Author: Fund Refund
In 2021, is the "low valuation" banking sector worth investing in?
I have been thinking about it for a long time and don’t know how to start, so let’s start the topic directly~~
This article has 5 parts in total:
, 3 reasons why bank valuation is low
, 3 reasons why banks can buy in 2021
, bank theme fund which one to buy
, selected bank stocks simple & effective indicators
5, bank stocks dividends which company is strong
The article is a bit long, please drag it to the place you care about. Look~~~
1. Three major reasons for low bank valuations
, Banks are highly leveraged cyclical industries
Fund manager Zhang Kun once stated that he was unwilling to put his fund assets in such a situation. ——When encountering cyclical downturns or exogenous shocks (such as financial crises and COVID-19 epidemics), investment returns will decline and bad debt rates will increase. Leverage will increase this risk exposure.
The global economic growth has been sluggish in recent years, and the global banking industry is facing the uncertainty of declining profits and rising bad debts in the future. Therefore, " economic downturn , expected shrinkage " is an important reason for the ultra-low valuation of the global banking industry.
. Oversupply of loans + impact of technology and finance
In the past decade or so, “loan business” is no longer exclusive to banks. More and more financial institutions can participate in the supply of "bank lending business" through various "curve-saving" methods.
Later, traditional banks began to face the challenges of technological financial platforms .
China is insufficient in the service supply of small businesses and personal loans . Many Internet platforms took the opportunity to enter this blue ocean market and quickly grew in size. For example, Ant Financial .
In fact, in terms of business nature, traditional banks and Ant Financial are similar, which is credit.
However, based on the issuance price announced by Ant Financial at that time, the price-to-earnings ratio was 96.5 times , while the valuation of during the same period was being 6.1 times , a difference of 6 times !
The market is not stupid, so why are there such big differences in valuations?
Because Ant is at the advantage of "dimension reduction strike": with its own platform data capabilities , from lending to risk control, it can partially achieve standardization . The benefit of standardization is that it can scale , thus greatly Improve efficiency and reduce costs!
Therefore, with the development of technology, technological financial platforms will have a greater impact on traditional finance , which also makes the market afraid to have more optimistic long-term expectations for traditional financial companies!
. The "low sustainability" of banks maintaining high profits
Where do the high profits of my country's banks mainly come from?
From a macro point of view, of course China's rapid economic growth and the accompanying credit expansion.
From the micro business point of view, the most profitable parts are mainly as follows:
① Residents housing mortgage loans and residents consumer loans;
② Infrastructure industry loans;
③ Construction and real estate industry loans. Relatively profitable.
First look ①: Chinese residents The "good quality" of housing mortgage loans is world-famous.
The down payment is high, housing prices are stable, the people's savings rate is high, and the defective rate is extremely low.
However, as mortgages are replaced by LPR, which is the market-oriented floating interest rate, the mortgage loan interest rate is obviously in the downward channel, and with the end of large-scale urbanization, the growth rate of mortgage scale is also declining It is inevitable.
Look again ②: Infrastructure industry loans have long terms and stable yields, and are an important source of profit.
But a very real problem is that in reality more than half of infrastructure investment projects actually have no cash flow support, and the corresponding loan quality is actually very poor. Banks and local platform companies form a "win-win game" : Platform companies rely on local government credit to continuously receive support from banks for interest payments or new investments; banks provide continuous financing to local government platforms, allowing the platforms to pay interest , the bank earns considerable interest income.
However, new debts pay the interest on old debts, and demolishing one wall to pay for the other ultimately results in the debt burden of local governments getting heavier and heavier.
The funds in the stock market are very smart, and they know in their hearts that the "sustainability" of these profits is very questionable! It is just a temporary "exchange of time for space" that has not yet surfaced. If there is not enough growth to absorb these debts, you will eventually need to pay for it in the future.
To sum up: the equity market has given an ultra-low valuation.
2. In 2021, you can also buy bank stocks, but be cautious!
stands at the end of 2020 and is considered in a 1-year period.
factors can configure the banking sector:
① The valuation of bank stocks is very low and the market is large, there is little room for a large-scale correction ;
② In any case, the economy needs to be stimulated in 2021 and this year's GDP will be smashed. Make up for the mistakes;
③ Most A-share sectors are on the expensive side.
Therefore, bank stocks are now considered a good staged investment target.
---------- How to invest in the banking sector? ----------
Let’s talk about the conclusion first:
. If you are a pure novice or a pure Christian, just copy the big V’s work
. If you have enough energy, you can select individual stocks. (After all, banks are very polarized Look, it’s equivalent to not rising. The growth rate of in the past year is even more negative than !
