Chongqing Rural Commercial Bank(601077) 中泰证券·2024-05-28 13:30Investment Rating - The report upgrades the investment rating of the company to "Buy" [2][7] Core Views - The company benefits from a low-cost funding advantage due to its deep penetration in the Chongqing region, leading to a low deposit interest rate of 1.88% in 2023, the lowest among listed city commercial banks [5][41] - The company's low-cost liabilities contribute to a lower risk appetite in its operations, focusing on public clients primarily in government financing and industrial sectors, while retail clients are mainly small and micro enterprises with sufficient collateral [5][6] - The asset quality is expected to remain stable, supported by the improving economic conditions in Chongqing and the company's low-risk preference, which enhances its long-term high dividend yield characteristics [5][6] Summary by Sections 1. Low-Cost Funding Advantage - The company has a significantly low deposit interest rate of 1.88% as of the end of 2023, which is 32 basis points lower than the average of its peers [5][41] - The structure of deposits shows a high proportion of personal demand deposits, which helps in reducing interest costs [41][49] - The company is the first rural commercial bank in China to achieve A+H listing, with the largest asset scale among domestic rural commercial banks, benefiting from both scale and regional advantages [5][55] 2. Low-Risk Appetite on Asset Side - The company maintains a low loan yield of 4.38% in 2023, reflecting its conservative risk approach [5][6] - Public clients are primarily focused on government financing and industrial sectors, aligning with key strategic plans in Chongqing, which are expected to have stable development prospects [5][6] - Retail clients are mainly small and micro enterprises, with a collateral coverage ratio of 1.77 times, indicating a strong risk management framework [5][6] 3. Asset Quality Improvement - The company has been actively clearing historical non-performing assets, leading to a continuous decline in non-performing and attention rates [6] - The economic recovery in Chongqing is expected to alleviate pressure on asset quality, with significant government projects supporting growth [6][55] - The company's low-risk preference in client selection ensures a robust asset quality outlook, with a focus on high-quality retail loans [6][37] 4. High Dividend and Stable Earnings - The company is projected to have a price-to-book ratio (PB) of 0.46X, 0.43X, and 0.40X for 2024E, 2025E, and 2026E respectively, with a price-to-earnings ratio (PE) of 5.00X, 4.76X, and 4.55X [5][7] - The expected dividend yield is 6.13%, 6.44%, and 6.74% for the next three years, indicating a strong dividend-paying capability [5][7] - The company's profitability is stabilizing, supported by a high and stable historical dividend payout ratio [7]