Recently, an investor named "Serious Little Retail ixv2n8" asked the Agricultural Bank on the investor interactive platform whether he could lend 1.33 trillion yuan to the Agricultural Bank of China to buy all the shares of the Agricultural Bank at its latest market value. The investor said that the Agricultural Bank of China can pay the loan interest as long as it takes 30% of its net profit dividend, while the Agricultural Bank of China can pay the principal by 80% of its net assets.
In response to this, Agricultural Bank of China responded quickly: According to regulatory regulations, bank credit funds cannot enter the stock market in violation of regulations.
jokes are based on jokes. Why did this investor come up with such an idea?
is only because the banking sector has broken the net too seriously and its market value is less than the net asset scale. In addition, bank stocks have fallen continuously and have actually fallen into high dividend varieties.
Source: Investor Interactive Platform
32 bank stocks have fallen below their net assets
As of the close of June 12, 32 of the 36 bank stocks listed on the A-share market have fallen below their net assets, and the current net ratio is close to 90%.
only Ningbo Bank, China Merchants Bank, Changshu Bank and Zijin Bank have not yet broken the net. The price-to-book ratios of the four unbreakable banks are: Ningbo Bank 1.73 times, China Merchants Bank 1.43 times, Changshu Bank 1.14 times, and Zijin Bank 1.03 times. Among the
32 bank breaking net, China Merchants Bank has the deepest broken net, with a price-to-book ratio of only 0.46 times, making it the only bank in the two markets with a price-to-book ratio below 0.5 times. In addition, there are 7 banks with the latest price-to-book ratios ranging from 0.5 to 0.6 times. Currently, all the six major banks have broken net, with the lowest price-to-book ratio of Bank of Communications, at 0.53 times, and the highest price-to-book ratio of Postal Savings Bank of China, at 0.79 times.
A research report from a brokerage firm shows that the valuation of bank stocks is currently at a historical low, that is, the level around 2014, and some bank stocks even hit new lows.
The banking industry has been operating steadily this year. The first quarter report has exceeded expectations in terms of profit growth and asset quality, and the divergence between stock prices and fundamentals is becoming increasingly serious.
In response to this, Agricultural Bank of China stated in a question on the stock price of the investor platform that the current valuation and fundamentals are the common situation of listed banks in China, and the main factor is that the capital market is too pessimistic about the future economy. The management of the Agricultural Bank of China pays great attention to the stock price and regularly analyzes the reasons. At the same time, we also pay more attention to the fundamentals of the Agricultural Bank of China, continuously promote business transformation and innovation, and create long-term and stable returns for shareholders. Since its listing, the Agricultural Bank of China has maintained a high dividend level. In the past three years, the average dividend yields of A and H shares have been 5.9%, 5.6% and 4.7% respectively. Agricultural Bank of China also said that there is no repurchase plan in the near future.
Some banks took action to protect the market
At present, the stable stock price plan of most listed banks is mainly for major shareholders or directors, supervisors and senior managers to increase their holdings. For example, Chongqing Rural Commercial Bank stated that 11 directors and senior executives of the bank will increase their holdings of the bank through centralized bidding transactions through the Shanghai Stock Exchange trading system with no more than 15% of their own funds received after-tax compensation from the bank in 2019.
Postal Savings Bank recently announced that from December 10, 2019 to June 8, 2020, the Postal Group increased its holdings of the bank's A-shares by 737 million shares, with an increase of 3.98 billion yuan, accounting for 0.85% of the total issued common shares of the bank.
However, overall, the above method has little effect on boosting the stock price of banks. The market value of listed banks is generally more than 10 billion, 100 billion or even 100 trillion. The amount of these funds for increasing holdings is obviously unable to make the giant elephant dance.
is falling continuously, and some investors choose to "vote with their feet".
Bank stocks were the hardest hit by active funds withdrawal in the first quarter of this year. Wind data shows that as of the end of the first quarter, the fund's bank holdings decreased by 96 billion yuan, and the number of listed bankers held decreased from 36 to 31. The share reduction ratio in a single quarter was the highest since 2016. The share reduction was concentrated in leading banks, and some bank stocks with higher previous gains were concentrated in fund profit settlement.
Insurance funds continue to raise their shares
Bank stocks have been relatively stable over the years, and the stock prices have continued to fall, making bank stocks fall into high dividend varieties. Currently, the dividend yields of many banks have reached more than 4%. The dividend yield of the Agricultural Bank of China's H-shares has exceeded 6%, exceeding the yield of some bonds.
has a low valuation and a high dividend yield, which is the type of preference for large insurance funds. Since 2018, insurance funds have increased their holdings of listed banks' H shares, and this year has become an industry trend.
htmlOn June 9, China Life Group disclosed on the official website of the China Insurance Industry Association that it has recently increased its holdings and raised its shares in ICBC H shares. As of the same day, China Life Group consolidated and held a total of approximately 4.34 billion shares of ICBC H shares, accounting for 5.0001% of its H shares. So far, the H shares of Industrial and Commercial Bank of China have been raised by China Ping An and China Life Group respectively. In addition, this year, the H shares of the Agricultural Bank of China were also staked by China Life Group and Taiping Life Group, and China Life Group reached the second stake.In the near future, both Industrial and Commercial Bank of China and Agricultural Bank of China will pay dividends. According to the number of ICBC AH shares and Agricultural Bank of China AH shares held by China Life and its related insurance products, China Life can receive approximately RMB 4 billion (tax included) of cash dividends.
On the other hand, with the implementation of the new accounting standards, in order to reduce the impact of current fluctuations in equity assets on net profit, more and more insurance companies have begun to prefer high dividends and low volatility stocks, and bank stocks with lower valuations naturally attract attention.
However, although insurance funds have increased their holdings in bank stocks, they are basically in H shares with lower valuations, and it is difficult to increase the valuation of the A-share banking sector. In this regard, some analysts believe that the differentiation of bank valuations will continue in the future, and investment bank stocks should be selected for individual stocks.
Qiu Guanhua, director of Zhejiang Securities Research Institute and well-known banking analyst, previously pointed out that the fundamentals of bank stocks in the future are likely to be better than expected, and the opportunities of high-quality bank stocks are far greater than risks, and their cost-effectiveness is good.
Qiu Guanhua said that the scene that banks will have in the next 10 years is very similar to the cement industry in the past 10 years. The industry growth rate will decline and companies will significantly differentiate. Correspondingly determines the idea of bank stock investment. In stock selection, we focus on recommending high-quality banks with excellent endowment, proper strategies and proper tactics.