So~~If you choose "bank ETF fund" at will, the probability of falling into the trap is higher~
Let's copy the big V homework:
@小志 Gang teacher's " Nine Fog Combination ", Alex Value Discoverer's " Positive The ICBC Financial Real Estate Mix configured in the "aggressive " and other big V combinations in the past year has earned 3.02% ;
The ICBC Select Financial Real Estate Mix C configured in " Heavy Equipment Base Soldiers " by @ Zero City Niying (F005938)$ The income in the past year is 9.66%;
. These two funds account for the top three banks: China Merchants Bank, Ningbo Bank , Ping An Bank .( Students who want to buy "bank stocks" can also refer to it)
4. Buy individual stocks - look at 4 indicators
key indicators are: ① PB and ROE ② Income structure ③ Asset quality ④ Radiation area
In the past 1 year, the stock price Banks with the top rise/fall rates: (red bottom represents excellence)
, look at PB and ROE
(1) It is better to choose PB1
Since 2010, the price-to-book ratio of many banks (PB) has entered a downward trend channel, but ,Ping An Bank, China Merchants Bank and Ningbo Bank After 2014, the price-to-book ratios began to turn upward.
① Price-to-book ratio (PB) = stock price per share / net assets per share. Net assets per share is the book value of the stock, It is measured by cost; and The share price is the current value of these assets, which is the result of transactions on the securities market.
② When the book value of the stock price (i.e. PB1): the company's assets are of good quality and have development potential, and the stock price per share of high-quality stocks is much higher than the net assets per share.
On the contrary (i.e. PB1), the asset quality is poor. is like a commodity that is sold below cost and is a "processed product" .
③ Of course, "processing products" are not without purchase value, but it depends on whether the company has turned around.
From the picture above, we can find that the PB of the five bank stocks with the best stock price growth this year is greater than 1. Among the top five companies, only one had a PB greater than 1.
(2) The bigger the ROE, the better: As a "shareholder", of course, the bigger the return on shareholders' equity, the better!
. Looking at the income structure
banks with a lower interest income quality are better than .
This means that the bank's income sources are relatively diversified and less dependent on policy dividends (for example: mortgage dividends in the past 10 years).
Among the top five banks with the highest growth rates, three have interest rates below 85%. , especially $China Merchants Bank (SH600036)$ , is as low as 77%, which also shows that China Merchants Bank still has many sources of income. Among the top five banks with the largest decline, only one had an interest income of less than 90%.
. Look at the region. Banks with good performance in recent years are almost from the economically developed areas in the south. This is easy to understand. In economically developed areas, housing loans, personal credit loans, corporate loans, and local government platform loans are all large in quantity and high in quality. It is normal for banks to make good profits.
This can also be clearly seen from the above table:
radiation Bank of Hangzhou and Bank of Ningbo in East China have performed very well this year.
After Chengdu-Chongqing Economic Circle is upgraded to a national-level strategy, our " Chengdu Bank " development prospects in Greater Chengdu are also relatively broad.
. Look at the non-performing asset risk
non-performing loan ratio, the lower the better.
(Non-performing loans) Provision coverage ratio , the higher the better.
" Commercial Bank Risk Supervision Core Indicators" stipulates that the non-performing loan ratio should not be higher than 5%, and the provision coverage ratio should not be lower than 100%.
*Provision coverage ratio = loan loss reserve/Non-performing loan balance
If it is 200%, it means that the bank has prepared 2 yuan for every 1 yuan of non-performing loans.The larger the number, the stronger the bank's ability to withstand shocks.
The most outstanding performance is "Bank of Ningbo" , with a non-performing loan rate of only 0.8%, but the provision coverage rate is as high as 516%! This means that for every 1 yuan of non-performing loans, there are more than 5 yuan to support it. Excellent asset quality and leveraged risk resistance~
In fact, this also means that these banks with better management are "hiding profits" , and even means that the current prices of these banks may be underestimated! !
After filtering these few items, high-quality bank stocks will actually emerge.
5. Another benefit of bank stocks: stable dividends every year
The biggest purpose of many people buying bank stocks is to replace bank time deposits.
020 annual dividend situation :
reference : Industrial and Commercial Bank of China 1-year period 1.95%, China Construction Bank 1-year period 2.1%, Yu'ebao 1.95% in the past year, WeChat Lingqiantong 2.14% in the past year
side is when For bank customers, the one-year regular interest rate is 2%~~
On the one hand, as a high-quality bank shareholder, the annual stable dividend yield is 3~5%, but it bears the risk of stock price decline.
It’s up to you to decide~
