@Today’s topic $ China Merchants Bank (SH600036)$ $ Industrial Bank (SH601166)$ $ Ping An Bank (SZ000001)$
If I were to judge stock investment opportunities this year, my overall judgment would be tough. This difficulty is not only the stock price has fallen significantly. It’s more because even when the index has fallen significantly, it doesn’t seem to have identified an opportunity that is particularly worth investing in.
Today, let’s talk about bank stocks. In terms of the range of ups and downs, the overall decline of bank stocks this year is lower than that of the index, which is a good defensive variety. But if you look back, everything feels so obscure and vague.
For bank stocks, I have always had this view. Long-term certainty is not enough, and in the short-term, benefiting from the improvement of asset quality, there will be opportunities for performance release. This situation will manifest itself most vividly in 2021.
But since the second half of last year, I have become somewhat unclear about the short-term certainty of bank stocks. This ambiguity is largely due to the following factors.
1. The impact of the real estate industry plight on the asset quality of banks’ corporate real estate loans; the impact on the scale of mortgage loans. It should be known that these two pieces have been the most high-quality assets in the banking industry in the past. It is also the largest single industry.
2. The leverage ratio of residents reaches 70%, which is the level of leverage ratio in developed countries. At the current level of leverage, it is difficult to expect better growth in retail loans;
3. The impact of high-quality enterprises shifting from indirect financing to direct financing. Today, I saw that Zijin Mining is conducting a 3.5 billion bond issuance inquiry with a coupon rate of 2.6%-3.6%. Of course, it is a long-term trend for high-quality enterprises to switch from indirect financing to direct financing. Don’t pay too much attention for now.
4. This is a content about the transformation direction of the banking industry. China Merchants Bank put forward the direction of deep wealth management in retail as a new direction for the retail transformation of the banking industry. Many banks are also working in this direction. But if we take the fund agency business as an example to see the performance of each bank in the financial management business. In 2021, when the scale of public funds increases by 20%, the situation of the banking industry will underperform the average.
Of course, the big wealth management in the banking industry is not only fund sales, but also custody and wealth management.
5. The most direct factor affecting the performance of the banking industry is the economic cycle. On the one hand, the rate cut will directly impact the bank’s net interest margin; on the other hand, the bank’s asset quality will face a new round of impact.
The above are the dangers of bank stocks that we have seen. If there are only dangers and no opportunities, then it is not called the hard model.
From the perspective of investors, the biggest opportunity comes from valuation. As of now, the ten-year valuation percentiles of China Construction Bank, Industrial Bank, and China Merchants Bank are 10.3%, 14.9%, and 48.4%, respectively. Although the figures of several banks are not All the same, but generally in a relatively low position.
The dividend yields are also very attractive. The dividend yields of China Construction Bank, Industrial Bank and China Merchants Bank are 6.05%, 5.25% and 3.89% respectively. are in very high positions.
Another point is that although the obvious performance release process has been interrupted and the banking industry is currently in a difficult position, as of now, there is still no evidence that the asset quality of bank stocks has deteriorated significantly. Nor can we scare ourselves in the absence of evidence.
In fact, the situation faced by bank stocks this year is also faced by many other industries, that is, on the one hand, it kills performance, and on the other hand, it also kills valuation. Makes investment more difficult.
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I recommend Erma’s book “Noise and Insight”, a book that helps ordinary investors establish a stock investment system.
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