Bank of Chengdu Co., Ltd. (601838) Report Analysis
Bank of Chengdu's Q1 results, which were published on 2022-04-27, contained several weak and problematic metrics. Individually, while its growth and income factors look unhealthy, the holistic financial picture that includes growth factors painted a picture that looks more encouraging. In statistics, this is called the Simpson Paradox (https://www.britannica.com/topic/Simpsons-paradox). Thus, Bank of Chengdu received an overall score of 79, which translates to a BUY recommendation.
Bank of Chengdu reported earnings results for the first quarter ended March 31, 2022. For the first quarter, the company reported net interest income was CNY 3,840.97 million compared to CNY 3,215.97 million a year ago. Net income was CNY 2,150.53 million compared to CNY 1,669.31 million a year ago. Basic earnings per share from continuing operations was CNY 0.6 compared to CNY 0.46 a year ago. Diluted earnings per share from continuing operations was CNY 0.57 compared to CNY 0.46 a year ago.
Business Description
Bank of Chengdu provides various commercial banking products and services in China. It offers personal and corporate deposits, personal and corporate loans, personal finance, trade chain financing, credit cards, guarantee, foreign exchange, and insurance services. The company was formerly known as Chengdu City Commercial Bank Co., Ltd. and changed its name to Bank of Chengdu in August 2008. Bank of Chengdu was founded in 1996 and is based in Chengdu, China.
Sector Overview
Bank of Chengdu is included in the Banks according to GICS (global industry classification standard). The Banks industry, which is in the Financials sector, includes Diversified & Regional Banks whose operations focus on conventional banking, retail banking, and lending to SMEs (small and medium enterprises). Bank of Chengdu's industry and sector affiliation are expected to negatively affect their likelihood to overperform the market in the upcoming period, as other sectors appear more likely to benefit from the macroeconomic environment we see now.
Parameter | Value | Change | Score | |
---|---|---|---|---|
Return on Equity | 16.2 | 2.4% | 75 | |
Net Cashflow | 14,845.7 | 168.5% | 66 | |
Capital Expenditure | -145.2 | -39.6% | 45 | |
Free Cashflow | -0.8 | -160.8% | 67 |
* All values are TTM
The below chart reflects Bank of Chengdu's birds-eye view on its performance with respect to its peers, the company's fillings as reported or to a similar industry, market cap, and country of origin. While Bank of Chengdu's peer average final assessment score stands on 75.0, Bank of Chengdu's score is 79.
When trying to optimize the timing of an investment, it's critical to analyze whether the stock looks overbought or oversold, and in which direction the momentum is moving. Bank of Chengdu's stock is now priced above its 50-day and 200-day, but below its 5-day moving average, while its MACD (moving average convergence divergence) indicates that the stock's price movement momentum is strengthening. Historically, this is a positive setup in the medium and long-term. In particular, many institutional investors keep close watch of the 200-day moving average. Meanwhile, looking at the Stochastic Oscillator and RSI (relative strength index), Bank of Chengdu's stock indicates that it's likely oversold. Overall, these technical indicators signal positive upward momentum. Therefore, this stock received a cumulative TA (technical analysis) score of 73.
Bank of Chengdu appears likely to maintain its strong balance sheet metrics and momentum going forward. Bank of Chengdu has done an excellent job managing its liabilities. Bank of Chengdu's liabilities stood at 783112.7 in the current filing, which represents a 12.4% change from the previous report. This performance is all interesting relative to their peers and suggests that their stock price has room to grow to reflect a higher intrinsic value. Therefore, we rated their liabilities movement with a score of 83. Also, Bank of Chengdu publishes solid book value factor metrics in this report. Price to book ratio (P/B) now sits at 1.0 and represents a 16.6% change from the previous report. The company's book value factor metrics are even more remarkable when compared to their peers. Therefore, its book value factors earned a score of 83. On the other hand, Equity, jumped out as looking problematic. Bank of Chengdu reported weak equity changes momentum this period. At filing, equity was reported as 54603.5, representing 10.2% change from the previous report. This parameter often affects companies in the same industry and market capitalization by up to 7.1%. This performance is significantly less impressive than its peers and competitors. Therefore, their equity movement component earned a score of 68. Therefore, we scored its balance sheet a 86.
