid in anti-involution and risk digestion, which is expected to slow funding supply to overcapacity sectors [5][15]. 2. Regulations on Payments to SMEs: The State Council's regulations require large enterprises to pay SMEs within 60 days, prohibiting non-cash payments, which is seen as a measure to control capacity and reduce irrational competition [6][7][18]. 3. Impact on Manufacturing Firms: Analysis indicates that 41.3% of sectors have payable periods exceeding 60 days, suggesting a high reliance on non-interest-bearing payables, which could pressure the supply chain [8][11]. 4. Reduction in Capex Expansion: Controlling payables and fund flows is projected to effectively reduce capital expenditure (capex) expansion, with a potential cut of Rmb1.19 trillion in total payables balance if turnover days are compressed to 60 days [11][15]. 5. Credit Risk Management: The current level of high-risk loans is significantly lower than in 2015, with only 8.3% of industrial credit at risk by the end of 2024, compared to 17% in 2015 [20][21]. 6. Gradual Digestion of High-Risk Credit: It is estimated that 8.3% of industrial-related credit could be digested over a three to four-year period, which is manageable for banks [23][41]. 7. Sector-Specific Risks: Different sectors exhibit varying levels of credit risk, with electronic devices and electrical equipment showing 8% high-risk credit, while chemicals and ferrous metal processing show higher risks at 12% [24]. Additional Important Insights 1. Investment Opportunities: Despite challenges, there are still opportunities in China Financials, with expectations of stable financial asset yields and improved bank net interest margins (NIM) [33][34]. 2. Infrastructure Investment Support: New programs initiated by the China Development Bank, including Rmb500 billion in loans for city upgrades, are expected to support credit demand amid slowing industrial investment growth [38][39]. 3. Preference for Mid-Sized Banks: Mid-sized banks are favored due to attractive dividend yields and potential benefits from rationalized credit growth and market-oriented competition [45][46]. 4. Market Conditions: The financial system is seen as bottoming out, with increasing efforts towards anti-involution, which may lead to more rational loan growth and pricing [45][46]. This summary encapsulates the key points discussed in the conference call, highlighting the regulatory environment, credit risk management, and investment opportunities within the China Financials sector.