Sunong Bank (603323): Major shareholders increase their stability and have been watching the company’s long-term investment value

Sunong Bank (603323): Major shareholders increase their stability and have been watching the company’s 杭州夜网 long-term investment value
Event: On June 20th, Sunong Bank issued an announcement on stabilizing the previous plan. Opinion: The major shareholders intend to increase and remain unchanged, showing their confidence in the company’s long-term development prospects.From May 17 to June 14, the closing price of Sunong Bank for 20 consecutive trading days was lower than the net assets, triggering the company’s stability measures.The company plans to adopt shareholders holding more than 5% of the shares (including Hengtong Group, New Hengtong Group and Global Asia Industrial) to serve as directors (except independent directors) of the company in a timely manner.The total amount to be increased is not less than RMB 13.74 million.Listed companies’ major shareholders and directors’ increased holdings of shares means that they have a solid and long-term development prospect for the company, firmly recognize the company’s investment value, and at the same time strengthen investors’ confidence in Sunan Bank, which will play a greater role in stabilizing the company. Suning Bank successfully changed its name and has ample room for business expansion.In March of this year, the company was renamed from “Jiangsu Wujiang Rural Commercial Bank” to “Jiangsu Suzhou Rural Commercial Bank”, and its business scope also expanded from Wujiang District to the entire city of Suzhou.The size of Suzhou’s GDP in 2018 was 1.86 trillion US dollars, and Wujiang District’s GDP is about one tenth of that. The expansion of business areas will have a significant impact on the scale of assets.At the end of the first quarter, the bank loan balance was 60 billion yuan, exceeding +22.1%, the growth rate increased by 1 compared with 2018.0 shares per share; deposit balance of 85.3 billion yuan, +21 for the year.6%, an increase of 5% over 2018.8 units.At the same time, the increase in capital adequacy ratio and Tier 1 capital adequacy ratio were 15 at the end of the first quarter.1%, 12.5%, providing sufficient capital support for business expansion. The amount of non-performing loans and the non-performing ratio both decreased, and the provision coverage ratio increased significantly.At the end of the first quarter, the non-performing ratio of Sunong Bank fell by 1.25% (2018: 1.31%), provision coverage ratio rose to 264% (2018: 248%).The non-performing loan balance was 7.8 ‰, at least -1.7%, non-performing balance fell for two consecutive quarters.At the end of 2018, the overdue loan interval was -15.0% to 9.400 million, loans overdue for more than 90 days extended by -15.1% to 5.500 million, and bad transcendence replaced 69.8% (2018H: 92.5%), and the criteria for bad confirmation are more stringent. Investment suggestion: The major shareholders of 成都桑拿网 Suning Bank intend to increase their holdings for stability, demonstrating confidence in the company’s long-term development prospects; after the company was renamed, the business scope was expanded to Suzhou, and the capital adequacy ratio business scale was expanded; asset quality was optimized, and risk resistance was enhanced.YOY net profit attributable to mothers is expected to be 14 in 19/20.1% / 12.3%, corresponding to BVPS6.9/7.5 yuan, the current price is 0.83/0.76 times PB.Target price for 2019 is 6.9 yuan, corresponding to 1 PB, 20% of the current price space, given an “overweight” rating. Risk warning: the risk of macroeconomic downturn; credit default exceeds expectations; high write-offs may erode performance.