Parameter | Value | Change | Score |
---|---|---|---|
Assets | 837,798.5 | 12.2% | 76 |
Liabilities | 783,112.7 | 12.4% | 83 |
Price to Book | 1.0 | 16.6% | 83 |
Cash & Equivalents | 54,240.9 | 38.1% | 82 |
Equity | 54,603.5 | 10.2% | 68 |
The below chart describes Bank of Chengdu's performance as reflected on its balance sheet with respect to its peers. While Bank of Chengdu received a balance sheet score of 86, the average of its peers stands on 77.0.
Name | Market Cap | Liabilities Movement | Asset Change | Equity/Intangibles Adjustments | Cash & Equivalents | Book Value Momentum | Balance Sheet | mc_sort | Hidden |
---|---|---|---|---|---|---|---|---|---|
China Merchants Bank Co., Ltd. | 1.1T | 72 | 81 | 68 | 37 | 84 | 77 | 0 | 1 |
Industrial Bank Co., Ltd. | 402.2B | 74 | 80 | 68 | 90 | 82 | 85 | 1 | 1 |
Shanghai Pudong Development Bank Co., Ltd. | 233.9B | 74 | 70 | 55 | 51 | 76 | 72 | 2 | 1 |
China Everbright Bank Company Limited | 160.4B | 89 | 44 | 69 | 54 | 76 | 76 | 3 | 1 |
China Minsheng Banking Corp., Ltd. | 150.8B | 80 | 45 | 69 | 90 | 77 | 81 | 4 | 1 |
Bank of Nanjing Co., Ltd. | 111.2B | 81 | 51 | 51 | 89 | 82 | 82 | 5 | 1 |
Bank of Jiangsu Co., Ltd. | 100.3B | 87 | 85 | 55 | 92 | 78 | 83 | 6 | 1 |
Bank of Beijing Co., Ltd. | 95.8B | 64 | 63 | 68 | 67 | 90 | 84 | 7 | 1 |
Bank of Shanghai Co., Ltd. | 92.8B | 83 | 62 | 54 | 90 | 90 | 90 | 8 | 1 |
Bank of Hangzhou Co., Ltd. | 85.0B | 82 | 63 | 54 | 87 | 79 | 81 | 9 | 1 |
Hua Xia Bank Co., Limited | 79.1B | 79 | 49 | 69 | 89 | 76 | 81 | 10 | 1 |
Bank of Changsha Co., Ltd. | 31.4B | 74 | 63 | 69 | 72 | 79 | 79 | 11 | 1 |
QILU BANK CO., LTD. | 22.4B | 80 | 59 | 95 | 77 | 89 | 93 | 12 | 1 |
Bank of Guiyang Co.,Ltd. | 21.2B | 74 | 61 | 69 | 77 | 80 | 80 | 13 | 1 |
Jiangsu Changshu Rural Commercial Bank Co., Ltd. | 20.6B | 85 | 81 | 69 | 60 | 81 | 82 | 14 | 1 |
Bank of Xi'an Co.,Ltd. | 16.2B | 81 | 55 | 67 | 97 | 75 | 80 | 15 | 1 |
Xiamen Bank Co., Ltd. | 15.6B | 86 | 66 | 69 | 84 | 78 | 83 | 16 | 1 |
Zhejiang Shaoxing RuiFeng Rural Commercial Bank Co.,Ltd | 12.2B | 83 | 72 | 69 | 81 | 79 | 83 | 17 | 1 |
Jiangsu Zijin Rural Commercial Bank Co.,Ltd | 10.5B | 41 | 80 | 56 | 95 | 80 | 77 | 18 | 1 |
Wuxi Rural Commercial Bank Co.,Ltd | 10.3B | 66 | 72 | 55 | 62 | 78 | 73 | 19 | 1 |
Jiangsu Suzhou Rural Commercial Bank Co., Ltd | 9.0B | 78 | 77 | 55 | 60 | 75 | 74 | 20 | 1 |
Ping An Bank Co., Ltd. | 281.2B | 79 | 78 | 69 | 88 | 79 | 83 | 21 | 1 |
Bank of Ningbo Co., Ltd. | 225.7B | 86 | 51 | 68 | 97 | 84 | 89 | 22 | 1 |
Bank of Suzhou Co., Ltd. | 22.1B | 91 | 82 | 54 | 97 | 89 | 92 | 23 | 1 |
Qingdao Rural Commercial Bank Co., Ltd. | 18.4B | 66 | 68 | 55 | 72 | 77 | 74 | 24 | 1 |
Jiangsu Zhangjiagang Rural Commercial Bank Co., Ltd | 11.1B | 84 | 53 | 55 | 65 | 79 | 77 | 25 | 1 |
Jiangsu Jiangyin Rural Commercial Bank Co.,LTD. | 9.3B | 76 | 66 | 69 | 76 | 74 | 77 | 26 | 1 |
