China Postal Savings Bank (601658): Minutes of the telephone conference: The epidemic has limited impact on operations; continuous retail conversion enhances value

China Postal Savings Bank (601658): Minutes of the telephone conference: The epidemic has limited impact on operations; continuous retail conversion enhances value

The company’s recent situation. The Bank of Posts and Banks organized a conference call on February 25, and exchanged views with investors on the impact of the epidemic on business operations, outlet transformation, and retail strategic planning.

We believe that the duration of the epidemic will have limited impact on bank operations and performance indicators; in the medium and long term, we continue to be optimistic about the bank’s continued excavation of outlets and customer values, and maintain high net profit growth in 2019-2021.

5%, 15.

0%, 16.

0% forecast, re-determined A / H shares outperform the industry rating.

Comments Hubei has a relatively small business exposure and little impact on asset quality.

Branches of the Hubei Branch of the Post Office, total assets and loans accounted for about 3 of the total bank.

3%, 6.

0% and 3.

6%.

In terms of asset quality, 58% of the local public debt is invested in power, heat, gas, water and other infrastructure and transportation industries; while the proportion of loans to the catering, cultural tourism, wholesale and retail industries affected by the affected situation is limited to the total loan of the branchOf 8.

5%.

If the impact of the epidemic gradually subsides, preliminary judgments on the overall asset quality of the bank can be controlled.

The initial business plan remains unchanged.

Although the recent regulatory guidance has led to a downward interest rate, taking into account that the ratio of loan-to-deposit ratio of Postal Savings is far below the industry level (1H19: 52% vs 75%), and plans to continue to add> 60% of additional credit to retail lines, there is confidence to maintainThe interest margin exceeds the advantage of 20-30bp of Daxing. There is no plan to revise the expected revenue and asset and liability growth targets for the time being.
深圳SPA会所

Handling for retail transformation: outlet conversion, customer value mining, and extra investment in technology.

Initially re-determined the retail strategic positioning. The main focus of the three-year retail transformation is 1) a systematic transformation of online and online integration of 40,000 outlets to build a full industry chain service capability rooted in urban and rural retail customer groups from birth to retirement;50% of outlet conversions will be completed by 2020, and all of them will be completed in 1H21.

2) Enhance the value mining of 600 million individual customers, increase the coverage of credit card, wealth management, consumer credit and other products; clarify the bank’s intermediate business tackling plan to ensure annual income growth rate> 10%; 3) technology investment will increase, andThe 3% (approximately RMB 1 million) of the income was invested in the field of fintech, which will raise the level of science and technology to the upper and middle level of the industry in 2-3 years.

ROE and market cap targets.

Leaders expressed the hope that the ROE of the postal bank will remain at the level of about 13% in the future, and that the market value will be raised to the trillion level in 3-4 years.

Wealth management subsidiaries opened in an orderly manner and positioned to serve value customers.

Post Bank plans to open three wealth centers in the first half of this year, and open 15 wealth centers before the end of the year. By the end of 2022, the construction and opening of 126 second-level branch wealth centers across the country will be completed.

It is estimated that the current postal deposit A / H shares are trading at 0.

9/0.

7x 2020e P / B.

Maintain profit forecast and A / H outperform industry rating.

Maintain a target price of 7.

05 yuan, corresponding to 1.

10x 2020e P / B, with 28% growth potential compared to the same period of the previous year, with a H-share target price of 7.

45 Hong Kong dollars, corresponding to 1.

00x2020e P / B and 51% growth space.

The impact scope and duration of the risk epidemic exceeded expectations; deterioration in asset quality exceeded expectations