Bank of RuiFeng(601528) 广发证券·2024-11-17 02:20Investment Rating - The report assigns a Buy rating to Ruifeng Bank (601528 SH) with a target price of 6 53 yuan per share, compared to the current price of 5 33 yuan [2] Core Views - Ruifeng Bank has a strong foothold in the Shaoxing Keqiao District, with its business extending to Yuecheng District, Shengzhou City, and Yiwu City in Jinhua The region's robust GDP and active private economy provide fertile ground for small and micro-enterprise (SME) business development [2] - The bank has built a deep moat in SME services through innovative models such as the "Enterprise Credit Database" and the "Three Divides, Three Looks, and Three Weights" approach, which have effectively countered competition from larger banks [2] - Ruifeng Bank's SME loans grew by 15 4% YoY in Q2 2024, with SME loans accounting for 39 91% of total loans, ranking second among listed rural commercial banks [2] - The bank's merger and acquisition (M&A) strategy has enhanced profitability By acquiring stakes in Yongkang and Cangnan Rural Commercial Banks, Ruifeng Bank has boosted its ROE by 0 4 PCT and 0 3 PCT, respectively, in 2024 [3] - The bank's ROA is at the mid-level among rural commercial banks, supported by higher interest income, non-interest income, and lower operating costs [3] - Ruifeng Bank's asset quality remains stable, with a non-performing loan (NPL) ratio of 0 97% for four consecutive quarters and a steadily increasing provision coverage ratio [3] Regional Advantages - Ruifeng Bank is deeply rooted in the Keqiao District, which is the largest textile industry cluster in China The district's industrial transformation and the construction of SME industrial parks provide a solid foundation for sustainable credit growth [2] - The bank's business extends to Yuecheng District, Shengzhou City, and Yiwu City, with Keqiao contributing 78 86% of operating income and 57 64% of operating profit in H1 2024 [50] - The bank's deposit and loan market share in Keqiao reached 32 26% and 20 34%, respectively, in 2023, significantly higher than its average market share in Shaoxing [50] SME Business Model - Ruifeng Bank has developed a unique SME model, combining the "Enterprise Credit Database" with the "Three Divides, Three Looks, and Three Weights" approach This model ensures efficient credit assessment and loan approval for SMEs [92] - The bank has also implemented the "One Township, One City, One Market" model, which caters to the diverse financial needs of rural, urban, and market-based SMEs [92] - The "Hundred Parks Project" has established service stations in 100 SME industrial parks, providing grid-based, mobile, and professional services to fill service gaps [93] Financial Performance - Ruifeng Bank's net profit is expected to grow by 12 52% and 10 32% in 2024 and 2025, respectively, with EPS of 0 99 yuan and 1 09 yuan per share [3] - The bank's current valuation is 5 38X and 4 88X PE for 2024 and 2025, respectively, with a PB of 0 57X and 0 52X [3] - The report values Ruifeng Bank at 0 7X PB for 2024, corresponding to a target price of 6 53 yuan per share [3]