Jiangsu Leasing (600901): Focusing on serving small and medium-sized ROE industries, leading the practice of “financial supply-side structural reform”
Jiangsu Leasing’s business model is highly in line with the direction of “financial supply-side structural reform” 1) On February 22, General Secretary Xi Jinping pointed out “increasing the number and proportion of business of small and medium-sized financial institutions, improving small and micro enterprises and financial services for agriculture, rural areas and farmers.”
It can be seen that the adjustment of the internal structure of indirect financing (focusing on small and medium-sized enterprises), as well as the promotion of direct financing and the development of the capital market, is also the focus of “financial supply-side structural reform”.
During the two sessions, Guo Shuqing, secretary of the People ‘s Bank of China ‘s party committee and chairman of the China Banking and Insurance Regulatory Commission, clearly stated that “solving loans to small and micro enterprises and private enterprises, credit support, and financial support is the most important component of financial supply-side structural reforms”.
2) Jiangsu Leasing was established in 1985. It is one of the enterprises that initially carried out financial leasing business in China. It is also the first domestic financial leasing company listed on the A-share market.
The company’s development 杭州桑拿网 philosophy is “serving small and medium-sized enterprises, serving agriculture, rural areas and farmers, and serving people’s livelihood.” The business model is “deep into the market, differentiated marketing, provide differentiated products different from bank loans, and resolve SME financing difficulties through multiple channels.”The total proportion of receivable financing leases accounted for more than 90%.
Customers further “sinked” in 2018, with 2,457 new contracts in the first half of 2018, an annual increase of 201%.
“Focus on small and medium-sized enterprises” goes beyond policy guidance (we can expect further favorable policies), it can also improve bargaining power, diversify asset risks, and the market has a broad future.
The ROE of Jiangsu Leasing has been in the top two in the industry (stable over 15%) since 2015. The NPL ratio is stable below 1%, and the net interest margin has been higher than 3% for a long time. The decline in market interest rates is conducive to the improvement of net interest margins and counter-cyclical adjustment of macroeconomic policies.Conducive to improving the NPL ratio 1) The duration of assets leased by Jiangsu is significantly longer than the duration of negative debts. The maturity period of interest-bearing debt of the company is generally within one year, and the collection period of the company’s financial lease is generally more than three years.
Therefore, while the company has liquidity risks, it can obviously benefit from the increase in net interest margin brought by the decline in market interest rates.
2) The Central Economic Working Conference proposed that “macro policies should strengthen counter-cyclical adjustments”. At present, these policies are supporting SMEs and private enterprises. This macro environment is also conducive to improving the asset quality of Jiangsu Leasing, which focuses on SMEs.
Investment suggestion: Jiangsu Leasing “Serving Small and Medium-sized Enterprises, Serving Agriculture, Countryside, Peasants and People ‘s Livelihoods” has long been advocating the direction of “financial supply-side structural reform”. At present, policies such as counter-cyclical adjustments, wide currency and wide credit are clearly beneficial to Jiangsu LeasingImproved net interest margin and NPL ratio.
The financial leasing industry has broad space for development, and Jiangsu Leasing’s profitability ranks at the forefront of the industry, and its development trend is good.
We expect earnings per share for 2018-2020 to be zero.
58 yuan, net profit growth rate was 13 respectively.
97% / 24.
39% / 20.
The company’s market development space is broad, business growth breakthroughs, and the company’s unique business model, there is no clear comparable company, so we consider using PEG pricing.
Based on the above assumptions, the 2018-2020 net profit composite advantage is 19.
51%, given 19.
5x 2019PE, corresponding to a target price of 9.
36 yuan, covering the legal “buy” rating for the first time.
Risk reminders: The rising interest rate affects the company’s financing costs; the increase in the bad debt ratio of investment projects; the liquidity risk caused by the mismatch of capital terms;