20220614-招银国际-China_Financials_Weekly_ST_loan_and_special_bond_drive_TSF_beat__P_C_momentum_rebounded_24页_2mb
报告摘要
China Financials Weekly Summary
Core Content and Key Insights
Banking Sector
- TSF Growth in May: Total social financing (TSF) increased by RMB 2.79tn, +10.5% YoY, surpassing market expectations. This growth was primarily driven by a rise in loans (RMB 1.82tn, +10.5% YoY) and government bonds (RMB 1.06tn, +10.2% YoY).
- Lending Structure: While TSF increased, trust loans, corporate bonds, and equity financing for non-financial institutions remained weak. The increase in loan scale is attributed to a rebound following a sharp decline in April, not a sign of broader economic confidence.
- Loan Composition: In May, short-term corporate loans and bill discount loans accounted for 52% of new loans, up 2% from April. Long-term loans remained stable.
- Government Bonds: The growth in government bonds was due to fiscal front-loading and the accelerated issuance of special bonds. Special bonds are expected to exceed RMB1.6tn in June, but will no longer be a growth driver in the second half of the year.
- Investment Recommendations: The banking sector is rated OUTPERFORM. PSBC (1658 HK) is highlighted as the top pick with a target price of HK$8.40, suggesting a 45% upside.
Insurance Sector
- P&C Insurance Momentum: The P&C insurance sector rebounded in May, with PICC P&C and CPIC showing growth in monthly premium income. PICC's non-auto premiums grew by 20% YoY, driven by Accident & Health (+62% YoY), credit insurance (+144% YoY), and cargo insurance (+11% YoY). Auto insurance also returned to positive growth.
- Future Outlook: The growth in June is expected to continue due to the purchase tax cut, which is likely to stimulate new car sales. Claims rates remain low, supporting underwriting margins.
- Regulatory Changes: The regulators expanded the coverage of tax-exempt health insurance policies, including long-term care and health management, which could increase product ticket sizes. This is similar to the trend observed in critical illness insurance reform.
- Investment Recommendations: PICC P&C (2328 HK) is the top pick with a target price of HK$11.64 and a 45% upside. Ping An (2318 HK) is also recommended due to its ongoing proactive agency reform.
Key Information
Main Points
- TSF Growth: May's TSF growth was higher than expected, but it should not be interpreted as a sign of economic confidence.
- Loan and Bond Drivers: Loans and government bonds were the primary contributors to TSF growth in May.
- P&C Insurance Recovery: The P&C insurance sector showed a rebound in May, with PICC P&C and CPIC leading the growth.
- Tax Cut Impact: The purchase tax cut is expected to boost auto insurance growth in June.
- Regulatory Expansion: Tax-exempt health insurance coverage is being expanded, potentially increasing product sizes and improving underwriting margins.
- Investment Ratings: Several banks and insurers are recommended with buy ratings, while some are advised to avoid due to low provisions.
Investment Picks
- Banks:
- Insurers:
- PICC P&C (2328 HK) - BUY, Target Price: HK$11.64, Upside: 45%
- Ping An (2318 HK) - BUY, Target Price: HK$81.40, Upside: 74%
- China Life (2628 HK) - BUY, Target Price: HK$18.18, Upside: 52%
- NCL (1336 HK) - BUY, Target Price: HK$32.35, Upside: 57%
