20220330-招银国际-建设银行-00939.HK-FY21_review__results_in_line,_expecting_stable_asset_quality_in_2022_4页_916kb

CMB International Global Markets | Equity Research | Company Update Summary

Core Content

This report provides an analysis of China Construction Bank (939 HK) for FY21 and forecasts for FY22 to FY24. It highlights the bank's performance, asset quality, capital adequacy, profitability, and valuation, along with investment recommendations and key financial metrics.

Main Points

FY21 Performance

• Operating Income: Increased by 7.07% YoY to RMB 764.7 billion (NII +5.12%, Fee&Commission +6.03%).
• Net Profit: Rose by 12.26% YoY to RMB 2,979.75 billion, driven by reduced provisions and good cost control.
• Cost-to-Income Ratio (CIR): Declined to 27.64% from 29.96% in 2020.
• Net Interest Margin (NIM): Compressed by 6 bps YoY to 2.13% due to lower loan rates and higher deposit costs.
• Non-Performing Loan (NPL) Ratio: Improved by 14 bps YoY to 1.42%, indicating better asset quality.
• Dividend Yield: Increased to 6.70% in FY21, showing an attractive payout.

Key Positives

1. Asset Quality Stability: Despite rising property-related risks, the NPL ratio for non-property assets improved, and the SML ratio showed a 26 bps improvement, suggesting stable NPL in 2022.
2. Capital Adequacy: CET-1 ratio remained at 13.59%, with provision coverage increasing to 239.96%.
3. Dividend Sustainability: CCB is expected to maintain a 30% payout ratio in the next few years, supported by capital management and government expectations.
4. Valuation: The stock is trading at 0.48x/0.44x FY22/23E P/B, lower than the 3-year historical average of 0.55x P/B. The target price was lifted to HK$8.10 from HK$7.10, implying a 39.2% upside from current price (HK$5.82).

Key Negatives

1. NIM Compression: Continued due to falling LPR and competition in the deposit market, leading to a 6 bps reduction in NIM.
2. Property Risks: NPL ratio for property development loans increased by 54 bps YoY to 1.85%, though still manageable.

Key Financial Metrics

Investment Recommendation

• Rating: BUY (Maintain)
• Target Price: HK$8.10 (up from HK$7.10)
• Upside: +39.2% from current price (HK$5.82)
• Reasoning: The stock is a defensive play with low valuation, attractive dividend yield, and strong fundamentals. Despite NIM compression, the bank is well-positioned to maintain asset quality and profitability.

Stock Performance

• Market Cap (HK$ mn): 1,451,052
• Average 3 Months Turnover (HK$ mn): 1,644.38
• 52-Week High/Low (HK$): 6.73 / 5.03
• Total Issued Shares (mn): 240,417 (H), 9,594 (A)
• Share Performance (1-mth/3-mth/6-mth):
  • Absolute: -2.2% / +6.1% / +5.9%
  • Relative: +2.4% / +13.9% / +19.7%

Shareholding Structure

• Central Huijing: 57.11%

Analyst Certification & Disclaimer

• The analyst certifies that the views expressed reflect personal opinions and are not influenced by compensation.
• The report is not an offer to buy/sell and is not liable for any losses incurred from reliance on its content.
• CMBIGM provides information on an "AS IS" basis and does not offer individual investment advice.
• The report may contain assumptions and conclusions that differ from other publications.

CMBIGM Ratings

Important Disclosures

• The report is intended for distribution to specific investors and is not for general public.
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• No responsibility is accepted for any reliance on the report's content.