高华证券-_China+Bank+Sector中国银行业深度报告对

September9,2008China:BanksGoldmanSachsGlobalInvestmentResearch1September9,2008China:BanksPropertydeveloperloans:S/Trisks,lowsystemicrisks;beselectiveContinuedcashburnatdevelopersposesn-tNPL/macrorisksRealestateloancreditqualityhasheldupsofardespiteweakeningpricesandtransactionvolumes,partlyduetothehighprofitmarginsonpropertyprojectsthatattractedcontinuedfinancingflowin1H08.However,webelievethecontinuingdeclineintransactionvolumes,weakeningbuyersentiment,inventorybuild-upandfallinggrossmarginswillleadtoacashsqueezeforsomedevelopers,particularlyin4Q08and1H09;weseethisasanemergingrealestateNPLriskforChinabanksin4Q08/2009.Moreover,weseethescalingbackofrealestateinvestment,whichiscriticalfordeveloperstosurvive,posingriskstomacrogrowth(20ppyoyslowdowninpropertyinvestmentgrowthmayreduceGDPgrowthratesby~1pp).Systemicrisklow;recoveryhingesonaffordability,policyeasingUnlikeUS/Japan,webelievesystemicriskislow/manageable,as:(1)affordabilityisanissueforselectcities(e.g.Beijing/Shenzhen)ratherthananationwideproblem.Weexpectaffordabilityinthesecitiestoreturntotheir1998-2007averagein2010,basedonourforecastof~12%p.a.riseinChinahouseholdincomeanda5%-20%propertypricedeclinefrom2Q08to2009;(2)totalpropertyloans,includingmortgages,areatamanageable18%oftotalloans,vs.53%oftotalcommercialbankloansintheUS;(3)Chinamortgagescarryrecourseandhouseholdshavelowleverage;(4)justasintheUSandJapan,banksprefertoworkoutrestructuring/M&Afordistresseddeveloperssolongasunderlyingprofitability/viabilityareintact;and(5)bankingliquidityremainshighinChina,andChinahaspro-growthpolicies.WewouldbemorepositiveifChinaeasedtighteningpolicies,orifinflationpressurefundamentallyeasedpostutilities/energypriceadjustments.Downsiderisksinclude:hardlandingoftheChineseeconomy,behind-the-curvepolicyeasing;collapseofpropertypricesdampeningsentiment.Beselective;widedifferencesinlendingpractices,P&LresilienceWeseesomepotentialcreditlossonpropertyNPLs,partlyduetolendingloopholesdespitehighcollaterallevelsandtightregulatoryrequirements.Wefavorbankswithlowexposuretodevelopers,lowNPLsensitivitytoearnings,andconservativelendingriskmanagement.WebelieveICBC(1398.HK,Buy)isbestplacedtocontrolrisks,whilewethinkSPDB(600000.SS,Sell),Huaxia(600015.SS,Sell)andIndustrial(601166.SS,Neutral)aremorevulnerabletorealestatemarketdeterioration.Propertytransactionsslowedmaterially-2,0004,0006,0008,00010,00012,00014,00016,000Jan-07Mar-07May-07Jul-07Sep-07Nov-07Jan-08Mar-08May-08Jul-08-20,00040,00060,00080,000100,000120,000140,000160,000180,000200,000GFASoldRevenue('000sqm)RmbmnSource:CIA.PotentialcashflowsqueezeatdevelopersRmbmn1H072H071H082H08EOperatingcashinflow70,839120,68986,52172,905Operatingcashoutflow78,053147,747118,184153,934Netoperatingcashinflow/(outflow)(7,215)(27,058)(31,663)(81,030)Netinvestingcashinflow/(outflow)(3,809)(10,731)(8,687)(8,585)Netfinancingcashinflow/(outflow)21,02055,11245,52235,823Netcashinflow/(outflow)10,02217,2865,109(53,792)Endingcashbalance50,17169,70278,12224,330Source:Wind,andGaoHuaSecuritiesResearchestimates.Earningssensitivityto3%realestateloanandmortgageNPLformation-13.3%-12.0%-10.7%-8.5%-8.5%-8.3%-8.2%-8.0%-7.0%-6.5%-6.5%-6.2%-4.2%-11.1%-14.0%-12.0%-10.0%-8.0%-6.0%-4.0%-2.0%0.0%IndustrialBOBJMinshengSPDBCCBSZDBHuaXiaBONJCNCBBoComCMBICBCBOC(Domestic)BONBSource:GaoHuaSecuritiesResearchestimates.ForspecialdisclosuresastoGoldmanSachs'investmentinICBC,seethestatementprecedingtheRegACcertification.RichardXu,CFA+86(10)6627-3192|[e-mail]sCompanyLimitedYiWang,CFA+86(10)6627-3022|[e-mail]sCompanyLimitedNingMa+852-2978-1677|[e-mail](Asia)L.L.C.JudyZhang+86(10)6627-3095|[e-mail]sCompanyLimitedTheGoldmanSachsGroup,Inc.doesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcertification,seetheendofthetext.OtherimportantdisclosuresfollowtheRegACcertification,orgoto:BanksGoldmanSachsGlobalInvestmentResearch2TableofcontentsContinuedhousingmarketweaknesssqueezesdevelopercashflow3Realestatemarketfundamentalscontinuetodeteriorate3WhyrealestateloanNPLshavenotshownupsofar5Riskofcashflowsqueezeincreasing,particularlyin4Q08/20096Lendingloopholesandfallincollateralvaluecouldleadtosomerealestateloanlosses9Realestateinvestmentscale-backisamacrodownsiderisk10Weviewthelikelihoodofsystemicriskaslow11Propertymarketturnaroundhingesoninflationandpolicyeasing16Beselective;lendingpracticesandearningssensitivitymatter17AppendixI:Lendingloopholesexposebankstocreditrisks22AppendixII:Earningssensitivitytototalrealestateloanandmortgagecreditqualitydeterioration27AppendixIII:Realesta