20130819-DBS_Group-Decent_results_but_credit_cost_pressure_remains_11页_241kb

报告摘要

DBS Group Research Summary: China Merchants Bank (CMB)

Core Content

This report from DBS Group Research provides an analysis of China Merchants Bank (CMB) for the period ending 19 August 2013. It highlights the bank's performance in the first half of 2013, its financial metrics, and the implications of the rights issue on its valuation and investment outlook. The report also compares CMB with its peers and outlines key assumptions and sensitivity analyses for future performance.

Main Points

Price Target: The updated 12-month price target is HK$19.00, up from the previous HK$17.74.
Reason for Report: The report is based on changes in earnings and the rights issue.
Potential Catalysts: Improving macroeconomic environment, faster asset securitization, and completion of the rights issue.
Analysts: Alexander LEE CFA and Nicole Wu from DBS Vickers.
Rating: Maintain BUY, due to the bank's strong deposit franchise and lower exposure to riskier segments.

Key Financial Performance (1H13)

Net Profit: Rmb26.3bn (+12% yoy), 11% above estimates and 4% above consensus.
Fee Income Growth: 46% yoy growth, driven by strong performance in bank card fees and trust services.
Net Interest Income (NII): Rmb47.4bn (+8.7% yoy), slightly below forecasted NIM at 2.89%.
Loan Growth: 10.2% yoy, with a rise in overdue loans and NPLs.
NPL Ratio: Increased to 0.71% from 0.66% in Q1, driven by manufacturing and wholesale & retail segments.
Provision to Loan Ratio: Remained low at 2.17%, below the industry requirement of 2.5%.
ROE: 25.5% in 1H13, slightly lower than the previous year's 27.0%.

Capital Adequacy and Risk Exposure

Core CAR: 8.0% at end of 1H13, expected to improve by 1.4ppts after the rights issue.
LGFV Exposure: Reduced to Rmb86.1bn, representing 4.2% of total loans, with a low NPL ratio of 0.04%.
Property Loan Exposure: Decreased by 1.7% from Dec'12 to Rmb79.1bn.
WMP: Trimmed to Rmb138.6bn, making up 25% of total WMP, with a small exceeding amount of Rmb2.3bn.

Valuation and Dividend Discount Model (DDM)

EPS (HK$): Revised forecasts for FY13-15F are slightly lower than consensus.
DDM Target Price (HK$): Revised to HK$19.00, assuming H-share rights will be priced at book value.
Dividend Yield: Increased from 5.1% to 6.5% in FY13F, with DPS rising to HK$0.94.
P/BV Ratio: Implied at 1.32x, with a trend showing a decline over time.

Peer Comparison

ROE: CMB's ROE of 25.5% is lower than peers such as ICBC and CCB.
PER: CMB's PER is 5.5x, slightly above the average of 5.3x.
P/BV: CMB's P/BV is 20.8x, higher than the average of 19.0x.
Dividend Yield: CMB's yield is 19.1%, higher than the average of 17.6%.

Key Assumptions

NIM: Expected to decline to 2.84% in FY13F.
Fee Income Growth: Projected at 35% for FY13F.
Cost-to-Income Ratio: Expected to decrease to 34.4% in FY13F.
Credit Cost: Projected at 0.56% for FY13F.
Deposit Growth: Expected to be 15% in FY13F.
Capital Adequacy Ratio (CAR): Expected to increase to 12.1% in FY13F.

Sensitivity Analysis

NIM +/- 10bps: Net profit fluctuates by +/-7.6%.
Credit Cost +/- 10bps: Net profit fluctuates by +/-4.8%.

Summary of Financials

Metric	FY13F	FY12A	FY11A
Net Interest Income	Rmb97,493m	Rmb88,374m	Rmb76,307m
Non-Interest Income	Rmb31,426m	Rmb25,380m	Rmb19,991m
Operating Income	Rmb128,919m	Rmb113,754m	Rmb96,298m
Operating Expenses	Rmb52,701m	Rmb48,671m	Rmb40,889m
Pre-Provision Profit	Rmb76,218m	Rmb65,083m	Rmb55,409m
Pretax Profit	Rmb64,765m	Rmb59,564m	Rmb47,122m
Net Profit	Rmb49,008m	Rmb45,273m	Rmb36,129m
EPS (HK$)	2.66	2.58	2.04
DPS (HK$)	0.84	0.77	0.51

Financial Stability Measures

Metric	FY13F	FY12A	FY11A
Loan-to-Deposit Ratio	75.8%	75.2%	73.9%
Net Loans / Total Assets	54.5%	54.7%	57.4%
Investment / Total Assets	16.2%	15.3%	16.5%
NPL / Total Gross Loans	0.9%	0.6%	0.6%
NPL / Total Assets	0.5%	0.3%	0.3%
Loan Loss Reserve Coverage	264.0%	302.4%	400.1%
Total CAR	12.1%	11.4%	11.5%
Tier-1 CAR	9.4%	8.3%	8.2%

Summary of Key Highlights

Earnings Growth: Strong fee income growth and improved net profit.
Credit Risk: Credit cost pressure remains, with rising NPLs and overdue loans.
Capital Position: Core CAR is expected to improve post-rights issue.
Dividend Yield: Increased, reflecting strong dividend payout.
Valuation: Revised target price of HK$19.00, based on DDM and updated earnings.
Peer Comparison: CMB has a competitive position with higher ROE and dividend yield, but lower PER and P/BV compared to peers.

Conclusion

Despite the credit cost pressure and slightly lower earnings estimates compared to consensus, the report maintains a BUY rating for CMB, citing its strong deposit franchise, lower exposure to risky sectors, and the potential for improved capital position post-rights issue. The updated target price of HK$19.00 reflects the revised DDM and the bank's continued growth in fee income and profitability.

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