Jiangsu Leasing (600901): Steady increase in net interest margin and controllable risks in accelerating transformation

Jiangsu Leasing (600901): Steady increase in net interest margin and controllable risks in accelerating transformation

Investment Highlights: Event: The company disclosed 2019 semi-annual results, and the company achieved operating income in 1H1914.

20,000 yuan, an increase of 20 in ten years.

2%, realizing net profit attributable to mother 7.

90,000 yuan, an increase of 22 in ten years.

3%; net profit after deducting non-attribution to mothers increased by 33 each year.

2%.

Performance has grown steadily, basically in line with expectations.

  Accelerating transformation, focusing 重庆耍耍网 on core business areas.

Under the strategy of “transition + growth”, the company focuses on transformation of core businesses such as clean energy, high-end equipment, auto finance, and information technology. The number of contracts issued for transformation business in 1H19 accounted for 98 of the total number of delivery contracts.

3%, the total investment amount accounted for 55.

9%, an increase of 21 a year.

8 pct.

.
In the 1H19 rental business income, the water conservancy, environment and public utilities industry income increased and grew9.

5%, accounting for 40.

7%; revenues from the electricity, heat, gas, transportation, and warehousing industries increased by 141.

2%, 260.

4%, accounting for 15.

2%, 4.

6%.

At the same time of strategic transformation, the company maintains stable profitability: the company’s leasing business has a net interest margin of 3.

46%, an annual increase of 0.

54%

, Company ROA up to 1.

27%, an annual increase of 0.

06 pct.

; After deducting non-ROE up to 6.

92%, an annual increase of 0.

42 pct.

.
  The asset quality is stable and there is a safety mat.

As of 1H19, the balance of the company’s finance lease receivables was 626.

0 trillion, which includes accrued interest, and the net amount of finance lease receivables after replacement of impairment provision is 611.

30,000 yuan, an increase of 9 over the end of last year.

2%, accounting for 94% of total assets.

6%.

Among them, non-performing financing lease assets are zero.

84%, a slight increase of 0 from the end of last year.
05 pct.
, Far below the average level of commercial banks (1Q19 was 1.

8%); provision ratio of financial lease assets.

44% and provision coverage reached 408.

30% is at the leading level in the industry, which is enough to have a certain margin of safety.

At the same time, the company’s consolidated budget financing capacity, the company’s main credit rating is AAA, and the credit line is abundant. It has obtained 1351 credit lines from 101 banks in 1H19.

400 million, an annual increase of 7.

3% of credit is recycled 25.

4%, the debt side can provide more stable budget funding support.

  The company’s operating efficiency was optimized, and employee compensation was in place.

1H19 company business and management fee is 1.

3 ‰, an increase of 15 in ten years.

3%, of which employee compensation is 1.

0 ppm, accounting for 77% of total business and management fees.

9%, an annual increase of 27.

1%, the company’s employee compensation has been in place after market-oriented reforms.

The company’s cost-to-income ratio is 9.

46%, a decrease of 0 every year.

41 pct.

Continue to optimize management efficiency.

  Investment suggestion: The company deepens its transformation, stabilizes interest spreads, and maintains an “overweight” rating.

In the financial leasing industry where the company is located, it has expanded diversified financing channels to reduce capital costs. At the same time, it has cultivated small and medium-sized customers to improve profitability. After this, the company can still maintain a stable net interest margin and control its asset risk under downward pressure.

The company began to implement the new accounting standards for financial instruments in 2019, and the relevant impact amount caused by the sequence adjustment was 684.

0 million yuan reduced the retained earnings at the beginning of 2019, at the same time the company accrued credit impairment losses accordingly, 1H19 company accrued credit impairment losses2.

300 million.

Maintain the company’s profit forecast. It is expected that the company’s previous net profit growth rate in 2019-21 will be 22 respectively.

5%, 26.

9% and 25.

3%, EPS for 2019-21 is 0.

51/0.

65/0.

82 yuan / share, maintaining the overweight rating.

  Risk reminder: local and regional risk outbreaks, downward pressure on the economy leading to asset quality risk outbreaks, regulatory uncertainty