Bank of Chengdu appears likely to maintain its strong income statement metrics, especially Return Factors. In this filing, Bank of Chengdu reported a return on equity (ROE) ratio of 16.2, which represents a change of 2.4%. These numbers show that management has successfully encouraged growth while managing ROE and ROA metrics, especially relative to their peers. Consequently, their return factors received a grade of 75. That said, one metric, Revenue Efficiency, stood out as strongly negative. Bank of Chengdu's revenue efficiency metrics look especially concerning this period, highlighting issues management is having controlling and reducing expenses while increasing earnings. This metric might have a 2.3 percent impact on companies in the same industry and with the same market capitalization. Their revenue efficiency does not make a compelling case for upward pressure on the company's stock price. As a result, their revenue efficiency earned a score of 44. their income statement received an overall score of 68.
Parameter | Value | Change | Score |
---|---|---|---|
Total Revenues | 13,853.7 | 16.5% | 44 |
Return on Equity | 16.2 | 2.4% | 75 |
The below chart describes Bank of Chengdu's performance as reflected on its income statement with respect to its peers. While Bank of Chengdu received a income statement score of 68 , the average of its peers stands on 70.0.
Bank of Chengdu's most recent cash flow report was not encouraging. Bank of Chengdu's management did not a remarkable job this period managing capital expenditures (CapEx). In terms of the raw numbers, CapEx was reported as -145.2, which represents a -39.6% change from the last period. This performance is all the more uninspiring relative to their peers and competitors. Consequently, their CapEx movement received a grade of 45. Also, Bank of Chengdu's produced underwhelming cash flow numbers in this filing. Net cash flow was reported as 14845.7, which is a 168.5% change from the last report. As demonstrated by these concerning net cash flow metrics, their priorities seem to be headed in the wrong direction. Its net cash flow, therefore, received a grade of 66. However, one encouraging metric, Free Cash flow, stood out. Free cash flow numbers published by Bank of Chengdu were -0.8, which was a -160.8% change from the previous filing. Companies in the same industry and market capitalization are typically affected by this parameter by up to 9.3%. Their free cash flow situation is all the more impressive relative to their peers and competitors. The company's free cash flow movement, therefore, received a grade of 67. Therefore, their cash flow earned a grade of 58.
Parameter | Value | Change | Score |
---|---|---|---|
Net Cashflow | 14,845.7 | 168.5% | 66 |
Capital Expenditure | -145.2 | -39.6% | 45 |
Free Cashflow | -0.8 | -160.8% | 67 |
The below chart describes Bank of Chengdu's performance as reflected on its cash flow with respect to its peers. While Bank of Chengdu received a cash flow score of 58, the average of its peers stands on 68.0.
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