- Taiping (966 HK) - BUY, Target Price: HK$11.48, Upside: 28%
- PICC Group (1339 HK) - BUY, Target Price: HK$3.58, Upside: 44%
- CPIC (2601 HK) - BUY, Target Price: HK$30.49, Upside: 80%
- Zhong An (6060 HK) - BUY, Target Price: HK$33.20, Upside: 26%
Summary of Valuation Metrics
Banking Industry
| Ticker | Name | Mkt Cap (LC) | Price (LC) | Rating | TP (LC) | Upside | P/E (x) | P/B (x) | Dividend Yields |
|---|---|---|---|---|---|---|---|---|---|
| 1658 HK | PSBC-H | 554.5 | 5.80 | Buy | 8.40 | 45% | 6.7 / 6.1 | 0.8 / 0.7 | 4.8% / 5.3% |
| 939 HK | CCB-H | 1,401.0 | 5.55 | Buy | 8.10 | 46% | 4.3 / 3.9 | 0.5 / 0.5 | 7.0% / 7.8% |
| 600000.CH | SPDB-A | 228.1 | 7.77 | Hold | 9.00 | 16% | 4.4 / 4.0 | 0.4 / 0.4 | 5.6% / 6.1% |
| 601229.CH | BOSH-A | 91.3 | 6.43 | Buy | 8.68 | 35% | 3.9 / 3.4 | 0.5 / 0.4 | 7.3% / 8.2% |
| 601577.CH | BOCS-A | 31.7 | 7.88 | Hold | 8.30 | 5% | 4.6 / 4.0 | 0.6 / 0.5 | 5.4% / 6.3% |
| 601658.SH | PSBC-A | 469.6 | 5.13 | Buy | 7.07 | 38% | 5.9 / 5.4 | 0.7 / 0.6 | 5.5% / 6.0% |
| 601939.SH | CCB-A | 1,197.0 | 5.93 | Buy | 7.50 | 26% | 4.6 / 4.2 | 0.6 / 0.5 | 6.6% / 7.3% |
| 601077.SH | CQRCB-A | 40.5 | 3.90 | Hold | 3.60 | -8% | 4.4 / 4.1 | 0.4 / 0.4 | 6.9% / 7.5% |
Insurance Industry
| Ticker | Company | Price | Rating | PO | Upside | P/BV | P/EV (Group) | New Business Multiplier | ROE | ROEV |
|---|---|---|---|---|---|---|---|---|---|---|
| 2318 HK | Ping An | 46.75 | Buy | 81.40 | 74% | 0.8 x / 0.7 x | 0.5 x / 0.4 x | (22.9) x / (25.0) x | 13.6% / 14.1% | 8.9% / 10.3% |
| 2628 HK | China Life | 11.96 | Buy | 18.18 | 52% | 0.5 x / 0.5 x | 0.2 x / 0.2 x | (21.8) x / (23.3) x | 11.5% / 11.3% | 8.4% / 8.4% |
| 2601 HK | CPIC | 16.98 | Buy | 30.49 | 80% | 0.8 x / 0.7 x | 0.3 x / 0.2 x | (29.3) x / (28.6) x | 12.1% / 12.6% | 7.4% / 7.5% |
| 1336 HK | NCL | 20.65 | Buy | 32.35 | 57% | 0.4 x / 0.4 x | 0.2 x / 0.2 x | (34.2) x / (34.3) x | 13.7% / 14.0% | 5.8% / 5.5% |
| 966 HK | Taiping | 8.94 | Buy | 11.48 | 28% | 0.3 x / 0.3 x | 0.1 x / 0.1 x | (23.6) x / (24.0) x | 8.4% / 8.7% | 6.5% / 6.4% |
| 1339 HK | PICC Group | 2.49 | Buy | 3.58 | 44% | 0.4 x / 0.4 x | 0.3 x / 0.3 x | (70.0) x / (75.0) x | 11.2% / 11.8% | 7.3% / 7.7% |
| 601318 CH | Ping An | 44.14 | Buy | 67.56 | 53% | 0.9 x / 0.8 x | 0.5 x / 0.5 x | (20.2) x / (22.6) x | 13.6% / 14.1% | 8.9% / 10.3% |
| 601628 CH | China Life | 25.14 | Sell | 18.10 | -28% | 1.3 x / 1.2 x | 0.6 x / 0.5 x | (12.4) x / (14.2) x | 11.5% / 11.3% | 8.4% / 8.4% |
| 601601 CH | CPIC | 21.29 | Buy | 30.37 | 43% | 0.8 x / 0.7 x | 0.4 x / 0.4 x | (24.1) x / (24.0) x | 12.1% / 12.6% | 7.4% / 7.5% |
| 601336 CH | NCL | 28.69 | Sell | 26.85 | -6% | 0.7 x / 0.6 x | 0.3 x / 0.3 x | (28.6) x / (29.0) x | 13.7% / 14.0% | 5.8% / 5.5% |
| 601319 CH | PICC Group | 4.80 | Sell | 3.72 | -23% | 0.9 x / 0.8 x | 0.7 x / 0.6 x | (30.7) x / (37.2) x | 11.2% / 11.8% | 7.3% / 7.7% |
Conclusion
The banking and insurance sectors in China showed mixed signals in May. While TSF growth was notable, it is attributed to short-term factors rather than long-term confidence recovery. The P&C insurance sector rebounded, supported by easing lockdowns and a tax cut, indicating positive momentum. Regulatory changes in health insurance could further enhance the sector. Investors are advised to focus on companies with strong fundamentals and avoid those with weak provisions.
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